Finance Bill (HC Bill 49)

(b) confer power on the Administrator to vary such
agreements to take account of any changes in the terms
specified under paragraph (a) from time to time.

(2) The terms which may be specified under sub-paragraph (1)(a)
5include (in particular) terms falling within paragraph 49(4) under
which the absence (or partial absence) of any progress towards
meeting any targets for a facility may be made up for by the
payment to the Administrator of a sum specified in, or determined
in accordance with, the regulations.

(3) 10Sums received by the Administrator must be paid to the Secretary
of State who must pay them into the Consolidated Fund.

52F (1) Regulations may confer power on the Administrator—

(a) to impose a financial penalty of a specified amount on a
person who, as a representative of a facility to which a
15climate change agreement applies, contravenes a term of
the agreement, and

(b) to terminate, with effect from a specified date, the
agreement so far as it applies to the facility if—

(i) the financial penalty is not paid to the
20Administrator within a specified period, or

(ii) the contravention is not remedied to the
Administrator’s satisfaction within a specified
period.

(2) Regulations may also confer power on the Administrator to
25terminate, with effect from a specified date and without first
imposing a financial penalty, a climate change agreement so far as
it applies to a facility if there is a contravention of the agreement
by a person who is a representative of the facility.

(3) Neither sub-paragraph (1)(a) nor sub-paragraph (2) covers a
30failure to meet, or to make progress towards meeting, any targets
set for a facility under a climate change agreement.

(4) If regulations falling within sub-paragraph (1) or (2) are made, the
regulations must also—

(a) confer rights of appeal against a decision taken by the
35Administrator to impose a financial penalty or to terminate
a climate change agreement (as the case may be), and

(b) specify the court, tribunal or person who is to hear and
determine the appeal.

(5) The Secretary of State may be specified for the purposes of sub-
40paragraph (4)(b).

(6) Penalties received by the Administrator must be paid to the
Secretary of State who must pay them into the Consolidated Fund.

(7) Regulations may confer power on the Administrator to terminate,
with effect from a specified date, a climate change agreement so
45far as it applies to a facility in specified circumstances not
involving a contravention of the agreement.

(8) In sub-paragraphs (1) to (7)—

Finance BillPage 601

• “representative” has the meaning given by paragraph 47(2),
  and

• “specified” means specified in, or determined in accordance
  with, the regulations.

(9) 5Sub-paragraph (10) or (11) (as the case may be) applies if a climate
change agreement is terminated in respect of a facility before the
start of, or during, a period specified for the facility in such a
certificate as is mentioned in paragraph 44(1).

(10) If the termination is before the start of the specified period, the
10Administrator must, in respect of the facility, give a variation
certificate within paragraph 45(1)(a) in relation to the specified
period.

(11) If the termination is during the specified period, the
Administrator must, in respect of the facility, give a variation
15certificate within paragraph 45(1)(b) in relation to the specified
period specifying the day of the termination.”

10 In paragraph 137(1) (disclosure of information) after paragraph (f) insert—

“(fa) the Administrator (within the meaning of Part 4 of this
Schedule);”.

11 20The amendments made by this Schedule have no effect in relation to climate
change agreements entered into with the Secretary of State before the day on
which this Act is passed.

Section 205

SCHEDULE 31 Climate change levy: supplies subject to the carbon price support rates and
25combined heat and power stations

Part 1 Main provision

Amendments to Schedule 6 to FA 2000

1 Schedule 6 to FA 2000 (climate change levy) is amended as follows.

2 30In paragraph 4(2)(b) (definition of “taxable supply”) after “24” insert “, 42C,
42D”.

3 (1) Paragraph 6 (supplies of gas) is amended as follows.

(2) In sub-paragraph (1A) for “but not sub-paragraph” substitute “or”.

(3) In sub-paragraph (2A) after “24” insert “, 42C, 42D”.

4 35After paragraph 14(5) (exemption: supplies to electricity producers) insert—

“(6) A supply of a taxable commodity other than electricity to a person
is exempt from the levy if—

(a) the commodity is to be used by that person in producing
electricity in a generating station,

(b) the generating station is neither a fully exempt combined
heat and power station nor a partly exempt combined heat
and power station, and

(c) the capacity of the generating station for producing
5electricity is no more than 2 megawatts.

