Energy Bill [HL]

House of Commons

Session 2003 - 04
Internet Publications
Other Bills before Parliament

Energy Bill [HL]

Energy Bill [HL]
Part 2 — The Civil Nuclear Industry
Chapter 1 — Nuclear decommissioning
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Government guarantees for NDA borrowing
(1)
The Secretary of State may guarantee—
(a)
the repayment of the principal of any sum borrowed by the NDA from
a person other than the Secretary of State;
(b)
the payment of interest on such a sum; and
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(c)
the discharge of any other financial obligation of the NDA in
connection with the borrowing of such a sum.
(2)
The Secretary of State may give a guarantee under this section in such manner,
and on such terms, as he thinks fit.
(3)
As soon as practicable after giving a guarantee under this section, the Secretary
10
of State must lay a statement of the guarantee before Parliament.
(4)
If sums are paid out by the Secretary of State under a guarantee given under
this section, the NDA must pay him—
(a)
such amounts in or towards the repayment to him of those sums as he
may direct; and
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(b)
interest, at such rates as he may direct, on amounts outstanding under
this subsection.
(5)
Payments to the Secretary of State under subsection (4) must be made at such
times, and in such manner, as he may from time to time direct.
(6)
Where a sum has been paid out by the Secretary of State under a guarantee
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given under this section, he must lay a statement relating to that sum before
Parliament—
(a)
as soon as practicable after the end of the financial year in which that
sum is paid out; and
(b)
as soon as practicable after the end of each subsequent relevant
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financial year.
(7)
In relation to a sum paid out under a guarantee, a financial year is a relevant
financial year for the purposes of subsection (6) unless—
(a)
before the beginning of that year, the whole of that sum has been repaid
to the Secretary of State under subsection (4); and
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(b)
the NDA is not at any time during that year subject to a liability to pay
interest on amounts that became due under that subsection in respect
of that sum.
(8)
The approval of the Treasury is required—
(a)
for the giving of a guarantee under this section; and
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(b)
for the giving by the Secretary of State of a direction under subsection
(4) or (5).
(9)
The Secretary of State must pay sums received by him by virtue of subsection
(4) into the Consolidated Fund.
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Accounts of NDA
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(1)
The NDA must—
(a)
keep proper accounts and proper accounting records; and
(b)
in respect of each of its accounting years, prepare a statement of its
accounts.

Energy Bill [HL]
Part 2 — The Civil Nuclear Industry
Chapter 1 — Nuclear decommissioning
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(2)
A statement of accounts prepared under this section must give a true and fair
view of—
(a)
the income and expenditure of the NDA for the accounting year in
question; and
(b)
its state of affairs.
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(3)
Such a statement of accounts must comply with every requirement which has
been notified by the Secretary of State to the NDA.
(4)
Those requirements may include, in particular, requirements relating to—
(a)
the information to be contained in the statement;
(b)
the manner in which that information is to be presented; or
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(c)
the methods and principles according to which the statement is to be
prepared.
(5)
The approval of the Treasury is required for the imposition of a requirement
under subsection (3).
(6)
The accounts of the NDA relating to each of its accounting years, including the
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statement of accounts prepared for the year under this section, must be audited
by the Comptroller and Auditor General.
(7)
The Comptroller and Auditor General must send a copy of his report on what
is audited to the NDA.
(8)
The NDA must send to the Secretary of State and to the Scottish Ministers, in
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respect of each of its accounting years—
(a)
a copy of the accounts for that year that are required to be audited
under this section; and
(b)
a copy of the Comptroller and Auditor General’s report on those
accounts.
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(9)
The NDA must comply with any directions given to it by the Secretary of State
about the times by which it must have complied with its obligations under
subsections (1)(b), (6) and (8).
(10)
The Secretary of State must lay a copy of whatever is sent to him under
subsection (8) before Parliament.
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(11)
The Scottish Ministers must lay a copy of whatever is sent to them under
subsection (8) before the Scottish Parliament.
(12)
In this section—

“accounting records” includes all books, papers and other records of the
NDA relating to—
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(a)
the accounts which it is required to keep; or
(b)
matters dealt with in those accounts;

