Finance Bill

Finance Bill - continued	House of Commons
SCHEDULE 6, CLIMATE CHANGE LEVY - continued

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PART IV

PAYMENT AND RATE OF LEVY

Persons liable to account for levy

38. - (1) The person liable to account for the levy charged on a taxable supply is, except in a case where sub-paragraph (2) applies, the person making the supply.

(2) In the case of a taxable supply made by a person who-

(a) is not resident in the United Kingdom, and

(b) is not a utility,

the person liable to account for the levy charged on the supply is the person to whom the supply is made.

Returns and payment of levy

39. - (1) The Commissioners may by regulations make provision-

(a) for persons liable to account for levy to do so by reference to such periods ("accounting periods") as may be determined by or under the regulations;

(b) for persons who are or are required to be registered for the purposes of the levy to be subject to such obligations to make returns for those purposes for such periods, at such times and in such form as may be so determined; and

(c) for persons who are required to account for levy for any period to become liable to pay the amounts due from them at such times and in such manner as may be so determined.

(2) Without prejudice to the generality of the powers conferred by sub-paragraph (1), regulations under this paragraph may contain provision-

(a) for levy falling in accordance with the regulations to be accounted for by reference to one accounting period to be treated in prescribed circumstances, and for prescribed purposes, as levy due for a different period;

(b) for the correction of errors made when accounting for levy by reference to any period;

(c) for the entries to be made in any accounts in connection with the correction of any such errors and for the financial adjustments to be made in that connection;

(d) for a person, for purposes connected with the making of any such entry or financial adjustment, to be required to provide to any prescribed person, or to retain, a document in the prescribed form containing prescribed particulars of the matters to which the entry or adjustment relates;

(e) for enabling the Commissioners, in such cases as they may think fit, to dispense with or relax a requirement imposed by regulations made by virtue of paragraph (d);

(f) for the amount of levy which, in accordance with the regulations, is treated as due for a later period than that by reference to which it should have been accounted for to be treated as increased by an amount representing interest at the rate applicable under section 197 of the Finance Act 1996 for such period as may be determined in accordance with the regulations.

(3) Subject to the following provisions of this paragraph, if any person ("the taxpayer") fails-

(a) to comply with so much of any regulations under this paragraph as requires him, at or before a particular time, to make a return for any accounting period, or

(b) to comply with so much of any regulations under this paragraph as requires him, at or before a particular time, to pay an amount of levy due from him,

he shall be liable to a penalty of £250.

(4) Liability to a penalty under sub-paragraph (3) shall not arise if the taxpayer satisfies the Commissioners or, on appeal, an appeal tribunal-

(a) that there is a reasonable excuse for the failure to make the return or to pay the levy in accordance with the regulations; and

(b) that there is not an occasion after the last day on which the return or payment was required by the regulations to be made when there was a failure without a reasonable excuse to make it.

(5) Where, by reason of any failure falling within paragraph (a) or (b) of sub-paragraph (3)-

(a) a person is convicted of an offence (whether under this Schedule or otherwise), or

(b) a person is assessed to a penalty under paragraph 96 (penalty for evasion),

that person shall not, by reason of that failure, be liable also to a penalty under that sub-paragraph (3).

Amount payable by way of levy

40. - (1) The amount payable by way of levy on a taxable supply is-

(a) if the supply is neither a half-rate supply nor a reduced-rate supply, the amount ascertained from the Table in accordance with sub-paragraph (2);

(b) if the supply is a half-rate supply, 50 per cent. of the amount that would be payable if the supply were neither a half-rate supply nor a reduced-rate supply;

(c) if the supply is a reduced-rate supply, 20 per cent. of the amount that would be payable if the supply were neither a half-rate supply nor a reduced-rate supply.

TABLE

Taxable commodity supplied	Rate at which levy payable if supply is neither a half-rate supply nor a reduced-rate supply
Electricity....................................................................	£0.0043 per kilowatt hour
Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility................................................................	£0.0015 per kilowatt hour
Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state...........	£0.0096 per kilogram
Any other taxable commodity........................................	£0.0117 per kilogram

(2) The levy payable on a fraction of a quantity of a commodity is that fraction of the levy payable on that quantity of the commodity.

