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On 16 January 2020, the UK government launched the Joint Unit for Waste Crime (JUWC), a new taskforce of environmental regulators, HMRC and the National Crime Agency committed to tackling serious and organised ‘waste crime’.
Waste Crime includes fly-tipping, illegal dumping or burning of waste, the operation of illegal waste management sites and illegal waste export. In 2015 waste crime was estimated to have cost £600 million in the UK.
In 1996 Landfill Tax was introduced which commoditised waste, rendering it more lucrative for those involved in serious financial crime. Between 2013 and 2018 total Landfill Tax cash receipts dropped from £1.189 billion to £888 million. The lower rate of Landfill Tax is £2.80 per tonne, the higher rate being £88.95 per tonne, given the difference in rates, tax evasion figures are expected to be high.
The waste industry is highly regulated, but it mostly focuses on waste sites and their operators. Due to this, brokers and carriers are not as focused on and increasing numbers of organisations and individuals are becoming involved in the waste industry, fragmenting the market and developing increasingly complex transactions and business structures. Waste sites are often located out of site of the general public, making it easier to conceal their workings and easier to conceal illegal money into the legitimate economy.
In an Independent Review published in November 2018, they stated that the structure and organisation of the Environment Agency (EA) belonged to an older and simpler world and did not possess the necessary authority, powers or business model to counter the criminal scourge in the waste sector effectively.
The Review advocated for the EA to be equipped with further powers to search premises and seize materials, for the introduction of a Fixed Penalty Notice for the clear and deliberate mis-description of waste, for increased use of digital waste tracking, a duty of care at each stage in the waste process and a review of funding, amongst other changes.
These powers would bring the EA in line with other regulatory bodies such as HMRC, where under the Criminal Finances Act 2017 HMRC are allowed to target corporates who fail to implement reasonable procedures to ensure they do not facilitate tax evasion by associated persons. Such entities would not need to be engaged in the underlying tax evasion. HMRC do not have to secure a conviction for the underlying evasion before prosecuting the corporate. Sanctions are severe, including unlimited financial penalties, confiscation orders and serious crime prevention orders.
Under section 330 of the Proceeds of Crime Act 2002, there is a requirement to report any suspicion of money laundering, this does not, however, apply to those in the waste industry. Although this is the case, anyone involved in the regulation of the waste industry should emphasise to industry participants the importance of steering clear of the money laundering offences as well as other forms of criminal activity.
A year ago, HMRC introduced a self-reporting regime encouraging anyone discovering tax evasion to come forward. Any reporting would be reflected in any penalties imposed and would form part of the ‘reasonable procedures’ defence. Unlike other self-reporting regimes such as Code of Procedure 9 in tax evasion cases, there is no assurance of immunity for the person reporting.
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