“accounting year”, in relation to the NDA, means—
(a)
the NDA’s first accounting year; or
(b)
a financial year after the end of the NDA’s first accounting year;
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“the NDA’s first accounting year” means—
(a)
where the NDA is established at the beginning of a financial
year, that financial year; and
(b)
in any other case, the period which begins with the day on
which the NDA is established and ends—
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Energy Bill [HL]
Part 2 — The Civil Nuclear Industry
Chapter 1 — Nuclear decommissioning
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(i)
if no direction is given under sub-paragraph (ii), with 31st
March in the financial year current on that day; and
(ii)
if the Secretary of State so directs, with 31st March at the
end of the following financial year.
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Tax exemption for NDA activities
5
(1)
For the purposes of corporation tax—
(a)
trading income arising or accruing to the NDA or an NDA company
from the carrying on of exempt activities shall be disregarded in
computing the total profits of the NDA or that company; and
(b)
trading losses incurred by the NDA or an NDA company in the
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carrying on of exempt activities shall be disregarded in determining the
amounts that may be set off under section 393 or 393A of the Income
and Corporation Taxes Act 1988 (c. 1) (trading losses) or surrendered as
trading losses for the purposes of section 403 of that Act (group relief).
(2)
Schedule 4 (which makes further provision for the purposes of the exemption
15
granted by this section) has effect.
(3)
Activities are exempt for the purposes of this section and Schedule 4 if they—
(a)
are activities carried on in connection with anything mentioned in
section 6(1); and
(b)
are specified for the purposes of this section in regulations made by the
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Treasury.
(4)
In this section and Schedule 4 “NDA company” means—
(a)
a company the whole of the ordinary share capital in which is owned
directly or indirectly by the NDA; or
(b)
a company that is a relevant site licensee.
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(5)
A company is a relevant site licensee for the purposes of subsection (4) if—
(a)
it is not a company falling within paragraph (a) of that subsection;
(b)
it holds a nuclear site licence for a site the whole or part of which is
either a designated site or a site in or on which there is a designated
installation or designated facility;
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(c)
in a case where there is in force a management contract relating to the
whole or a part of the site to which that licence relates, or to an
installation or facility in or on that site, the parties to the contract
include either—
(i)
the company in question; or
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(ii)
a company which owns directly or indirectly at least 90 per cent
of the ordinary share capital of that company; and
(d)
such further conditions that are required by regulations made by the
Treasury to be satisfied have been satisfied.
(6)
The concurrence of the Secretary of State is required for the making of any
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regulations under this section by the Treasury.
(7)
A statutory instrument containing regulations under this section shall be
subject to annulment in pursuance of a resolution of the House of Commons.
(8)
In this section—

“management contract” means a contract between the NDA and another
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person under which the other person is required to do or secure

Energy Bill [HL]
Part 2 — The Civil Nuclear Industry
Chapter 1 — Nuclear decommissioning
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anything that the NDA is required to secure for the purpose of
discharging its responsibilities;

“owned directly or indirectly” has the same meaning as in section 838 of
the Income and Corporation Taxes Act 1988 (c. 1) (subsidiaries), and
“owns directly or indirectly” is to be construed accordingly;
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“trading income”, in relation to the NDA or an NDA company, means
(subject to subsection (9)) income which falls or (apart from this section)
would fall to be included—
(a)
in respect of a trade, and
(b)
as chargeable to tax under Case I of Schedule D,
10

in the total profits for the purposes of corporation tax of the NDA or
that company;

