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STATUTORY INSTRUMENTS

2005 No. 1716
CLIMATE CHANGE LEVY
The Climate Change Levy (Miscellaneous Amendments) Regulations 2005

	Made	30th June 2005
	Laid before the House of Commons	1st July 2005
	Coming into force	22nd July 2005

The Commissioners for Her Majesty's Revenue and Customs[1], in exercise of the powers conferred by section 30 of and Schedule 6 paragraphs 20A(1)(c), 20A(4)(c), 20A(5), 20A(6), 20A(7), 22(1), 22(2), 39(1)(c), 41(1), 41(2), 41(2B), 43(4), 53(4), 59(1), 59(2), 60(1)(a), 62(1), 62(2), 62(3), 114(1), 114(2), 125(1), 125(2), 125(3), 146(2), 146(4), 146(7), 147, 149A(1), 149A(2), 149A(3) and 149A(4) to the Finance Act 2000[2], make the following Regulations:

Citation, commencement and effect
     1. —(1) These Regulations may be cited as the Climate Change Levy (Miscellaneous Amendments) Regulations 2005 and come into force on 22nd July 2005.

    (2) Regulations 2 to 5, and 7, amend the Climate Change Levy (General) Regulations 2001[3], subject to the transitional provisions in regulation 6.

    (3) Regulation 8 elucidates the Climate Change Levy (Registration and Miscellaneous Provisions) Regulations 2001[4].

Excluded, exempt and half-rate supplies
     2. In regulation 2(1) of the Climate Change Levy (General) Regulations 2001 in the meaning given for "registrable person", insert after "Act"—

" (including, but for regulations 8 and 9 only (records), a person whom the Commissioners exempt from that requirement under Schedule 1 paragraph 5(9))".

     3. In regulation 5(1)(b) of those Regulations, for "5(6)(b)(ii)" substitute "5(9G)".

     4. In regulation 34(1)(a) of those Regulations, for "or 18 (non fuel use)" substitute ", 18 (non fuel use) or 18A (recycling processes)".

     5. In Schedule 1 to those Regulations—

(a) in the index at the start—

(b) in the Notes to Schedule 1 paragraph 2—

(c) change paragraph 5's heading to "Compulsory updates, corrections and payment of CCL due, exemption from CCL registration";

(d) to paragraph 5(3), add—

" This sub-paragraph is subject to paragraph 16 (5 year renewal limit).";

(e) for paragraphs 5(6) to 5(9), substitute—

    " (6) For the purposes of sub-paragraph (5), the benefit and extent of any relevant tax credit must be allocated to supplies in reverse chronological order (see paragraphs 6 to 10, tax credits for recipients, etc).

This means that supplies treated as taking place later have priority over supplies treated as taking place earlier.

    (7) Sub-paragraphs (8) to (9F) apply if (a) the supplier certificate was incorrect because the CCL relief percentage was too high, and (b) paragraphs 24(1B) and 24(3) of the Act (Deemed supply: change of circumstances etc) apply accordingly in relation to supplies made on the basis of that certificate in that review period.

    (8) For the purposes of sub-paragraph (7), the extent to which the supplier certificate was incorrect must be allocated to supplies in reverse chronological order (about which see sub-paragraph (6)).Any supplies then deemed to be made under paragraph 24(3) of the Act are treated as taking place at the time of the review in question under sub-paragraph (1).

    (9) But the Commissioners may exempt the recipient from any consequential requirement to be registered if the following conditions and requirements are satisfied (for registration, see paragraphs 24(3), 40 and 53(1) of the Act).

    (9A) First, the recipient must not otherwise be a registrable person (for registrable, see regulation 2(1)).

    (9B) Secondly, the recipient must deliver a relevant written application to the Commissioners within 30 days starting from the day after compliance with sub-paragraph (1).

    (9C) That application must include notification of the following—

    (9D) Thirdly, the recipient must pay the CCL due on those supplies to the Commissioners no later than the 30th day after the one on which the approval decision is delivered.

    (9E) If the Commissioners do not exempt the recipient but sub-paragraphs (9A), (9B) and (9C) are satisfied, the 30 days for notifying registrability starts on the day the refusal decision is delivered (for notifying registrability, see regulations 2(5) and 20(a) of the Climate Change Levy (Registration and Miscellaneous Provisions) Regulations 2001[5]).

    (9F) Exemption from registration under sub-paragraph (9) applies only in relation to the consequential requirement mentioned there in relation to sub-paragraphs (7) and (8).Such exemption may be of limited duration and revoked by the Commissioners at any time.

    (9G) This sub-paragraph applies instead of sub-paragraphs (7) to (9F) to the extent that the supplier certificate was incorrect because the CCL relief percentage was too high in relation to half-rate supplies (see paragraph 43(1) of the Act).

The recipient must pay to the Commissioners, no later than the 30th day after the last one for that person's compliance with sub-paragraph (1), the balance of the CCL due for those supplies.

