Administration Costs and Unspent Funds Framework

1 Nov 2018

As a modern transparent regulator, we aim to provide stakeholders with as much information as possible as to how we provide HM Revenue & Customs (HMRC) with independent assurance that LCF monies are spent in compliance with the Landfill Tax Regulations 1996 (Regulations).

In achieving this objective, we have recently reviewed and updated our framework for reviewing, monitoring and managing the level of administration costs and unspent funds claimed and held by Environmental Bodies (EBs) and therefore considered that it was also appropriate to publish the document on our website.

The aim of the framework is to help facilitate the delivery of two of HMRC's strategic priority objectives for the LCF:

  • The level of administration costs incurred by EBs, should be at or below the guidance level of 7.5 per cent of project expenditure; and
  • The value of unspent funds held by EBs should be reducing year on year.

The framework is based on our analysis of the data submitted by EBs in their Statutory Annual Returns (Form 4s). For each area the framework sets out the processes ENTRUST follows for those EBs who have failed to meet HMRC's requirements.

Administration costs are defined within Regulation 30 (1) as those costs "incurred in connection with the management and administration of an EB or its assets".

Running costs should be reasonable and relevant to the administration of the LCF and not exceed 7.5 per cent of the organisation's actual funding spent during the year on LCF project expenditure.

Unspent funds are those LCF funds remaining at the end of each reporting period. EBs are required to state within their Annual Return whether these funds are committed to projects or retained for winding up, any other funds are classed as uncommitted. New guidance has been published that an EB's total unspent funds at year end should be no more than 1.5 times an EB's LCF income (including contributions and transfers) in that year.

You can access the framework in the document on the right hand side of this page or on the new Administration Costs and Unspent Funds page of our website.

You can also access the updated guidance on the unspent funds levels on the Guidance page of our website.