Guidance

Claim bad debt relief for Aggregates Levy

Check if you can claim for bad debt relief if a customer is insolvent and can no longer pay what they owe for taxable aggregate.

• From: HM Revenue & Customs
• Published: 9 October 2020
• Last updated: 27 November 2020 — See all updates

Who can claim

You can make a claim for bad debt relief if a customer becomes formally insolvent owing you money for taxable aggregate.

You can claim if:

• you have commercially exploited aggregate, accounted for it and paid the levy to HMRC
• the customer is not connected to you, for example, you and they do not have a common director
• you’ve written off the debt in your accounts and transferred it to a separate bad debt account

You cannot claim if the aggregate was not in the form of aggregate when you sold it to your customer. For example, if you had mixed it into concrete.

Records you must keep

If you claim this relief you must keep records including a bad debt account.

How much you can claim

There are 2 different rates for claiming bad debt relief depending on how much you sold the aggregate for.

If the price per tonne you sold the aggregate for was:

• at least twice the rate of the levy at the time - you can claim relief at the full rate of the levy at that time
• less than twice the rate of the levy at the time - you can only claim half the value of the overall transaction as debt relief

Example

If the levy was £2 per tonne and you sold the aggregate for £4 per tonne, you can claim bad debt relief at £2 per tonne.

If you sold the aggregate for £3 per tonne you can claim £1.50 per tonne in debt relief.

You can only claim bad debt relief on the outstanding amount of debt.

For example:

Charges and payments	Amount
Total charge for 20 tonnes of aggregate	£160
Aggregates Levy chargeable	£40
Payment received	£42
Outstanding debt	£118
Bad debt relief claimable	£118 divided by £160 × £40 = £29.50

If your customer has more than one debt with you and pays something to you, allocate this payment to the oldest debts first. This includes payment of debts for non-taxable or non-aggregate sales such as haulage or plant hire.

How to claim

To claim bad debt relief, include the amount of relief you’re claiming in your Aggregates Levy account. This will reduce the figure you enter in the net levy liability on your return.

If your customer pays after you’ve claimed

If you’ve claimed bad debt relief and you get any payment from your customer, you’ll have to repay some or all of the relief. This includes a payment from an insolvency practitioner by way of a dividend.

To work out the amount you have to repay:

1. Multiply the amount of relief you claimed by the new amount you’ve received from your customer.

2. Divide this by the amount of outstanding debt at the time of your original claim.

Types of insolvency

You’ll need to keep evidence of one of the following:

• bankruptcy
• sequestration
• Voluntary Arrangement
• Deed of Arrangement
• Scottish Trust Deed
• company liquidation
• Company Administration Order
• Company Administrative Receivership

Published 9 October 2020
Last updated 27 November 2020 + show all updates

1. 27 November 2020

   Added link to access your Aggregates Levy account.

2. 9 October 2020

   First published.