If the recipient is a registrable person, the error may be corrected by the making of an appropriate adjustment under regulation 5(1)(b) (adjustment in CCL return) in relation to an accounting period ending no later than six months after the last day for that person's compliance with sub-paragraph (1).";

Tax credit for recipient and reconciliation for input fuel to combined heat and power stations

9A.

9B.

—(1) For the purposes of the following sub-paragraphs, regard a completed calendar year as one for which 31st December is passed and an incompleted calendar year as one for which 31st December is not passed.

(2) The reconciliation day for a completed calendar year is the earlier of—

(a) the first day of the month in the subsequent calendar year in which regulation 3(2) of the Climate Change Levy (Combined Heat and Power Stations) Exemption Certificate Regulations 2001[

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The "reconciliation span" relating to this reconciliation day is the completed calendar year.

    (3) A reconciliation day for an incompleted calendar year is the 60th day after any day in that incompleted calendar year on which the station's exemption certificate is revoked pursuant to regulation 4(2) of those Regulations.

The "reconciliation span" relating to any such reconciliation day spans 1st January in that calendar year to the day before that reconciliation day, inclusive.

     9C. —(1) The recipient must review the correctness of the supplier certificate no later than a reconciliation day in paragraph 9B.

This review is only in relation to that part of the recipient's relief percentage that is determined on the basis mentioned in paragraph 9A (taxable commodities supplied to combined heat and power stations).

    (2) That correctness must be reviewed in relation to the efficiency percentage determined for the relevant reconciliation span (for determination of efficiency percentage, see regulations 3(2) and 6(2) of the Climate Change Levy (Combined Heat and Power Stations) Regulations 2005[7]).

In the case of a reconciliation span for an incompleted calendar year, treat the actual efficiency percentage as one determined for the 12 month period preceding the relevant reconciliation day and as if that period was an Annual Operation (for Annual Operation, see regulation 51B(6)), but as zero for any time the exemption certificate stands revoked.

    (3) The review must properly take into account—

    (4) Sub-paragraph (5) or (6) applies if the review demonstrates that the supplier certificate was incorrect as respects the taxable commodity referable to paragraph 15 of the Act (supplies to combined heat and power stations).

    (5) If the CCL relief percentage applied was too low, the recipient may act in accordance with paragraphs 6 to 9 (recipient's tax credit for supply incorrectly made on basis of its being a taxable supply) (but only in relation to the taxable commodity referable to paragraph 15 of the Act – supplies to combined heat and power stations).

After 21st July 2005, and irrespective of when the supplies in question were made or other relevant events occurred, paragraph 5(5) does not apply where this paragraph applies.

    (6) If the CCL relief percentage applied was too high, paragraphs 5(7) to 5(9G) apply accordingly (deemed taxable self supplies, exemption from registration, payment of CCL due, etc).

    (7) This paragraph only applies to supplies made after 31st December 2004, but not to those supplies in relation to which corresponding arrangements have been initiated or made before 22nd July 2005.

Corresponding arrangements are only—

(n) in paragraph 12(1), for everything after "anticipated" substitute "events.";

(o) omit paragraph 12(2);

(p) after paragraph 13(1), insert—

If there is no such transfer, the supplier certificate and supporting analysis document shall not have effect in relation to supplies from the later supplier.";

16.

6. Arrangements initiated or made before 22nd July 2005 on the basis of paragraph 5(5) or 5(6) of Schedule 1 to those Regulations as then in force remain subject to the provisions applicable when they were initiated or made (tax credit claims and corrections to over-estimated relief).

Electricity from combined heat and power stations
7. —(1) Renumber regulation 51A of those Regulations as regulation 51A(1), for "Schedule 2" in its introductory words substitute "Schedules 1 and 2", and insert after the meaning for "CHP declaration contract"—

" "CHPQA" refers to the Combined Heat and Power Quality Assurance Standard, Issue 1, November 2000 originally published by the Department for the Environment, Transport and the Regions (including the later of version Final 1.0 or 2.0 of CHPQA Guidance Notes[

8

(2) Insert as regulation 51A(2) of those Regulations—

(3) For regulation 51B(1) of those Regulations, substitute—

(4) In regulation 51B(5) of those Regulations, for the acronym and words after "metering requirements of" substitute "the CHPQA".

(5) For regulation 51B(6) of those Regulations, substitute—

This requirement is subject to the other provisions of this Part and Schedule 2 (non-certification, restricting validity to indirect supplies, reconciliation).

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(6) To regulation 51B(8) of those Regulations, add—

" The relevant Authority must both certify QPO electricity in accordance with paragraphs (1), (2), (3), (6) and (7) and issue the relevant CHP LEC no later than the end of the third month following the end of the month in which the electricity is produced.

Whilst the relative proportions mentioned in paragraph (6)(b) are unknown, the relevant Authority must use a reasonable estimate of what those relative proportions will be.