Half-rate for supplies to horticultural producers

41. - (1) For the purposes of this Schedule a half-rate supply is a taxable supply in respect of which the following conditions are satisfied-

(a) the first condition is that the person to whom the supply is made is a horticultural producer;

(b) the second condition is that the horticultural producer intends to use the taxable commodity supplied-

(i) in the heating, for the growth of horticultural produce primarily with a view to the production of horticultural produce for sale, of any building or structure, or of the earth or other growing medium in it, or

(ii) in the sterilisation of the earth or other growing medium to be used for the growth of horticultural produce as mentioned in sub-paragraph (i) in any building or structure.

(2) In this paragraph "horticultural producer" means a person growing horticultural produce primarily for sale.

(3) In this paragraph "horticultural produce" means-

(a) fruit;

(b) vegetables of a kind grown for human consumption, including fungi, but not including maincrop potatoes or peas grown for seed, for harvesting dry or for vining;

(d) herbs;

(e) seeds other than pea seeds, and bulbs and other material, being seeds, bulbs or material for sowing or planting for the production of-

(i) fruit,

(ii) vegetables falling within paragraph (b),

(iii) flowers, plants or foliage falling within paragraph (c), or

(iv) herbs,

or for reproduction of the seeds, bulbs or other material planted; or

(f) trees and shrubs, other than trees grown for the purpose of afforestation;

but does not include hops.

(4) The Commissioners may by regulations make provision for facilitating the enjoyment of the reduced rate of levy payable on half-rate supplies.

(5) Regulations under sub-paragraph (4) may, in particular, include provision-

(a) for determining the extent to which a taxable supply is, or is to be treated as being, a half-rate supply;

(b) for authorising a person making taxable supplies to another person to treat the supplies to that other person as being half-rate supplies only to an extent certified by the Commissioners;

(c) for a person making half-rate supplies ("the supplier") to account for levy on those supplies as if the supplies were neither half-rate supplies nor reduced-rate supplies.

(6) Provision such as is mentioned in sub-paragraph (5)(c) may be made only where tax credit regulations provide for a horticultural producer to be entitled to a tax credit in respect of 50 per cent. of the levy accounted for by the supplier on any half-rate supplies-

(a) that are made by the supplier to the horticultural producer, and

(b) on which the supplier has accounted for levy on the basis mentioned in sub-paragraph (5)(c).

Reduced-rate for supplies covered by climate change agreement

42. - (1) Where the Secretary of State gives a certificate to the Commissioners stating that, for a period specified in the certificate, a facility is to be taken as being covered by a climate change agreement, the Commissioners shall publish a notice in respect of the facility.

(2) Such a notice shall-

(a) state the day on which it is published,

(b) identify the facility or facilities in respect of which it is published,

(i) set out the first and last days of the period specified for the facility in the Secretary of State's certificate, and

(ii) indicate the effect of sub-paragraph (3),

and

(d) indicate that the notice may be varied by later notices.

(3) For the purposes of this Schedule, a reduced-rate supply is a taxable supply in respect of which the following conditions are satisfied-

(a) the first condition is that the taxable commodity supplied by the supply is supplied to a facility identified in a notice published under sub-paragraph (1);

(b) the second condition is that the supply is made at a time falling in the period that begins with the later of-

(i) the first day set out for the facility under sub-paragraph (2)(c), and

(ii) the day on which the notice is published,

and ends with the last day set out for the facility under sub-paragraph (2)(c).

(4) Sub-paragraph (3) has effect subject to paragraph 43.

(5) The Commissioners may, for the purposes of sub-paragraph (3), by regulations make provision for determining whether any taxable commodity is supplied to a facility.

(6) The provision that may be made by regulations under sub-paragraph (5) includes, in particular, provision for a taxable commodity of any description specified in the regulations to be taken as supplied to a facility only if the commodity is delivered to the facility.

