March 30th, 2012

Bringing it all back home

by Claire Stonier and Peter Jones

 

If you work at home from time to time, is the waste you produce there domestic or commercial? How about if you manage you computer repair business from your spare room? Or if you run a child minding business in your house?

As a responsible business owner, you might well turn to BusinessLink for advice, where you’d read that:

“If your business is home-based, any waste you produce from your business activities is classed as business waste. You must keep it separate from your household waste and complete waste transfer notes when it is collected or disposed of.”

A number of local authority web pages show they share this view, but others we’ve spoken with say that pretty much any waste coming from domestic premises – any on which council tax rather than business rates are paid – is to be treated as household.

So who is right? The local authorities collecting waste from home-based businesses in with the household stream? Or BusinessLink, telling these businesses to make their own arrangements?

 

Getting your acts together

The key pieces of legislation defining household and commercial waste are the Environmental Protection Act 1990 (EPA) and the Controlled Waste Regulations (CWR) – the 1992 regulations being replaced as of April 6th by a new 2012 set. S.75 of the EPA says that any waste from “domestic property” is “household waste”. Both the EPA and the CWR add a range of other types of premises, the waste from which is to be treated as household and indicates which types of premises may be charged for waste collection (with the 2012 regulations further defining those that may be charged for disposal).

The EPA defines “domestic property” by reference to how the property is used: “a building or self-contained part of a building which is used wholly for the purposes of living accommodation”. So if you run a business at home, is it still used “wholly” as living accommodation?

The CWR provide little clarification. They just list types of premises, like churches, charities, and prisons, whose waste is to be counted as “household”, whatever the activities carried out there may be, and whether they can be charged for its collection and disposal.

The EPA definition echoes the Local Government Finance Act 1988 (LGFA), which sets out whether a property (or “hereditament”) is:

  • domestic, and therefore subject to council tax
  • non-domestic, and therefore subject to business rates, or
  • a “composite hereditament”, like a shop through which an upstairs living space is accessed, which has both domestic and non-domestic parts that are taxed separately.

The tax status of a property appears to be the critical issue in deciding what type of waste is produced, as the CWR clearly state that waste from the non-domestic part of a composite hereditament is commercial waste.

Camden Bins - geograph.org.uk - 706777

Do home-based businesses need separate commercial waste bins?

 

Taxing questions

The job of deciding whether a hereditament is domestic, non-domestic, or “composite” falls to the Valuation Office Agency (VOA). Can the answer to the status of waste produced by home-based businesses be found in its Rating Manual and Factsheets? The Rating Manual seems pretty unequivocal:

“To be “domestic”, that part [of a property] has to be used “wholly” for the purposes of living accommodation. A part which has a mixed use will not therefore be wholly domestic and will, in consequence, be non-domestic.”

So if your spare room doubles as an office, wouldn’t this be mixed use? A mixed use room counts as non-domestic, making your house a “composite hereditament”.

But the water is muddied by the VOA’s use of a “de minimis” criterion regarding what counts as being “used wholly” as living accommodation.

“non-domestic use of part of a dwelling should only be considered to be rateable… when that use materially affects the enjoyment of the residence as a residence, having regard to the extent and amount of use, and taking account of any structural changes that have been made to the property to facilitate that use.”

If a childminder uses the living room as the main area to look after the kids, and at the end of the day packs up the toys so that their family can use the room in the evening, it will still count as domestic. But if a childminder looks after the same number of children in a purpose-built garage conversion, and the toys stay out overnight, there’s every chance it is a composite hereditament, producing commercial waste and required to obtain waste transfer notes.

Clear? Not really, but that’s about as far as the law goes. While it leaves a pretty substantial grey area, it certainly looks as though the interpretation of the law in BusinessLink is wrong. The tax status and waste status of a property are intimately linked, and so long as a person is only paying council tax on their home, it seems their use of the domestic waste system for waste arising from their home working is perfectly legitimate.

 

Claire Stonier and Peter Jones

 

 Claire Stonier  Peter Jones

 

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One comment on “Bringing it all back home

  1. Peter Jones on said:

    Having written this piece with Claire, I’ve just found a brilliant discussion of a couple of real-life examples of difficult “commercial or household?” questions confronting local authority staff on the E2B Pulse forum.

    http://www.e2bpulse.com/Forums/Messages.aspx?ThreadID=234940

    Well worth a read through if you found the artice above interesting

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