If the relevant Authority must investigate further whether the electricity in question is "QPO electricity", it must certify the QPO electricity and issue the relevant CHP LEC no later than the end of the month following the month in which that investigation ought reasonably to have been concluded.".

    (7) Omit regulation 51C(4)(h) of those Regulations (Authority not otherwise satisfied that electricity should be certified).

    (8) In Schedule 2 paragraph 3(4) to those Regulations, for "120th day following when the supply is treated as taking place" substitute "end of the second month following the one in which the CHP LEC is issued".

    (9) For Schedule 2 paragraph 8(1) to those Regulations, substitute—

(10) In Schedule 2 paragraphs 8(2) and 8(3) to those Regulations, for "may" substitute "must".

(11) In Schedule 2 to those Regulations, after paragraph 11(7) insert—

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Tax representatives
8. In regulation 14(4) of the Climate Change Levy (Registration and Miscellaneous Provisions) Regulations 2001—

(a) in sub-paragraph (a) after "specify", insert "(for such residence, see paragraph 156 of the Act)", and

(b) after sub-paragraph (b), insert—

" In regulations 17(4)(a), 18(1)(e) and 19(5), "eligible" only refers to a person's being so resident in the United Kingdom.".

Helen Ghosh

Paul R C Gray
Two of the Commissioners for Her Majesty's Revenue and Customs

30th June 2005

EXPLANATORY NOTE

(This note is not part of the Regulations)

Amendments
These Regulations[11] amend the existing rules about administering exemptions and other reliefs from climate change levy (CCL)[12].

Regulations 5(g) to 5(k) enable consumers who under-estimate their entitlement to exemptions and other reliefs for a given period to enjoy the benefit of their tax credit earlier. This is because the tax credit no longer has to be assimilated into the consumer's estimate for the exemptions and other reliefs in the subsequent period.

A business supplied with commodities on a non-taxable basis later determined to be taxable must register for CCL to pay the amount due[13]. Regulation 5(e) makes amendments that enable HM Revenue & Customs to exempt such a business from registration on the basis of a suitable written application and payment of the CCL due[14]. Regulation 2 provides for existing record-keeping requirements to apply to such a business.

The precise amount of exemption for the fuel burned by a combined heat and power station in producing electricity may not be known until the end of a calendar year[15] although the supplier provisionally makes the exemption available during the year[16]. Regulation 5(m) makes amendments that require the station to reconcile separately the actual exemption with the amount made available. The reconciliation is linked to significant days in the station's assessment cycle[17], but otherwise operates under rules parallel to those that apply to businesses generally for other exemptions and reliefs[18].

Certified[19] electricity produced in combined heat and power stations may be supplied exempt from CCL[20]. Regulation 7(2) removes the certification requirements for stations that only supply the electricity directly to the user[21]. The remainder of regulation 7 makes technical changes to the manner in which certification proceeds[22].

Regulations 4 and 5(b)(ii) make consequential amendments to assimilate the new CCL exemption for recycling processes[23] within existing administrative arrangements[24].

Elucidation
Regulation 8 only adds words of elucidation[25] to better sign post the basket of provisions relating to eligibility of CCL tax representatives.

Regulatory impact assessment
A full regulatory impact assessment has not been produced for this instrument as it has no impact on the costs of business, charities or voluntary bodies.

Notes:

[1] The functions of the Commissioners of Customs and Excise were transferred to the Commissioners for Her Majesty's Revenue and Customs by section 5(2) of the Commissioners for Revenue and Customs Act 2005 (c. 11). Section 50(1) of that Act provides that a reference to the Commissioners of Customs and Excise shall be taken as a reference to the Commissioners for Her Majesty's Revenue and Customs.back

[2] 2000 c. 17; relevant amendments made by the Finance Act 2002 (c. 23) section 123 (having effect as of 1st April 2003 under S.I. 2003/603 (C.31)) and section 124, and by the Finance Act 2003 (c. 14) section 190 (having effect as of 22nd July 2005 under S.I. 2005/1713 (C.72)) and section 192.back

[3] S.I. 2001/838; relevant amending instrument is S.I. 2003/604.back

[4] S.I. 2001/7.back

[5] S.I. 2001/7.back

[6] S.I. 2001/486.back

[7] S.I. 2005/1714.back

[8] CHPQA Guidance Notes are explained in Section 5.1 of the Standard.back

[9] S.I. 2005/1714.back

[10] S.I. 2001/1140, amended by S.I. 2003/861 and revoked as of 22nd July 2005 by S.I. 2005/1714.back

[11] Which include a host of consequential amendments not dealt with separately in this explanatory note.back

[12] They build on or modify arrangements put in place at the inception of CCL in April 2001 and therefore do not of themselves implement Article 6 of Council Directive 2003/96/EC (taxation of energy products and electricity) (exemptions or reductions to be given effect directly, by means of differentiated rate, or by refund) (OJ No L 283, 31.10.03, p 54).back