HMRC using Google to target contractors for Aggregates Levy

HMRC is turning its attention to construction sites in an effort to boost revenue generated by the Aggregates Levy.

The levy is considered a tax on quarries, but now some construction sites are being targeted as they fall under the definition of “commercial exploitation” of aggregate.

Michael Hunter, senior associate at Pinsent Masons, said officials were rumoured to be using internet search engine Google to track down construction projects in an effort to find new revenue streams.

“Over the last year or so there has been an increase in the investigation of construction activity,” he said. “A policy decision seems to have been taken within HMRC to apply the levy more widely than was initially anticipated.”

The scope of the levy is wide - applying where any aggregate is removed from the site from which it is extracted, mixed with anything else, or supplied to another person. There are exemptions, but they are narrow, and only cover specific activities. HMRC could make a case against any activity that falls through the gaps.

Activities most at risk include civils projects and alternative energy developments. “We are representing a contractor that extracted rock from a site and used it within a building on the same site,” added Hunter. “HMRC seem to want to make it a test case.

“There was even a case in Scotland where a wind farm development was subject to the levy because an access road had been built with rock extracted from borrow pits on site.”

“They seem to be having a go at the Aggregate Levy to narrow the definition and raise more revenue from it.”

HMRC said it wouldn’t discuss whether particular areas were being targeted. A spokesperson said: “We will apply the policy on an operational basis to all relevant customers. If someone is excavating a site and they fulfil the criteria then we would seek to apply it.”