The Climate Change Levy (Miscellaneous Amendments) Regulations 2005

Explanatory Note

(This note is not part of the Regulations)

Amendments

These Regulations(1) amend the existing rules about administering exemptions and other reliefs from climate change levy (CCL)(2).

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(3). 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(4). 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(5) although the supplier provisionally makes the exemption available during the year(6). 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(7), but otherwise operates under rules parallel to those that apply to businesses generally for other exemptions and reliefs(8).

Certified(9) electricity produced in combined heat and power stations may be supplied exempt from CCL(10). Regulation 7(2) removes the certification requirements for stations that only supply the electricity directly to the user(11). The remainder of regulation 7 makes technical changes to the manner in which certification proceeds(12).

Regulations 4 and 5(b)(ii) make consequential amendments to assimilate the new CCL exemption for recycling processes(13) within existing administrative arrangements(14).

Elucidation

Regulation 8 only adds words of elucidation(15) 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.

(1)

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

(2)

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).

(3)

Finance Act 2000 (c. 17) Schedule 6 paragraphs 24(1B) (relevant amendments to paragraph 24 having effect as of 22nd July 2005 under the Finance Act 2003 (c. 14) section 190 and S.I. 2005/1713 (C.72)), 24(3), 40 and 53(1).

(4)

Provision is also made for a business not to be penalised for late registration for reason only that such an application is refused. The existing position is broadly maintained for half-rate supplies to horticultural producers.

(5)

Finance Act 2000 (c. 17) Schedule 6 paragraph 15; amendments to paragraph 15 have effect as of 22nd July 2005 under the Finance Act 2003 (c. 17) section 189(2) and S.I. 2005/1713 (C.72).

(6)

S.I. 2001/838 regulations 34 and 38 and Schedule 1.

(7)

Under the Combined Heat and Power Quality Assurance programme, see the CHPQA Standard, Issue 1 of November 2000 originally published by the Department of the Environment, Transport and the Regions and available from www.chpqa.com and see also S.I. 2005/1714.

(8)

Regulation 6 preserves the existing arrangements for all businesses on a transitional basis for steps initiated or made before 22nd July 2005 to finalise the amount of such exemptions.

(9)

Certification is by the Gas and Electricity Markets Authority or the Director General of Electricity Supply for Northern Ireland, as appropriate. See S.I. 2001/838 regulations 51A and 51B, inserted by S.I. 2003/604.

(10)

Finance Act 2000 (c. 17) Schedule 6 paragraphs 16, 17 and 20A, the latter inserted by section 123 of the Finance Act 2002 (c. 23) and having effect as of 1st April 2003 by virtue of S.I. 2003/603 (C.31). See also S.I. 2001/838 Part IV(A), inserted by S.I. 2003/604.

(11)

This includes own use, see regulation 7(2). Regulation 7(11) transitions such stations out of the certification regime up to and including 21st July 2005.

(12)

Including requiring the certifying authorities to act on the basis of objective requirements.

(13)

About which see the Finance Act 2000 (c. 17) Schedule 6 paragraph 18A, inserted by the Finance Act 2003 (c. 14) section 188, and S.I. 2005/1715.

(14)

Regulation 5(b)(i) takes the opportunity to provide a fuller description of the electricity to be excluded from the denominator of the CCL relief formula in S.I. 2002/838 Schedule 1 paragraph 2.

(15)

To regulation 14(4) of S.I. 2001/7.