On 29 January the European Commission has decided to take legal action against several Member States, including the UK, over various issues.
The European Commission sent a reasoned opinion, second step of the infringement procedure, to the UK, formally requesting it to amend its legislation on inheritance tax reliefs granted for agricultural and forestry property. According to the Commission,the UK’s legislation provides for discriminatory inheritance tax relief. The Commission has stressed that under the UK’s laws the taxpayers are entitled to the relief if the inherited agriculture property as well as the inherited forestry property is situated in the UK. Consequently, there is no tax relief when the inherited agricultural and forestry property is situated elsewhere in the EU. According to the Commission “The limited scope of the relief may dissuade taxpayers from investing in agricultural and forestry property outside the UK.” The Commission claims that that the UK’s legislation is not compatible with the free movement of capital enshrined in the EC Treaty. Consequently, the UK has failed to fulfil its obligations under the Treaty. The Commission is expecting a “satisfactory reaction” from the UK within two month otherwise the Commission may exercise its discretionary power to refer the matter to the Court of Justice. Hence, the UK will be taken to the ECJ if it does not amend its legislation in order to allow inheritance relief for all agricultural and forestry property situated in all EU and EEA Member States.
The Commission has also sent a reasoned opinion to twenty Member State, including the UK, for failure to communicate to the Commission full transposition of the Energy Services Directive into national legislation. The Directive aims at strengthening and improving energy end-use efficiency by providing a framework for incentives and energy services. Member States had until 17 May 2008 to transpose the Directive into national legislation.
The 1996 Air Quality Framework Directive has set limit values for various pollutants in ambient air, including for PM10 which should have been met since 2005. The new Council Directive on ambient air quality which entered into force last June provides for the possibility of limited time extensions for compliance for PM10 which can run until 10 June 2011.
The EU has recognised that several Member States have particular difficulties in achieving compliance with the limit values for PM10. Member States are, therefore, allowed to request limited extra time to meet the PM10 standard but under certain conditions. Hence, time extensions may only be granted for zones that satisfy the conditions laid down in the directive. The Member States when submit time extension notification to the Commission must demonstrated that all appropriate measures have been taken at national, regional and local level to meet the required limit values in 2005 and that these could not be achieved because of external factors such as site-specific dispersion characteristics, adverse climatic conditions or transboundary contributions. Member States are also required to show, through the establishment of an air quality plan for each zone, how compliance with the limit values will be achieved by June 2011 and put forward appropriate measures so that the "exceedences period" can be kept as short as possible. The Commission will take, specifically, into account the efforts undertaken by Member States to comply by the 2005, initial deadline.
If there are no objections, within nine months of receipt of an official and complete notification, the Commission will issue a decision confirming the details where extra time to meet the limit value has been agreed. If the Commission raises any objections a Member State may be required to adjust or provide new air quality plan but a shorter extension period could be granted.
Nevertheless, during the extension period Member States must ensure that the limit value is not exceeded by more than the maximum margin of tolerance specified in the Directive. Moreover, Member States must fully comply with the limit values outside the zones or agglomerations covered by the exemption decision.
Last July, the European Commission has written to 23 Member States which reported exceedances of the limit value for PM10 in 2006, requesting information, by September 2008, on what action they have been taking to achieve compliance. The Commission has stressed that Member States were expected to notify requests for time extensions by October 2008.
On 29 January, the Commission has started infringement proceedings, sending first warning letters to 10 Member States, including the UK, that have not yet achieved compliance with the PM10 limit values and have failed to submit notifications requesting extra time to meet the standards in all air quality zones where the PM10 limit values are being exceeded.
Defra has recently launched a consultation on the UK application to the European Commission for an extension to meet air quality targets for PM10 which will close on 10 March. Then, the UK will submit to the Commission the application for an extension. The UK notification will cover 8 zones: Greater London Urban Area, West Midlands Urban Area, West Yorkshire Urban Area, Glasgow Urban Area, Brighton/Worthing/Littlehampton, Swansea Urban Area, Eastern England zone and Yorkshire and Humberside zone. The Government is convinced that the limit values in those zones will be met by 2011.
The UK has to submit its notification otherwise the Commission will continue with the infringement proceedings on the basis of exceedences reported in 2006. Even if the Commission grants a time extension the UK still has to fully respect the EU standards on air quality where time extensions are not applicable. The UK has two months to reply to the Commission "Letter of Formal Notice" and then the Commission may decide to address a "Reasoned Opinion." And, then if the UK fails to comply with the Reasoned Opinion, the Commission may decide to bring the case before the Court of Justice. Hence, if the UK continues to fail to comply with EU standards on air quality it will be taken to the ECJ which may impose financial penalties.
