Excise Notice CCL1/3: Climate Change Levy – Reliefs And Special Treatments For Taxable Commodities

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This publication is available at https://www.gov.uk/government/publications/excise-notice-ccl13-climate-change-levy-reliefs-and-special-treatments-for-taxable-commodities/excise-notice-ccl13-climate-change-levy-reliefs-and-special-treatments-for-taxable-commodities

Fuel and power (VAT Notice 701/19) How VAT affects charities (VAT Notice 701/1) Education and vocational training (VAT Notice 701/30) Goods exported from the UK (VAT Notice 703) Notice 275: Customs export procedures The VAT treatment of passenger transport (VAT Notice 744A) Excise Notice CCL1: a general guide to Climate Change Levy Excise Notice CCL1/1: registering for Climate Change Levy Excise Notice CCL1/2: combined heat and power schemes Excise Notice CCL1/4: electricity from renewable sources Excise Notice CCL1/5: penalties and interest Excise Notice CCL1/6: a guide to carbon price floor VAT relief for suppliers to visiting forces (VAT Notice 431)

Climate Change Levy: relief supporting analysis (PP10) Climate Change Levy supplier certificate (PP11) Climate Change Levy tax credit claim (CCL200X)

This notice provides information about supplies of taxable commodities to which the full rates of Climate Change Levy (CCL) do not apply, and the certification and other procedures that must be followed in order to claim the reliefs.

This notice is for energy suppliers and for energy consumers in the business and public sectors that may be liable to the main rates of CCL, and for owners of generators and operators of combined heat and power (CHP) stations who are deemed to make a taxable self-supply that may be liable to the carbon price floor (CPS) rates of CCL.

Unless indicated to the contrary where we say ‘you’ or ‘your’ we mean the energy generator, energy supplier or energy consumer and where we say ‘we’, ‘our’ or ‘us’ we mean HMRC.

A full list of extant CCL legislation is set out in Excise Notice CCL1: a general guide to Climate Change Levy.

A supply is excluded from the main rates of CCL if it is for domestic use or use by a charity for its non-business activities. The domestic and charitable exclusions are based on the VAT fuel and power ‘qualifying use’ provisions contained in Fuel and power (VAT Notice 701/19).

Domestic use means use in:

Buildings such as garages used with houses are treated as part of the same residential unit. Subsidiary buildings situated a short distance away, for example, a garage in a block located away from a house, are also treated as part of the same residential unit. Corridors, lifts, hallways and stairways in a residential unit are treated as part of the domestic premises.

Subject to the de minimis provisions set out in paragraph 2.5, if a building is in use as a hospital, a prison or similar institution, a hotel, inn or similar establishment, supplies made to it are not for domestic use. See paragraph 2.8 for guidance on mixed use.

Stair lighting for domestic accommodation is not subject to the main rate of CCL. Supplies of energy for stair lighting in any commercial property or for street lighting in general are within its scope, unless the amounts involved are de minimis (see paragraph 2.5).

Small quantities (de minimis) of fuel and power may automatically be treated as supplies for domestic use, even where they’re supplied to a business. The de minimis limits for each fuel are as follows:

Within these limits there is no requirement for such supplies to be certified as being for domestic use, although the supplier must keep records to substantiate the treatment of the supply.

Supplies for use by a charity for its non-business activities are excluded from the main rates of CCL. Charities are normally non-profit making bodies whose objectives include the relief of poverty, sickness or infirmity or other activities beneficial to the community such as the advancement of education, religion, nature conservation and the support of the arts.

Charities may also carry out business activities and, unless the de minimis limits set out in paragraph 2.5 apply, the main rate of CCL is due on supplies used for these activities. Examples of business activities by charities include the:

An activity may still be a business activity even if charges are only set to recover costs incurred – it is not necessary to make a surplus for an activity to be business. If a charity is carrying out both business and non-business activities on the same premises then it may apportion its consumption per account between excluded and taxable use and advise its energy supplier accordingly. See How VAT affects charities (VAT Notice 701/1).

In order to claim this relief, a VAT certificate must be provided to the supplier. See Fuel and power (VAT Notice 701/19).

Supplies of fuel and power to educational institutions such as schools, sixth form colleges, further education colleges and universities are subject to the main rate of CCL unless the institution is a charity engaged in non-business activities.

Information about the business status of educational institutions can be found in Education and vocational training (VAT Notice 701/30).

Where supplies are made to a customer whose premises are put partly to domestic or non-business charity use if the domestic or charity use is:

Where you supply fuel and power for mixed use you should obtain from your customer a VAT certificate declaring what percentage is, or will be, put to domestic or charitable non-business use for each of the premises you supply and apply relief from CCL on this basis.

Ofgem updated their guidance on Third Party Intermediaries (TPI) on 11 October 2013. The factsheet What your business needs to know provides a definition of what a TPI is and states that it’s the energy supplier that provides the energy to businesses, not the TPI. The energy and contract is supplied by the energy supplier and will include the energy supplier’s terms and conditions.

Where there is domestic or charitable non-business use and there is an intermediary in the supply chain (for example, supplies to a tenant made through a landlord) the relief depends upon the use to which the commodity will be put. The fact that there’s an intermediary in the supply chain should not affect the relief if the utility is aware that the commodity is for domestic or charity use.

