Supplies for use in scrap metal recycling

43A

1

For the purposes of this Schedule, a taxable supply is a supply for use in scrap metal recycling if—

a

the person to whom the taxable commodity is supplied intends to cause the commodity to be used as fuel in a process (“the recycling process”) to be carried out by that person which is the shredding (or fragmentation), pre-treatment and melting of scrap metal for recycling, and

b

the condition in sub-paragraph (2) is satisfied.

2

The condition is that there is another process (“the competing process”) that—

a

uses taxable commodities otherwise than as fuel,

b

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

c

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

d

involves a lesser charge to levy for a given quantity of that product than would, but for paragraph 42(1)(d), be the case for the recycling process.

3

For the purposes of sub-paragraph (2)(a), 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 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 are to be treated for the purposes of sub-paragraph (2)(c) and (d) 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)(c), and the amounts of the charge to levy referred to in sub-paragraph (2)(d), are to be determined on a just and reasonable apportionment, and

b

in calculating the amount payable by way of levy on the taxable supply, only 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)) is to be treated as being a supply for use in scrap metal recycling.

7

In this paragraph—

• “melting” means—

  1. a

     the pre-heating and first melting of scrap metal before casting into items (“intermediates”) for further processing or re-melting, or

  2. b

     the heating of scrap metal as part of the recycling process before any solidification and re-melting,

  but excluding the melting of any metal which is not scrap but which is added at any stage to improve the quality or adjust the composition of the recycled metal or intermediates, and

• “metal” means aluminium or steel.

8

The Commissioners may by regulations make provision for giving effect to this paragraph.

9

Regulations under this paragraph may, in particular, include provision for determining whether or not a taxable supply is a supply for use in scrap metal recycling (to any extent).

Supplies for use in scrap metal recycling and reduced-rate supplies: deemed supply

43B

1

This paragraph applies where—

a

a taxable supply (“the original supply”) has been made to any person (“the recipient”),

b

the original supply was made on the basis that it was, to any extent, a supply for use in scrap metal recycling or a reduced-rate supply,

c

it is later determined that the original supply was (or was to some extent) a different kind of supply, and

d

the amount payable on the supply on the basis mentioned in paragraph (b) is less than the amount payable on the supply on the basis of the later determination.

2

For the purposes of this Schedule—

a

the recipient is deemed to make a taxable supply to itself of the taxable commodity, and

b

the amount payable by way of levy on that deemed supply is—

i

the amount payable on the original supply on the basis of the later determination mentioned in sub-paragraph (1)(c), less

ii

the amount payable on the original supply on the basis mentioned in sub-paragraph (1)(b).

3

This paragraph does not apply where a supply is treated as not being a reduced-rate supply by virtue of paragraph 45B.