Reduced-rate supplies: variation of notices under paragraph 42

43. - (1) This paragraph applies where the Secretary of State, after having given in respect of a facility such a certificate as is mentioned in paragraph 42(1) ("the original certificate"), gives a certificate (a "variation certificate") to the Commissioners stating-

(a) that, throughout the period ("the original period") specified for the facility in the original certificate, the facility is to be taken as not being covered by a climate change agreement; or

(b) that, for so much of the original period as falls on or after a day specified in the variation certificate (being a day falling within the original period), the facility is to be taken as no longer being covered by a climate change agreement.

(2) Where the Commissioners receive a variation certificate in respect of a facility before they have published a notice under paragraph 42(1) in response to the original certificate so far as relating to the facility, their obligation to publish a notice under paragraph 42(1) in respect of the facility shall have effect as an obligation to publish such a notice in response to the original certificate as varied by the variation certificate.

(3) Where the Commissioners receive a variation certificate but sub-paragraph (2) does not apply, they shall publish a notice (a "variation notice") that-

(a) states the day on which it is published,

(b) identifies the facility or facilities in respect of which it is published,

(c) sets out, for each facility in respect of which the statement in the variation certificate is of the type described in sub-paragraph (1)(b), the date specified for the facility in the variation certificate, and

(d) for each facility, indicates the effect of sub-paragraphs (4) to (7) as they apply in the case of the facility.

(4) Sub-paragraphs (5) to (7) set out the effect of a variation notice being published in respect of a facility.

(5) If-

(a) the statement in the variation certificate in respect of the facility is of the type described in sub-paragraph (1)(a), and

(b) the day on which the variation notice is published falls before the beginning of the original period,

the notice ("the original notice") published under paragraph 42(1) in response to the original certificate has effect as if the facility had never been identified in it.

(6) If-

(a) the statement in the variation certificate in respect of the facility is of the type described in sub-paragraph (1)(a), and

(b) the day on which the variation notice is published falls during the original period,

the original notice has effect as if the last day set out for the facility under paragraph 42(2)(c) were the day on which the variation notice is published.

(7) If the statement in the variation certificate in respect of the facility is of the type described in sub-paragraph (1)(b), the original notice has effect as if the last day set out for the facility under paragraph 42(2)(c) were the later of-

(a) the day on which the variation notice is published, and

(b) the day set out in the variation notice for the facility under sub-paragraph (3)(c).

Climate change agreements

44. In this Schedule "climate change agreement" means-

(a) an agreement that falls within paragraph 45, or

(b) a combination of agreements that falls within paragraph 46.

Climate change agreements: direct agreement with Secretary of State

45. An agreement (including one entered into before the passing of this Act) falls within this paragraph if it is an agreement-

(a) entered into with the Secretary of State,

(b) expressed to be entered into for the purposes of the reduced rate of climate change levy,

(d) entered into by the operator of each facility to which it applies or by a person authorised by the operator to enter into the agreement on the operator's behalf,

(e) setting, or providing for the setting of, targets for the facilities to which it applies,

(f) specifying certification periods (as to which see paragraph 47(1)) for the facilities to which it applies, and

(g) providing for five-yearly (or more frequent) reviews by the Secretary of State of targets set by or under the agreement for those facilities and for giving effect to outcomes of such reviews.

Climate change agreement: combination of umbrella and underlying agreements

46. - (1) A combination of agreements falls within this paragraph if the following conditions are satisfied.

(2) The first condition is that the combination is a combination of-

(a) an umbrella agreement (including one entered into before the passing of this Act), and

(b) an agreement (including one entered into before the passing of this Act) that, in relation to the umbrella agreement, is an underlying agreement.

(3) The second condition is that between them the two agreements-

(a) set, or provide for the setting of, targets for the facilities to which the underlying agreement applies,

(b) specify certification periods (as to which see paragraph 47(1)) for the facilities to which the underlying agreement applies, and

(c) provide for five-yearly (or more frequent) reviews by the Secretary of State of targets set by or under the agreements for those facilities and for giving effect to outcomes of such reviews.

