A RENEWABLE energy company has settled a year-long dispute with HM Revenue & Customs (HMRC) after it imposed a £187,000 penalty on the firm for failing to pay a tax bill – which was found not to be due.

Bangley Quarry Biogas Ltd, based to the north of Haddington, was issued with a penalty and placed on a defaulters’ blacklist by HMRC last year after allegedly failing to pay nearly £325,000 in VAT in 2020 which revenue officials believed was due.

But now, following negotiations lasting a year, HMRC has agreed that the tax is not actually due from the company and it will withdraw the penalty and remove the company from the blacklist.

READ MORE: Bangley Quarry Biogas Ltd named on list of deliberate tax defaulters

A letter sent to the company by HMRC reads: “On June 1, 2021, we sent you an assessment of the VAT we thought you should pay. The total was £324,892.00.

“We’ve decided to withdraw our assessment.

“This is because I have considered information, that has only recently been made available to me, that enables HMRC to withdraw the assessment on account of the fact that the company did not make any taxable supplies in the period.

“Any penalties associated with this assessment will also be removed from the company.

“This means you do not have to pay us anything for this assessment or penalties, described in the letter.”

East Lothian Courier: Bangley Quarry is to the north of Haddington Bangley Quarry is to the north of Haddington (Image: Contributed)

Marc McElhinney, Bangley Quarry Biogas (BQB) managing director, was relieved that the dispute had finally been settled.

However, he told the Courier that he was concerned about the negative impact it might have had on his reputation and that of the company.

He said: “The past year has been very stressful and I am glad it is over.

“Although we knew we did not owe any tax, because we hadn’t been trading, HMRC continued to pursue us for the tax and penalty.

“The process has been torture and it’s not something I would wish on anyone.

“We were concerned at the potential damage being done to our reputation from the negative coverage.

“I am not sure precisely what impact it has had – it’s difficult to prove a negative – but it was mentioned to me by several people who had read about it in the press.”

READ MORE: Construction under way on controversial energy plant at Bangley Quarry

The company is due to commission its £25 million anaerobic digestion (AD) plant, which will generate enough renewable gas to supply a town equivalent to the size of nearby Haddington.

It will take organic waste and energy crops from farms and whisky distilleries across Scotland and convert it into 1,100m3/hr of biomethane.

Despite the challenges posed by the dispute, Bangley Quarry Biogas remains confident about its future and the place of renewable gas in Scotland’s ambitions for net zero.

Mr McElhinney said: “Construction at the site is ongoing and we aim to start producing renewable gas later this year.

“The resolution of the tax issue in our favour is a positive development and it will allow us to focus entirely on our construction of BQB, our contribution to the renewable energy sector and Scotland’s circular economy.”

A spokesperson for HMRC said: “Naming taxpayers as deliberate defaulters is done in-line with the legislation and based on the information we hold at the time.

“We recognise dealing with large assessments of tax can lead to pressure on taxpayers and we are committed to supporting those who need extra help.

“Our message to anyone worried about paying what they owe is: please contact us as soon as possible to talk about your options.”