Finance Act 2003

188 Exemption for fuel used in recycling processes U.K.

(1) In Schedule 6 to the Finance Act 2000 (c. 17) (climate change levy), after paragraph 18 insert—

“Exemption: supply for use in recycling processes

18A (1) A supply of a taxable commodity is exempt from the levy if the person to whom the supply is made intends to cause the commodity to be used as fuel in a prescribed recycling process falling within sub-paragraph (2).

(2) A recycling process falls within this sub-paragraph if there is another process (“the competing process”) that—

(a) is not a recycling process,

(b) uses taxable commodities otherwise than as fuel,

(c) produces a product of the same kind as one produced by the recycling process,

(d) uses a greater amount of energy than the recycling process to produce a given quantity of that product, and

(e) involves a lesser charge to levy for a given quantity of that product than would, but for this paragraph, be the case for the recycling process.

(3) For the purposes of sub-paragraph (2)(b) taxable commodities are used “otherwise than as fuel” only if the supplies of those commodities to the person using them are exempted from the levy by virtue of paragraph 18.

(4) Sub-paragraphs (5) and (6) apply where the recycling process or the competing process, as well as producing a product that is of the same kind as one produced by the other process (“the corresponding product”), also produces one or more products that are not (“different products”).

(5) If the production of the different products is merely incidental to the production of the corresponding product, the different products shall be treated for the purposes of sub-paragraph (2)(d) and (e) as being of the same kind as the corresponding product.

(6) If the production of the different products is not merely incidental to the production of the corresponding product—

(a) the amounts of energy referred to in sub-paragraph (2)(d), and the amounts of the charge to levy referred to in sub-paragraph (2)(e), shall be determined on a just and reasonable apportionment;

(b) the exemption conferred by sub-paragraph (1) shall be restricted to the proportion of the supply that is the same as the proportion of the energy used by the recycling process to produce the corresponding product (as determined for the purposes of paragraph (a)).

(7) In this paragraph “prescribed” means prescribed by regulations made by the Treasury.”.

(2) The following amendments to that Schedule are consequential on that made by subsection (1)—

(a) in paragraph 14(3A)(a) (use of electricity in an “exemption-retaining” way) for “and 18” substitute “ , 18 and 18A ”;

(b) in paragraph 101(2)(a)(ii) (penalty for incorrect exemption notification) after “18” insert “ , 18A ”;

(c) in paragraph 146(3) (regulations subject to affirmative resolution procedure) after “18(2),” insert “ 18A, ”;

(d) in paragraph 147 (interpretation), in the definition of “prescribed”, after “16(3)” insert “ , 18A ”.