Rogue operators handling waste illegally will have to pay landfill tax.
From 1st April 2018, HM Revenue & Customs (HMRC) will be able to prosecute these illegal operators where necessary.
They could face large fines and risk a sentence of up to seven years in prison.
HMRC estimates there are currently around 600 illegal sites operating in England, Wales and Northern Ireland.
The draft legislation has been published for technical consultation until 25th October.