(7) If the generating station mentioned in sub-paragraph (6)(a) is one
of a number of generating stations (which may include fully or
partly exempt combined heat and power stations) which—

(a) are situated in the United Kingdom, and

(b) 10are owned by P or persons connected with P,

the reference to the capacity of the generating station in sub-
paragraph (6)(c) is to be read as a reference to the capacity of all
those generating stations taken together.

(8) For the purposes of sub-paragraph (7)(b)—

(a) 15“P” is the person who owns the generating station
mentioned in sub-paragraph (6)(a), and

(b) section 1122 of the Corporation Tax Act 2010 (“connected”
persons) applies.

(9) A supply of coal to a person is exempt from the levy if—

(a) 20the coal is to be used by that person in producing electricity
in a generating station which is neither a fully exempt
combined heat and power station nor a partly exempt
combined heat and power station, and

(b) the coal has a gross calorific value of no more than 15
25gigajoules per tonne.”

5 (1) Paragraph 15 (exemption: supplies to combined heat and power stations) is
amended as follows.

(2) In sub-paragraph (1)—

(a) for “a taxable commodity” substitute “electricity”,

(b) 30in paragraph (a), for “commodity” substitute “electricity”, and

(c) omit the final sentence.

(3) In sub-paragraph (2)—

(a) in paragraph (a), for “a taxable commodity” substitute “electricity”,
and

(b) 35in paragraph (b), for “commodity” substitute “electricity”.

(4) In sub-paragraph (3) for “a taxable commodity” substitute “electricity”.

(5) After sub-paragraph (3) insert—

“(3A) A supply of a taxable commodity other than electricity to a person
is exempt from the levy if—

(a) 40that person intends to cause the commodity to be used in—

(i) a fully exempt combined heat and power station, or

(ii) a partly exempt combined heat and power station,

in producing any outputs of the station, and

(b) the capacity of the station for producing electricity is no
45more than 2 megawatts.

(3B) If the station mentioned in sub-paragraph (3A)(a) is one of a
number of generating stations (which may include stations which
are neither fully exempt combined heat and power stations nor
partly exempt combined heat and power stations) which—

(a) 5are situated in the United Kingdom, and

(b) are owned by P or persons connected with P,

the reference to the capacity of the station in sub-paragraph
(3A)(b) is to be read as a reference to the capacity of all those
generating stations taken together.

(3C) 10For the purposes of sub-paragraph (3B)(b)—

(a) “P” is the person who owns the station mentioned in sub-
paragraph (3A)(a), and

(b) section 1122 of the Corporation Tax Act 2010 (“connected”
persons) applies.

(3D) 15A supply of coal to a person is exempt from the levy if—

(a) that person intends to cause the coal to be used in—

(i) a fully exempt combined heat and power station, or

(ii) a partly exempt combined heat and power station,

in producing any outputs of the station, and

(b) 20the coal has a gross calorific value of no more than 15
gigajoules per tonne.”

(6) Before sub-paragraph (4)(a) insert—

“( za) outputs” has the meaning given by
paragraph 148(9);”.

6 25After paragraph 15 insert—

“15A (1) This paragraph applies to a supply of a taxable commodity
mentioned in sub-paragraph (2) to a person if that person intends
to cause the commodity to be used in—

(a) a fully exempt combined heat and power station, or

(b) 30a partly exempt combined heat and power station,

in producing any outputs of the station.

(2) The taxable commodities referred to in sub-paragraph (1) are—

(a) gas supplied by a gas utility or any gas supplied in a
gaseous state that is of a kind supplied by a gas utility;

(b) 35any petroleum gas, or other gaseous hydrocarbon,
supplied in a liquid state;

(c) coal which has a gross calorific value of more than 15
gigajoules per tonne.

(3) The Treasury may by regulations provide that the non-electricity
40part of a supply to which this paragraph applies is exempt from
the levy to the extent determined in accordance with the
regulations.

(4) In sub-paragraph (3) the reference to “the non-electricity part” of a
supply is to the supply excluding so much of it as is referable to

the production of electricity in the station, as determined in
accordance with regulations under paragraph 42A(5B).

