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Finance Act 2012

Schedule 32 – Climate change levy: supplies subject to the carbon price support rates and combined heat and power stations

39.Paragraph 1 provides for the amendment of Schedule 6.

40.Paragraph 2 amends paragraph 4(2)(b) of Schedule 6 so that deemed supplies under paragraphs 42C and 42D are included in the definition of “taxable supply”.

41.Paragraph 3 amends paragraphs 6(1A) and (2A) of Schedule 6 to make the supply of gas to CHP stations (including deemed supplies under paragraphs 42C and 42D) liable to the CPS rates of CCL.

42.Paragraph 4 inserts four new sub-paragraphs into paragraph 14 of Schedule 6.  New sub-paragraph (6) introduces a non-CHP station generating capacity threshold of 2 megawatts below which generators will be exempt from paying CCL. New sub-paragraphs (7) and (8) provide that it is the combined capacity of all generating stations (including CHP stations) owned by connected persons that should be taken into account in determining whether the threshold has been reached. New sub-paragraph (9) introduces an exemption from CCL for all coal used at non-CHP generating stations with a gross calorific value of 15 gigajoules per tonne or less.

43.Paragraph 5 amends paragraph 15 of Schedule 6 so that the exemption in that paragraph applies only to the supply of electricity. It also introduces the same provisions for a CHP station that are introduced by paragraph 4 for non-CHP generating stations.

44.Paragraph 6 inserts a new paragraph 15A into Schedule 6.  It provides that, in relation to a supply of a taxable commodity in sub-paragraph (2) to a person who intends to cause the commodity to be used in producing any outputs of a CHP station, the Treasury may by regulations determine the extent to which the part of the supply that is not attributable to the production of electricity (as determined in accordance with regulations made under new paragraph 42A(5B)) is exempt from CCL. It also provides that the first regulations made under this power may have retrospective effect.  Sub-paragraph (7) fulfils the requirement of the European Union State aid General Block Exemption Regulation (Commission Regulation (EC) No 800/2008) (which permits the granting of an exemption) that the legislation providing for the aid must contain an express reference to that regulation.

45.Paragraph 7 inserts two new sub-paragraphs into paragraph 24(4) of Schedule 6 to provide that where a supply was not treated as taxable when it should have been, or the recipient’s intentions change, the recipient is deemed to have made a supply to itself that is subject to the CPS rates.

46.Paragraph 8 amends paragraph 26 of Schedule 6 and paragraph 9 inserts a new paragraph 28A into Schedule 6 to provide for the time of supply in respect of gas in cases where the person liable to account for the levy on the supply is the person to whom the supply is made.

47.Paragraph 10 disapplies paragraph 29 of Schedule 6 (which deals with special utility schemes) in cases where new paragraph 28A applies.

48.Paragraphs 11 and 12 make consequential amendments to paragraphs 34 and 39 of Schedule 6 respectively.

49.Paragraph 13 amends paragraph 40 of Schedule 6 to require those making supplies that are liable to the CPS rates of CCL or who cause the taxable commodity to be used in a CHP station to self-account for the tax.

50.Paragraph 14 amends paragraph 42A of Schedule 6 to make supplies of fossil fuels mentioned in the Table in sub-paragraph (5) to CHP stations that are attributable to the production of electricity liable to the CPS rates of CCL. It provides that the Treasury may make Regulations to determine the extent to which a supply of fossils fuels is attributable to the production of electricity in a CHP station. It also amends the taxable commodity “any other taxable commodity (apart from electricity)” to “coal” and amends the basis of taxation for this commodity from “per kilogram” to “per gigajoule”. It also amends sub-paragraph (7) to provide that, under regulations made under sub-paragraph (6), the Commissioners may include provision to determine whether or not paragraph 42B(2) applies (reduction in CPS rates on supplies to generating stations with CCS technology) and, if it does, to determine the reduction in the relevant carbon price support rate.

51.Paragraph 15 inserts three new paragraphs 42B, 42C and 42D into Schedule 6.

  • New paragraph 42B(1) provides for the new paragraph 42B(2) to apply for the purposes of determining the amount of CCL payable at the CPS rates where there is a supply of fossil fuels to an electricity generator who uses CCS technology in any calendar year.