(4) For the purposes of this paragraph an "umbrella agreement" is an agreement-

(a) entered into with the Secretary of State,

(b) expressed to be entered into for the purposes of the reduced rate of climate change levy,

(d) entered into by the operator of each facility to which it applies or by a person authorised by the operator to enter into the agreement on the operator's behalf.

(5) For the purposes of this paragraph an agreement is an "underlying agreement" agreement in relation to an umbrella agreement if it is an agreement-

(a) expressed to be entered into for the purposes of the umbrella agreement,

(b) entered into-

(i) with the Secretary of State, or

(ii) with a party to the umbrella agreement other than the Secretary of State,

(d) identifying which of the facilities to which the umbrella agreement applies are the facilities to which it applies, and

(e) entered into by the operator of each facility to which it applies or by a person authorised by the operator to enter into the agreement on the operator's behalf.

(6) In the case of a climate change agreement that is a combination of agreements that falls within this paragraph, references to the facilities to which the climate change agreement applies are references to the facilities to which the underlying agreement applies.

Climate change agreement: supplemental provisions

47. - (1) The first certification period specified by a climate change agreement for a facility to which it applies shall begin with the later of-

(a) the date on which the agreement, so far as relating to the facility, is expressed to take effect, and

(b) 1st April 2001;

and each subsequent certification period so specified shall begin immediately after the end of a previous certification period.

(2) For the purposes of giving certificates such as are mentioned in paragraphs 42(1) and 43(1), the Secretary of State may take a facility as being covered by a climate change agreement for a period if the facility is one to which the agreement applies and either-

(a) that period is the first certification period specified by the agreement for the facility, or

(b) that period is a subsequent certification period for the facility and it appears to the Secretary of State that progress made in the immediately preceding certification period towards meeting targets set by the agreement for the facility is, or is likely to be, such as under the provisions of the agreement is to be taken as being satisfactory.

(3) For the purposes of sub-paragraph (2)(b) a climate change agreement may (in particular) provide that progress towards meeting any targets for a facility is to be taken as being satisfactory if, in the absence (or partial absence) of any such progress required under the agreement, alternative requirements provided for by the agreement are satisfied.

(4) Paragraphs 45 and 46 and sub-paragraph (3) above are not to be taken as meaning that an agreement, or combination of agreements, containing provision in addition to any mentioned in those paragraphs and that sub-paragraph is not a climate change agreement.

(5) For the purposes of paragraphs 45 and 46 and this paragraph "target", in relation to a facility to which a climate change agreement applies, means a target relating to-

(a) energy, or energy derived from a source of any description, used in the facility or an identifiable group of facilities within which the facility falls, or

(b) emissions, or emissions of any description, from the facility or such a group of facilities;

and for this purpose "identifiable group" means a group that is identified in the agreement or that at any relevant time can be identified under the agreement.

(6) Nothing in this Schedule is to be taken as requiring the Secretary of State to-

(a) enter into any climate change agreement,

(b) enter into a climate change agreement with any particular person or persons, in respect of any particular facility or facilities or on any particular terms, or

Facilities to which climate change agreements can apply

48. - (1) This paragraph applies where, in connection with concluding or varying a climate change agreement, it falls to be determined whether a facility is to be, or is to continue to be, identified in the agreement as a facility to which the agreement applies.

(2) For the purposes of such a determination "facility" is (subject to any regulations under sub-paragraph (3) or (4)) to be taken as meaning-

(a) an installation covered by paragraph 49; or

(b) a site on which there is or are-

(i) such an installation or two or more such installations,

(ii) a part, or parts, of such an installation,

(iii) a part, or parts, of each of two or more such installations, or

(iv) any combination of such installations and parts of such installations.