(5) Regulations under sub-paragraph (3) may, in particular, include—

(a) provision in respect of the calculations, measurements,
data and procedures to be made or used in determining the
5extent to which a supply is exempt;

(b) provision that, so far as framed by reference to any
document, is framed by reference to that document as from
time to time in force.

(6) The first regulations made under sub-paragraph (3) may have
10retrospective effect.

(7) If the exemption of a supply to any extent under this paragraph is
part of an aid scheme within Article 25 of Commission Regulation
(EC) No. 800/2008, paragraph 42(4) cites the title and publication
reference of that Regulation for the purpose of complying with
15Article 3(1) of that Regulation.”

7 After paragraph 24(4) (deemed supplies) insert—

“(4A) Sub-paragraph (4B) applies if the supply mentioned in sub-
paragraph (1A) or (1B) (or a part of the supply) would have been,
or is determined to have been, a taxable supply subject to the
20carbon price support rates (see paragraph 42A).

(4B) The deemed taxable supply under sub-paragraph (3) (or the
deemed taxable supply so far as it covers the part in question of
the supply mentioned in sub-paragraph (1A) or (1B)) is to be
subject to the carbon price support rates.”

8 25After paragraph 26(3) (electricity or gas: supply when climate change levy
accounting document issued) insert—

“(3A) Sub-paragraphs (2) and (3) are subject to paragraph 28A.”

9 After paragraph 28 insert—

“Gas: supply when actually supplied

28A (1) 30This paragraph applies to supplies of gas where—

(a) the gas is supplied in a gaseous state and is of a kind
supplied by a gas utility,

(b) the supply by which the gas is supplied is a taxable supply,
and

(c) 35the person liable to account for the levy on that supply is
the person to whom the supply is made.

(2) Where this paragraph applies, a supply is treated as taking place
when the gas is actually supplied to that person.”

10 After paragraph 29(7) (electricity or gas: special utility schemes) insert—

“(8) 40This paragraph does not apply in relation to supplies of gas where
paragraph 28A applies.”

11 In paragraph 34 (other commodities: deemed supplies)—

(a) in sub-paragraph (1)(b), after “24” insert “, 42C, 42D”, and

(b) in sub-paragraph (4), after “paragraph” insert “42C, 42D or”.

12 In paragraph 39(1)(c) (regulations as to time of supply), after “24” insert “,
42C, 42D”.

13 (1) 5Paragraph 40 (persons liable to account for levy) is amended as follows.

(2) In sub-paragraph (1) for “(2) or (3)” substitute “(2), (3), (4) or (5)”.

(3) After sub-paragraph (3) insert—

“(4) In the case of a taxable supply subject to the carbon price support
rates (see paragraph 42A), the person liable to account for the levy
10charged on the supply is the person to whom the supply is made.

(5) In the case of a taxable supply to a person who intends to cause the
commodity supplied to be used in—

(a) a fully exempt combined heat and power station, or

(b) a partly exempt combined heat and power station,

15in producing any outputs of the station, the person liable to
account for the levy charged on the supply is the person to whom
the supply is made.”

14 (1) Paragraph 42A (supplies subject to the carbon price support rates) is
amended as follows.

(2) 20In sub-paragraph (2)(a) for “, apart from electricity,” substitute “mentioned
in the Table in sub-paragraph (5)”.

(3) After sub-paragraph (2) insert—

“(2A) A supply within sub-paragraph (3) is subject to the carbon price
support rates so far as it is referable to the production of electricity
25in the station.”

(4) In sub-paragraph (3) after “taxable commodity” insert “mentioned in the
Table in sub-paragraph (5)”.

(5) In sub-paragraph (5), in the Table—

(a) in the first column of the final row, for “Any other taxable
30commodity (apart from electricity)” substitute “Coal”, and

(b) in the second column of that row, for “£0.01188 per kilogram”
substitute “£0.44264 per gigajoule”.

(6) After sub-paragraph (5) insert—

“(5A) Sub-paragraph (4) needs to be read with paragraph 42B.

(5B) 35For the purposes of sub-paragraph (2A) the extent to which a
supply is referable to the production of electricity in a station is to
be determined in accordance with regulations made by the
Treasury.