  • New paragraphs 42B(2) and (3) reduce the CPS rates of CCL by the carbon capture percentage.

  • New paragraph 42B(4) specifies how a generating station’s “carbon capture percentage” is to be calculated.

  • New paragraph 42B(5) defines “generated carbon dioxide” for the purposes of new paragraph 42B(4).

  • New paragraph 42B(6) defines “carbon capture and storage technology” and “carbon dioxide”.

  • New paragraph 42B(7) provides for carbon dioxide captured by a generating station using CCS technology that leaks before it is permanently stored not to affect the station’s “carbon capture percentage” where the leak did not occur within the grounds of the station nor in any pipeline, facility or installation maintained by the operator of the station or a person connected to the operator.

  • New paragraph 42B(8) provides for carbon dioxide captured that has not leaked in any of the situations set out in new paragraph 42B(7) to be treated as permanently stored.

  • New paragraph 42B(9) provides for the “carbon capture percentage” where it is not a whole number to be rounded to the nearest whole number.

  • New paragraph 42C(1) provides for new paragraph 42C(2) to apply where a taxable supply of fossil fuels to a generating station has been made on the basis that the lower CPS rates of CCL provided for in new paragraph 42B(2) applied  but it is later  determined that either a) it should have been subject to the full CPS rate; or b) the level of reduction applied was too much.

  • New paragraph 42C(2) deems that where new paragraph 42C(1) applies, the recipient of the taxable supply makes a taxable supply to itself. The value of this self-supply is the difference between the amount calculated as now due and the amount originally paid.

  • New paragraphs 42D(1) and 42D(2) provide that where a supply is made on the basis that it is, or is to some extent, subject to the CPS rates and it is later determined that this basis was incorrect so that  the amount paid on the supply was too low, the recipient is deemed to have made a supply to itself. The value of this self-supply is the difference between the amount calculated as now due and the amount originally paid.

  • Paragraph 16 amends paragraph 62(1) of Schedule 6 to provide for a recipient to reclaim the appropriate amount of CPS rate overpaid where: a) a taxable supply was made on the basis that it was not subject to a lower CPS rate and it is later determined that it should have been; b) the amount of reduction originally given under new paragraph 42B(2) was too small; or c) a taxable supply was made on the basis that it was, or was to some extent, subject to the CPS rates and it is later determined that this basis was incorrect.

52.Paragraphs 17 and 18 amend Schedule 20 to FA 2011 to provide that provisions relating to civil penalties where incorrect supplier certificates are issued in relation to the supplies of fossil fuels to either a CHP station or a power station fitted with CCS technology do not have effect, and make some consequential amendments.

53.Paragraph 19 provides for paragraph 8 of Schedule 20 to FA 2011 (as amended by this Schedule) to apply in relation to amendments made by paragraphs 1 to 16 of this Schedule in the same way they applied to paragraphs 1 to 6 of Schedule 20. It also provides for special time of supply rules for supplies taking place between 21 March (Budget day) 2012 and 1 April 2013 of taxable commodities (other than of gas in a gaseous state) that will become liable to the CPS rates of CCL on and after 1 April 2013.  These are designed to prevent avoidance of tax.

54.Paragraph 20 amends paragraph 42A(5) of Schedule 6 (as amended by this Schedule) to introduce revised carbon price support rates for gas, LPG and coal; and provides for the revised rates to come into force on 1 April 2014.

55.Paragraph 21 amends paragraph 20A(1) of Schedule 6 to insert new sub-paragraph (e) to provide that the exemption relates only to electricity actually supplied before 1 April 2018. It also amends paragraph 20A(4)(a) of Schedule 6 to provide that, for the purposes of paragraphs 20A and 20B of Schedule 6, only electricity produced in either a fully exempt or a partly exempt CHP station before 1 April 2013 is considered CHP electricity for the purposes of this exemption.

56.Paragraph 22 provides for consequential repeals needed as a result of the amendments made by paragraph 21 and makes provision for the repeals made by paragraph 22 to come into force on the day appointed by HM Treasury in a statutory instrument.

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