Most of the exemptions, based on the geology of the rock being quarried are to be withdrawn on 1st April because of a ruling by the EU General Court. However, under EU competition law all state aid, if subsequently found to be illegal, must be repaid in full plus interest from the time it started.
The aggregates levy was introduced in 2002 and the EU is presently holding a ‘phase II’ investigation into the legality of certain exemptions including aggregates from slate, shale and china clay.
Having to stump up 12 years of unpaid levy would almost certainly put many operating companies out of business. In an effort to avoid a hostile reaction, the Treasury has claimed that it will not require payment of back levy. However, it may be over-ruled by the EU, whose state aid law demands otherwise. The BAA has obtained a legal opinion from law firm Herbert Smith Freehills pointing out that the UK government does not have the power to decide not to recover illegal state aid.
BAA director Robert Durward said: "It is now clear that ultimate power in this matter resides with the EU and not the UK. Operators who are concerned about the possibility of having to repay up to 12 years levy are advised to seek expert legal advice without delay. They could of course also ask HMRC for a written undertaking, specific to their company, that back levy will not be collected. HMRC's response, if they get one, will tell them all they need to know."
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