(5C) Regulations under sub-paragraph (5B) may, in particular,
40include—

(a) provision in respect of the calculations, measurements,
data and procedures to be made or used;

(b) provision that, so far as framed by reference to any
document, is framed by reference to that document as from
5time to time in force.”

(7) In sub-paragraph (6) after “paragraph” insert “and paragraph 42B”.

(8) For sub-paragraph (7) substitute—

“(7) Regulations under sub-paragraph (6) may, in particular, include
provision—

(a) 10for determining whether or not a taxable supply is subject
to the carbon price support rates,

(b) if the supply is subject to those rates, for determining
whether or not paragraph 42B(2) applies in relation to the
supply, and

(c) 15if paragraph 42B(2) applies in relation to the supply, for
determining the reduction in the relevant carbon price
support rate.”

15 After paragraph 42A insert—

“42B (1) Sub-paragraph (2) applies for the purposes of paragraph 42A(4)
20if—

(a) the taxable supply is a supply of a taxable commodity to be
used for producing electricity in a generating station, and

(b) in the calendar year in which the supply is made, carbon
capture and storage technology is operated in relation to
25carbon dioxide generated by the generating station in
producing electricity.

(2) In relation to the supply, only C% of the relevant carbon price
support rate is to be applied (instead of the full rate).

(3) “C%” is 100% minus the generating station’s carbon capture
30percentage for the calendar year.

(4) The generating station’s “carbon capture percentage” for the
calendar year is the percentage of the station’s generated carbon
dioxide for that year which, through the operation of the carbon
capture and storage technology, is—

(a) 35captured, and

(b) then disposed of by way of permanent storage.

(5) The generating station’s “generated carbon dioxide” for the
calendar year is the amount of carbon dioxide generated in the
year by the station in producing electricity through the burning of
40taxable commodities mentioned in the Table in paragraph 42A(5).

(6) In this paragraph “carbon capture and storage technology” and
“carbon dioxide” have the meaning given by section 7(3) and (4) of
the Energy Act 2010.

(7) Sub-paragraph (8) applies for the purposes of sub-paragraph (4) in
45relation to any carbon dioxide if—

(a) the carbon dioxide is captured but then leaks out and
therefore is not disposed of by way of permanent storage,
but

(b) the leak does not occur—

(i) 5on the land on which the generating station is
situated,

(ii) on any other land under the control of the station’s
operator or a person connected with the station’s
operator, or

(iii) 10from any pipeline or other facility or installation
which is operated by the station’s operator or a
person connected with the station’s operator.

Section 1122 of the Corporation Tax Act 2010 (“connected”
persons) applies for the purposes of paragraph (b).

(8) 15The carbon dioxide is to be treated as if it had been disposed of by
way of permanent storage.

(9) If the percentage mentioned in sub-paragraph (4) is not a whole
number, it is to be rounded to the nearest whole number (taking
0.5% as nearest to the next whole number).

42C (1) 20This paragraph applies if—

(a) a taxable supply (“the original supply”) subject to the
carbon price support rates has been made to any person
(“the recipient”),

(b) the original supply was made on the basis that paragraph
2542B(2) applied in relation to the original supply, and

(c) it is later determined—

(i) that paragraph 42B(2) did not apply in relation to
the original supply, or

(ii) that the reduction given, by virtue of paragraph
3042B(2), in the amount payable by way of levy on the
original supply was too much.

(2) For the purposes of this Schedule—

(a) the recipient is deemed to make a taxable supply to itself of
the taxable commodity in question, and

(b) 35the amount payable by way of levy on that deemed supply
is—

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

(ii) 40the amount previously determined to be payable
on the original supply.

42D (1) This paragraph applies if—

(a) a taxable supply (“the original supply”) is made to a
person (“the recipient”) on the basis that it is, or is to some
45extent, a taxable supply subject to the carbon price support
rates, and

(b) it is later determined that that basis was incorrect and, in
consequence, the amount previously determined to be
payable by way of levy on the original supply was too low.

(2) For the purposes of this Schedule—

(a) the recipient is deemed to make a taxable supply to itself of
the taxable commodity in question, and

(b) the amount payable by way of levy on that deemed supply
5is—

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

(ii) the amount previously determined to be payable
10on the original supply.”

