Finance Bill Tracking Service 2007 | Budget 2007 | Budget Notes

BN69 Climate Change Levy (CCL): simplification package

Who is likely to be affected?

1   Energy suppliers and CCL relief recipients.

General description of the measure

Administration of supplier certificates and penalty provisions

2   Most mainstream reliefs from CCL are applied via certificates of entitlement (supplier certificates) given to the supplier of a taxable commodity by the customer. That certificate amalgamates on a commodity per supplier basis all of the reliefs to which the customer is entitled, to arrive at an overall composite relief percentage on the given commodity. Currently certificates must be given to suppliers before a customer can receive a relieved supply. To ensure the accuracy of the relief claimed, relief claimants are generally required to review their certificates periodically, usually annually.

3   From autumn 2007 the requirement on the customer to provide a certificate before receiving the relieved supply will be removed allowing relief to be provided where the certificate is submitted after the supply. This will ensure that customers do not lose out on relief to which they are entitled simply because the certificate was not submitted on time.

4   Where an incorrect certificate is submitted by a claimant to their energy supplier, the claimant becomes liable to a penalty for incorrect certification. However, no penalty applies if information that is correct when the certificate is submitted subsequently becomes incorrect.

5   Liability to a penalty for incorrect certification will be extended to include circumstances where a certificate becomes incorrect after its initial submission. This will take effect from Royal Assent.

Levy exemption for exported and onward supplies

6   At present a supply is exempt from the levy if, before the supply is made, the customer gives the supplier specific notification that:

•   a commodity other than electricity or gas in a gaseous state is to be permanently exported from the UK or is to be the subject of an onward supply; or,

•   electricity or gas in a gaseous state is to be permanently exported from the UK. For practical purposes these prior notifications have generally been made using supplier certificates making separate notification unnecessary.

7   The separate notification requirement will be removed, allowing these exemptions to proceed on the supplier certification route only. This will take effect from Royal Assent.

Administration of the reduced-rate of CCL

8   Energy intensive businesses can receive supplies at the reduced-rate of 20 per cent of the full rate of levy where:

(a) supplies are made to a facility that is the subject of a certificate given to the Commissioners for HM Revenue & Customs by the Secretary of State for the Department for Environment, Food and Rural Affairs stating that for a defined period the facility shall be taken as being covered by a climate change agreement (CCA); and,

(b) the Commissioners have published a notice giving details of the facility concerned, including the period of time it is taken as being covered by a CCA.

In practice, energy suppliers have been applying the reduced-rate to CCA signatories when they have also been provided with a supplier certificate given by their customer in line with the way other CCL reliefs are administered.

9   This measure will remove the requirement on the Commissioners to publish a notice. In addition, in autumn 2007 procedures for reduced-rate supplies will be fully aligned with the CCL certification regime applying to other reliefs.

Operative date

10 The changes in respect of the penalty provisions and of exports and onward supplies will take effect on and after the date Finance Bill 2007 receives Royal Assent.

11 Changes in respect of reduced-rate supplies and the giving of supplier certificates will be brought into force in autumn 2007 on a date specified by Treasury Order and H M Revenue & Customs regulations to be laid before Parliament.

Current law and proposed revisions

12 Schedule 6 to the Finance Act 2000 will be amended to:

•   remove the separate notification requirement for supplies for export and onward supply (paragraph 11 of Schedule 6);

•   remove the requirement on the Commissioners to publish a notice in respect of facilities covered by a CCA (paragraphs 44 and 45); and

•   extend the penalty provisions (paragraph 101).

A number of consequential amendments will also be required.

13 Part III of and Schedule 1 to the Climate Change Levy (General) Regulations 2001 (SI 2001/838) will be amended to:

•   allow reduced-rate supplies to be brought fully into the CCL certification regime; and

•   allow supplier certificates to be given after the supply.

Further advice

14 If you have any questions, please contact the National Advice Service on 0845 010 9000. Information about Budget measures is available on the HM Revenue & Customs website at