“trading losses”, in relation to the NDA or an NDA company, means
losses incurred in a trade in respect of which the NDA or that company
is or (apart from this section) would be within the charge to corporation
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tax under Case I of Schedule D.
(9)
For the purposes of this section income consisting in—
(a)
anything giving rise to a credit that would fall to be brought into
account for the purposes of Chapter 2 of Part 4 of the Finance Act 1996
(c. 8) (loan relationships), or
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(b)
a credit falling to be brought into account under Schedule 26 to the
Finance Act 2002 (c. 23) (derivative contracts),

is to be treated as trading income accruing to the NDA or an NDA company
from the carrying on of exempt activities to the extent only that it would fall
(apart from this section) to be taken into account as trading income from a trade
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consisting in the carrying on of such activities by the NDA or that company.
(10)
This section and Schedule 4 are to be construed as one with the Corporation
Tax Acts.
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Taxation of NDA activities chargeable under Case VI of Schedule D
(1)
For the purposes of the Corporation Tax Acts so much of any activity of the
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NDA as—
(a)
is an activity the profits and gains from which would (apart from this
section) be chargeable to tax under Case VI of Schedule D, and
(b)
is not excluded from the operation of this section by subsection (2),

shall be treated as an activity carried on by it as part of a trade in respect of
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which it is within the charge to tax under Case I of Schedule D.
(2)
Any activity is excluded from the operation of this section if—
(a)
it is carried on by the NDA otherwise than in connection with
something mentioned in section 6(1)(a), (d) or (e) of this Act; and
(b)
the profits and gains from it would, in the NDA’s case, be chargeable to
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tax under Case VI of Schedule D by virtue of an enactment other than
just section 18 of the Income and Corporation Taxes Act 1988.
(3)
All activities treated under this section as carried on by the NDA as part of a
trade—
(a)
shall be treated as carried on as part of the same trade; and
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(b)
may be treated as carried on as part of another trade carried on by the
NDA.

Energy Bill [HL]
Part 2 — The Civil Nuclear Industry
Chapter 1 — Nuclear decommissioning
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(4)
Subsection (3) is subject to any other provision made by or under the
Corporation Tax Acts that requires an activity to be treated as carried on as part
of a separate trade (with or without any other activity).
(5)
This section is to be construed as one with the Corporation Tax Acts.
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Disregard for tax purposes of cancellation etc. of provisions
5
(1)
This section applies where—
(a)
a relevant provision is recognised in the accounts of a relevant
company in accordance with generally accepted accounting practice;
(b)
that provision relates to decommissioning or cleaning-up which the
NDA acquires responsibility for securing by virtue of a direction under
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section 6; and
(c)
that responsibility includes the financial responsibility under section
24.
(2)
In computing the profits, gains or losses of the company for the purposes of
corporation tax, no amount shall be brought into account in respect of a credit
15
or debit to which subsection (3) applies.
(3)
This subsection applies to a credit or debit if—
(a)
it arises on the occurrence of an event mentioned in subsection (4); and
(b)
it relates to the effect of that event on the relevant provision or the
subject matter of the provision.
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(4)
The events referred to in subsection (3) are—
(a)
the coming into force of the direction mentioned in subsection (1)(b);
and
(b)
a transfer of property, rights or liabilities of the company to the NDA or
a subsidiary of the NDA in accordance with a nuclear transfer scheme
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authorised by section 42.
(5)
In this section—

“BNFL company” means BNFL or a wholly-owned subsidiary of BNFL;

“relevant company” means a BNFL company that is publicly owned;

“relevant provision” means a provision for liabilities or charges as defined
30
in paragraph 89 of Schedule 4 to the Companies Act 1985 (c. 6).
(6)
This section is to be construed as one with the Corporation Tax Acts.
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Disregard for tax purposes of provisions recognised by NDA
(1)
This section applies where—
(a)
by virtue of a direction under section 6 the NDA acquires the
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responsibility for securing the cleaning-up of a site falling within
subsection (2), or the decommissioning of an installation or facility in or
on such a site;
(b)
that responsibility includes the financial responsibility under section
24; and
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(c)
on the coming into force of the direction mentioned in paragraph (a),
the NDA recognises in its accounts, in accordance with generally
accepted accounting practice, a relevant provision that relates to that
responsibility.

