AUG.L Regulatory News (AUG)

3 April 2018

Augean plc ("Augean" or the "Company")

HMRC update

Augean, one of the UK's leading specialist waste management businesses has, as expected, been issued with pre-assessment notifications from HMRC for Augean North Ltd and Augean South Ltd. HMRC has indicated that it intends to issue assessments for a total amount of £37.6 million covering the period from August 2013 to August 2017 in respect of Augean South Ltd and from October 2013 to July 2017 in respect of Augean North Ltd. HMRC has also notified the companies that it is considering issuing a reduction in the value of the previous five assessments received, from the £12.0m notified with our Preliminary Results to £7.5 million.

The receipt of the pre-assessment notifications was not unforeseen and we remain in cooperative discussion with HMRC. The Group believes from its legal advice and independent reviews of our systems that landfill tax has been collected and paid correctly. We are pleased that HMRC has recognised the majority of exemption status we had applied and as a result has significantly reduced the potential assessment value accordingly. The Group takes this as a positive and welcome initial development. We are also pleased that HMRC is responding to our situation in a timely manner and faster than we had indicated with our Preliminary Results. We continue to defend our position that the appropriate landfill tax has been paid.

The letters include HMRC's standard wording that it intends to apply interest and will consider penalties. Augean has been invited to put forward further information for HMRC to consider prior to issuing any further or amended assessment and will continue a cooperative dialogue with HMRC.

Having taken advice from leading counsel and its solicitors, Augean continues to believe that both the previous assessments and these pre-assessment notifications are without merit. The Group will robustly challenge these and any further landfill tax assessments that it may receive from HMRC, through the tax tribunal system if necessary. Based on advice received, the Group has not provided for the assessments in its accounts nor does it expect to pay the assessments levied to date. The advice received by Augean is that it will not be required to pay the assessments for at least 12 months.

Further announcements will be made at the appropriate time.

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