HM Revenue and Customs (HMRC) collected £1 billion in additional revenue from investigations into underpaid landfill tax over five years, according to a report from law firm Pinsent Masons.
Nearly £281 million was amassed in the last year alone.
Many businesses face investigations, leading to extra taxes and penalties due to the complex legislative regime.
HMRC’s strict interpretation of technical language describing waste materials can inflate tax liabilities significantly, according to the report.
Sam Wardleworth, Senior Associate at Pinsent Masons, said: “Landfill tax errors might be amongst the most costly errors in the entire UK tax system. If you’re disposing of ten thousand tonnes of waste, the wrong description can cost almost a million pounds in extra tax and fines.
“Making sure employees and drivers fill in forms correctly to ensure the correct rate of tax is payable can be very difficult in practice. There is a level of subjectivity in what constitutes an accurate description of material and HMRC’s interpretation is strict.”