(3) The Secretary of State may by regulations make provision for an installation covered by paragraph 49 to be taken to be a facility for those purposes only if-

(a) the taxable commodities supplied to the installation by taxable supplies are intended to be burned (or, in the case of electricity, consumed)-

(i) in the installation, or

(ii) on the site where the installation is situated but not in the installation,

and

(b) the amounts of the commodities subject to each of those intentions satisfy any conditions specified in the regulations.

(4) The Secretary of State may by regulations make provision for a site to be taken to be a facility for those purposes only if-

(a) the taxable commodities supplied to the site by taxable supplies are intended to be burned (or, in the case of electricity, consumed)-

(i) in installations on the site that are covered by paragraph 49 (or in parts of such installations), or

(ii) on the site but not in any such installation (or part of such an installation),

and

(b) the amounts of the commodities subject to each of those intentions satisfy any conditions specified in the regulations.

(5) Regulations under sub-paragraph (3) or (4) may make provision for deeming, for the purposes of the regulations, taxable commodities to be intended to be burned (or, in the case of electricity, consumed) in circumstances specified in the regulations.

(6) In this paragraph and paragraph 49 "installation" means a stationary technical unit.

Energy-intensive installations

49. - (1) An installation is covered by this paragraph if it falls within any one or more of the descriptions of installation set out in the Table.

(2) An installation is also covered by this paragraph if it is on the same site as, and ancillary to, an installation falling within any one or more of those descriptions.

(3) Sub-paragraphs (1) and (2) are subject to any regulations under paragraph 50.

(4) For the purposes of sub-paragraph (2), one installation ("the ancillary installation") is ancillary to another ("the primary installation") if-

(a) the ancillary installation does not fall within any of those descriptions,

(b) activities ("the ancillary activities") are carried out at the ancillary installation that are directly associated with any of the primary activities carried out at the primary installation, and

(i) have a technical connection with those primary activities, and

(ii) could have an effect on environmental pollution or emissions capable of causing such pollution.

(5) However, an installation (or part of an installation) used for research, development and testing of new products and processes does not fall within any of those descriptions.

(6) In sub-paragraph (4)-

"environmental pollution" has the same meaning as in the Pollution Prevention and Control Act 1999;

"primary activity", in relation to an installation falling within any one or more of the descriptions of installation set out in the Table, means an activity the carrying out of which at the installation results in the installation falling within one or more of those descriptions.

TABLE

DESCRIPTIONS OF ENERGY-INTENSIVE INSTALLATIONS

Energy industries

1. - (1) Combustion installations with a rated thermal output exceeding 50 MW.

(2) Combustion installations operated by the same operator on the same site with a combined rated thermal output exceeding 50 MW.

2. Mineral oil and gas refineries.

3. Coke ovens.

4. Coal gasification and liquefaction plants.

Production and processing of metals

5. Metal ore (including sulphide ore) roasting or sintering installations.

6. Installations for the production of pig iron or steel (primary or secondary fusion) including continuous casting.

7. - (1) The following installations for the processing of ferrous metals-

(a) hot-rolling mills;

(b) smitheries with hammers.

(2) Installations for the processing of ferrous metals by the application of protective fused metal coats.

8. Ferrous metal foundries.

9. Installations-

(a) for the production of non-ferrous crude metals from ore, concentrates or secondary raw materials by metallurgical, chemical or electrolytic processes;

(b) for the smelting, including the alloyage, of non-ferrous metals, including recovered products (refining, foundry casting, etc.).

10. Installations for surface treatment of metals and plastic materials using an electrolytic or chemical process.

Mineral industry

11. Installations for the production of-

(a) cement clinker in rotary kilns, or

(b) lime in rotary kilns or other furnaces.

12. Installations for the production of asbestos and the manufacture of asbestos-based products.

13. Installations for the manufacture of glass including glass fibre.

14. Installations for melting mineral substances including the production of mineral fibres.

15. Installations for the manufacture of ceramic products by firing, in particular roofing tiles, bricks, refractory bricks, tiles, stoneware, stoneware or porcelain.