Energy Bill [HL]
Part 2 — The Civil Nuclear Industry
Chapter 1 — Nuclear decommissioning
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(2)
A site falls within this subsection if—
(a)
at the time the direction mentioned in subsection (1)(a) comes into force
there is a nuclear site licence in force in relation to the site; and
(b)
the holder of that licence at that time is a BNFL company that is publicly
owned.
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(3)
In computing the profits, gains or losses of the NDA for the purposes of
corporation tax, no amount shall be brought into account in connection with
the recognition of the relevant provision in the accounts of the NDA.
(4)
But subsection (3) shall not affect the amount (if any) to be brought into account
in computing the profits, gains or losses of the NDA in connection with an
10
adjustment at a time after the first recognition of the relevant provision in the
accounts of the NDA.
(5)
In this section—

“BNFL company” means BNFL or a wholly-owned subsidiary of BNFL;

“relevant provision” means a provision for liabilities or charges as defined
15
in paragraph 89 of Schedule 4 to the Companies Act 1985 (c. 6).
(6)
This section is to be construed as one with the Corporation Tax Acts.
Nuclear Decommissioning Funding Account
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Establishment and maintenance of the Account
(1)
For the purpose of ensuring transparency as respects the funding of the
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carrying out of the NDA’s functions, it shall be the duty of the Secretary of
State to establish and maintain an account (to be known as the “Nuclear
Decommissioning Funding Account”).
(2)
The Account, when first established, is to have an opening balance of such
amount as the Secretary of State may determine.
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(3)
Every amount paid to the NDA by way of grant under section 25(1) must be
shown in the Account as a debit.
(4)
The following amounts are to be shown in the Account as credits—
(a)
every amount received by the Secretary of State in pursuance of a
requirement under section 8(2);
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(b)
every amount received by the NDA that is required to be paid by it to
the Secretary of State under section 25(3);
(c)
such amount in respect of each financial year as the Secretary of State
may determine; and
(d)
amounts representing interest, at such rate and in respect of such
35
periods as the Secretary of State may determine, on outstanding credit
balances of the Account.
(5)
The Secretary of State—
(a)
may make a single determination for the purposes of subsection (4)(c)
in relation to more than one financial year;
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(b)
must make every determination for those purposes in accordance with
the policy most recently published under subsection (6);

Energy Bill [HL]
Part 2 — The Civil Nuclear Industry
Chapter 1 — Nuclear decommissioning
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(c)
must revise a determination made for those purposes if he considers it
necessary to do so in order to take account of any revision of the policy
in accordance with which it was made, or last revised; and
(d)
must publish every determination made for those purposes, and every
revision of such a determination, in such manner as, in his opinion, is
5
most appropriate for bringing it to the attention of persons likely to be
affected by it.
(6)
The Secretary of State—
(a)
must prepare, and may from time to time revise, a statement of his
policy with respect to the determination of amounts for the purposes of
10
subsection (4)(c); and
(b)
must publish that statement, and every revision of it, in such manner
as, in his opinion, is most appropriate for bringing it to the attention of
persons likely to be affected by it.
(7)
The policy contained in the statement under subsection (6) must—
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(a)
set out the basis on which determinations for the purposes of
subsection (4)(c) are to be made;
(b)
secure that amounts credited to the Account in accordance with
subsection (4)(c) are at least enough to prevent the credit balance of the
Account falling at any time below such level as the Secretary of State
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determines to be appropriate; and
(c)
set out the basis on which the Secretary of State’s determination for the
purposes of paragraph (b) has been made.
(8)
The time at which an amount is to be debited or credited to the Account in
accordance with this section is to be the time determined by the Secretary of
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State.
(9)
The consent of the Treasury is required for every determination by the
Secretary of State for the purposes of this section.
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Examination of the Account
(1)
As soon as practicable after the end of each relevant financial year, the
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Secretary of State must prepare a statement of the Nuclear Decommissioning
Funding Account.
(2)
The statement must show—
(a)
the credits and debits made to the account during the period for which
it is prepared; and
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(b)
the determinations made or revised during that period for the purposes
of section 34(4)(c).
(3)
The period for which each statement is to be prepared is the period which—
(a)
begins—
(i)
in the case of the first statement, with the establishment of the
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Account; and
(ii)
in any other case, immediately after the end of the period for
which the previous statement was prepared; and
(b)
ends with the last day of the last relevant financial year to end before
the statement’s preparation.
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