Although the main aim of waste PFI contracts is to divert waste from landfill the Contractor may still incur landfill tax as a result of landfilling Contract Waste not treatable in the facility or because the facility is off line and hence not able to treat waste. The Contract should make clear the extent to which the Contractor can pass such costs on to the Authority through the Unitary Charge. This may be complicated by the fact that the rate of tax (per tonne) varies from time to time and Contractor's normally seek to minimise their exposure to any changes in the rate.
The WIDP Contract (Clause 49.2) makes it clear the Contractor is responsible for paying all the landfill tax in the first instance and can recover it through the Unitary Charge only to the extent permitted under the Payment Mechanism. It also places an obligation (Clause 49.2.3) on the Contractor to use reasonable endeavours to minimise the Landfill Tax arising, where this is of benefit to the Authority (for example by not mixing active and non-active waste prior to landfill).
The Contract Manager should be aware of how landfill tax costs are dealt with in the Authority's Contract and ensure the Contract Management Manual includes appropriate procedures as a sub-element of the section dealing with the Payment Mechanism. If, as is likely, the Authority is liable for any additional costs relating to an increase in the rate of tax then the Contract Manager should ensure that the Authority's Finance Department is alerted as soon as possible regarding the impact of any changes in the tax rate.