Chemical industry

16. Installations for the production, on an industrial scale by chemical processing, of basic organic chemicals such as-

(a) simple hydrocarbons (linear or cyclic, saturated or unsaturated, aliphatic or aromatic);

(b) oxygen-containing hydrocarbons such as alcohols, aldehydes, ketones, carboxylic acids, esters, acetates, ethers, peroxides, epoxy resins;

(d) nitrogenous hydrocarbons such as amines, amides, nitrous compounds, nitro compounds or nitrate compounds, nitriles, cyanates, isocyanates;

(e) phosphorus-containing hydrocarbons;

(f) halogenic hydrocarbons;

(g) organometallic compounds;

(h) basic plastic materials (polymers, synthetic fibres and cellulose-based fibres);

(i) synthetic rubbers;

(j) dyes and pigments;

(k) surface-active agents and surfactants.

17. Installations for the production, on an industrial scale by chemical processing, of basic inorganic chemicals such as-

(a) gases, such as ammonia, chlorine or hydrogen chloride, fluorine or hydrogen fluoride, carbon oxides, sulphur compounds, nitrogen oxides, hydrogen, sulphur dioxide, carbonyl chloride;

(b) acids, such as chromic acid, hydrofluoric acid, phosphoric acid, nitric acid, hydrochloric acid, sulphuric acid, oleum, sulphurous acids;

(d) salts, such as ammonium chloride, potassium chlorate, potassium carbonate, sodium carbonate, perborate, silver nitrate;

(e) non-metals, metal oxides or other inorganic compounds such as calcium carbide, silicon, silicon carbide.

18. Installations for the production, on an industrial scale by chemical processing, of phosphorous-based, nitrogen-based or potassium-based fertilizers (whether simple or compound).

19. Installations for the production, on an industrial scale by chemical processing, of basic plant health products and of biocides.

20. Installations using a chemical or biological process for the production, on an industrial scale, of basic pharmaceutical products.

21. Installations for the production, on an industrial scale by chemical processing, of explosives.

Waste management

22. Installations for the disposal or recovery of hazardous waste as defined in-

(a) the list referred to in Article 1(4) of Council Directive 91/689/EEC,

(b) Annex IIA, and headings R1, R5, R6, R8 and R9 of Annex IIB, to Council Directive 75/442/EEC, and

23. Installations for the incineration of municipal waste as defined in-

(a) Council Directive 89/369/EEC, and

(b) Council Directive 89/429/EEC.

24. Installations for the disposal of non-hazardous waste as defined in headings D8 and D9 of Annex IIA to Council Directive 75/442/EEC.

25. Landfills other than landfills of inert waste.

Other activities

26. Industrial plants for the production of-

(a) pulp from timber or other fibrous materials;

(b) paper and board.

27. Plants for the pre-treatment (operations such as washing, bleaching, mercerisation) or dyeing of fibres or textiles.

28. Plants for the tanning of hides and skins.

29. - (1) Slaughterhouses.

(2) Installations for-

(a) the production of food products by the treatment and processing of-

(i) animal raw materials (other than milk), or

(ii) vegetable raw materials;

(b) the treatment and processing of milk.

30. Installations for the disposal or recycling of animal carcases and animal waste.

31. Installations for the intensive rearing of poultry or pigs.

32. Installations for the surface treatment of substances, objects or products using organic solvents, in particular for dressing, printing, coating, degreasing, waterproofing, sizing, painting, cleaning or impregnating.

33. Installations for the production of carbon (hard-burnt coal) or electrographite by means of incineration or graphitization.

Power to vary the installations covered by paragraph 49

50. - (1) The Treasury may make provision by regulations for varying the installations covered by paragraph 49.

(2) The provision that may be made by regulations under this paragraph includes, in particular, provision-

(a) for the installations covered by paragraph 49 to include, or not to include, any installation of a description specified in the regulations;

(b) amending the Table in paragraph 49 by adding a description of installation to the Table, removing a description of installation from the Table or altering a description of installation set out in the Table;

Prepared 6 April 2000