A long-running wrangle over VAT and the fact that councils don’t have to charge for their commercial waste services has moved a step further with a court ruling in favour of local authorities.

In September, a High Court Judge upheld an HMRC ruling that councils carrying out trade waste collections should not be liable to charge customers VAT – despite a judicial review launched by North East-based business Max Recycle arguing this undercuts private sector companies offering the same type of services.

Now Max Recycle has said it is to appeal the decision and is being supported by members of the waste management sector including the Environmental Services Association. Local authorities, on the other hand, reason that they should be able to provide VAT free services, partly because they service some small businesses which might not be VAT registered.

However, there are a number of local authorities who are looking to develop their own waste businesses as an income stream although in some cases contractors will be used to provide the service. One senior local authority view was that: “Are we saying that VAT exemption for councils who have had 40% funding cuts is affecting multi million pound private firms?” Details of the appeal process are expected to emerge over the coming months.