16 After paragraph 62(1)(b) (tax credits) insert—

“(ba) after a taxable supply subject to the carbon price support
rates (see paragraph 42A) is made on the basis that paragraph
42B(2) does not apply in relation to the supply, it is
15determined that paragraph 42B(2) does apply;

(bb) after a taxable supply subject to the carbon price support
rates is made on the basis that paragraph 42B(2) applies in
relation to the supply, it is determined that the reduction
given, by virtue of paragraph 42B(2), in the amount payable
20by way of levy on the supply was too little;

(bc) after a taxable supply is made on the basis that it is, or is to
some extent, subject to the carbon price support rates, it is
determined that that basis was incorrect and, in consequence,
the amount previously determined to be payable by way of
25levy on the supply was too much;”.

Provision relating to Schedule 20 to FA 2011

17 The amendment of paragraph 101(2) of Schedule 6 to FA 2000 (civil
penalties: incorrect certificates) made by paragraph 7 of Schedule 20 to FA
2011 is not to have effect; and paragraph 7 of Schedule 20 to FA 2011 is
30omitted.

18 (1) Paragraph 8 of Schedule 20 to FA 2011 (commencement) is amended as
follows.

(2) In sub-paragraphs (1) and (3), for “7” substitute “6”.

(3) In sub-paragraph (2), omit paragraph (b) and the “and” before it.

35Commencement

19 (1) Paragraph 8 of Schedule 20 to FA 2011 (as amended by paragraph 18 above)
applies in relation to the amendments made by paragraphs 1 to 16 above as
it applies in relation to the amendments made by paragraphs 1 to 6 of that
Schedule.

(2) 40In paragraph 9(1)(c) of Schedule 20 to FA 2011 the reference to paragraph
42A of Schedule 6 to FA 2000 is to be read as a reference to paragraph 42A
as amended by paragraph 14 above.

(3) In relation to a supply within paragraph 42A(3) of Schedule 6 of FA 2000 (as
amended by paragraph 14 above), paragraph 9(5) of Schedule 20 to FA 2011
45applies as if for “23 March 2011” there were substituted “21 March 2012”.

Part 2 Carbon price support rates from 1 April 2014

20 (1) In paragraph 42A(5) of Schedule 6 to FA 2000 (supplies subject to the carbon
price support rates) (as amended by paragraph 14 above)—

(a) 5for “£0.00091 per kilowatt hour” substitute “£0.00175 per kilowatt
hour”,

(b) for “£0.01460 per kilogram” substitute “£0.02822 per kilogram”, and

(c) for “£0.44264 per gigajoule” substitute “£0.85489 per gigajoule”.

(2) The amendments made by this paragraph have effect in relation to supplies
10treated as taking place on or after 1 April 2014.

Part 3 Electricity produced in combined heat and power stations

21 (1) Paragraph 20A of Schedule 6 to FA 2000 (climate change levy: exemption in
relation to electricity produced in combined heat and power stations) is
15amended as follows.

(2) In sub-paragraph (1)—

(a) omit the “and” after paragraph (c), and

(b) after paragraph (d) insert “; and

“(e) the electricity is actually supplied before 1 April
202018.”

(3) In sub-paragraph (4)(a)—

(a) in sub-paragraph (i), after “station” insert “before 1 April 2013”, and

(b) in sub-paragraph (ii), after “station”, in the first place it occurs, insert
“before 1 April 2013”.

22 (1) 25The following repeals are made in consequence of paragraph 21.

(2) In Schedule 6 to FA 2000—

(a) in paragraph 5(3), omit “20B(6)(a),”,

(b) omit paragraphs 20A and 20B,

(c) in paragraph 24(2)—

(i) 30omit “or 20A,”

(ii) omit “or in combined heat and power stations”, and

(iii) omit “or 20B”, and

(d) omit paragraph 149A.

(3) Omit sections 123 and 124 of FA 2002.

(4) 35Omit section 193(3) and (5) of FA 2003.

(5) The repeals made by this paragraph come into force on the day appointed
by the Treasury by order made by statutory instrument.