Therefore, if the intermediary wants to be excluded from the main rate of CCL, they will need to submit a CCL declaration to their energy supplier which should include the following information:

In this scenario the main rate of CCL will not be charged. As the exclusion is based on use of the commodity, an intermediary does not need to apply for a utility direction in these circumstances.

The CCL exclusion for domestic use includes energy supplied to one party for use for the centralised provision of heat to a number of sites or users, for instance a common boiler heating a block of flats. This arrangement is commonly known as a ‘Community Heating scheme’.

Whether the supplier should charge the main rate of CCL will depend on whether an extant VAT certificate covers the community heating scheme. Where it does, the supply is excluded from CCL automatically. Where it does not, the main rate of CCL must be charged on bills unless the customer claims and certifies relief to the supplier on Climate Change Levy supplier certificate (PP11). To claim the exclusion the operator of the scheme must declare to their supplier that the commodities are being consumed for qualifying purposes (see section 6).

If you’re a UK VAT-registered business and registered for CCL, provided you fulfil the conditions described in VAT relief for suppliers to visiting forces (VAT Notice 431), you can supply fuel and power to US and NATO visiting forces without having to account for the levy.

You can also make levy free supplies of fuel and power to the American Military Cemetery and Memorial at Madingley, Cambridge or Brookwood, Surrey provided they are solely used for the maintenance of those cemeteries.

Further information about reliefs to visiting forces is set out in VAT relief for suppliers to visiting forces (VAT Notice 431).

Taxable commodities supplied to destinations outside the UK are entitled to relief from the main rates of CCL. Where you’re making supplies to destinations outside the UK, you must retain and make available to us documentary evidence that confirms the commodities were removed from the UK. The documentary evidence you must hold is the same as required for VAT purposes, and detailed in Goods exported from the UK (VAT Notice 703).

On occasion, an intermediate customer in the UK may make the export supply. Such intermediate customers must notify the UK supplier using form PP11 Climate Change Levy supplier certificate or written equivalent (see section 6) that they’re exporting the commodity and have no intention of bringing it back to the UK.

The export procedures and our legal requirements are described in detail in Notice 275: Customs export procedures.

If your sole intention is to sell solid fuels and LPG to another person for non-taxable use (examples include hardware stores selling LPG or garages selling bags of coal) the supplies of those commodities to you are free of CCL and you’re not required to register for CCL purposes.

Wholesalers and retailers of LPG in bulk and solid fuels must notify their suppliers that they intend to make onward supplies, using form PP11 Climate Change Levy supplier certificate or written equivalent (see section 6). The Solid Fuel Association has devised a simplified PP11 form for use by coal merchants among its membership.

If wholesalers and retailers are also making taxable supplies to end-users they must register and account for the main rate of CCL on those supplies.

Because of the de minimis arrangements explained in paragraph 2.5, supplies of LPG in cylinders of less than 50kgs each in weight are not taxable for CCL purposes.

A supply of a taxable commodity is exempt from the main rate of CCL if it is used for transport in the following categories:

The meanings of ‘Railway vehicle’ and ‘train’ are those given at section 83 of the Railways Act 1993:

‘Railway vehicle includes anything which, whether or not it is constructed or adapted to carry any person or load, is constructed or adapted to run on flanged wheels over or along track’.

(a) 2 or more items of rolling stock coupled together, at least one of which is a locomotive (b) a locomotive not coupled to any other rolling stock’.

‘Non-railway vehicle’ means any vehicle (other than a railway vehicle), or a ship, that is designed or adapted to carry not fewer than 12 passengers.

The exemption does not apply to the transportation of passengers to, from or within a place of entertainment, recreation or amusement, or a place of cultural, scientific, historical, or similar interest if rights of admission or use of facilities are supplied by the person (or a connected person) to whom the taxable commodity is supplied.

For example, supplies of the energy used to run transport at theme parks, or to run historical transport such as trams within museums, are not exempt. This treatment mirrors the VAT legislation that applies a zero rate to tickets sold for normal transportation purposes, but applies VAT at the standard rate to tickets sold in the aforementioned circumstances (see The VAT treatment of passenger transport (VAT Notice 744A) for further information).

To claim the exemption customers must declare to their suppliers that the commodities are being consumed for qualifying purposes (see section 6).

To avoid double taxation, a supply of a taxable commodity is exempt from the main rates of CCL if it is used in the production of taxable commodities other than electricity or the production of other energy sources that are subject to duty (for example, oils liable to hydrocarbon oil duties) or which may be used specifically for energy production. In order to obtain relief, supplier certificates must be provided (see section 6).

The exemption applies to taxable commodities supplied for use in the production of:

For the purposes of the exemption, the production of other energy sources includes the drilling and extraction of oil, but does not include oil exploration.

For a supply of a taxable commodity to be exempt under this relief the energy user and the energy producer must be one and the same entity. Therefore, sub-contractors in the oil industry cannot benefit from this exemption on the taxable commodities they purchase and use unless they themselves are refining or extracting oil.

As a result, the energy supply to and used by a sub-contractor employed by a producer as an engineering consultant (for example) is ineligible for the exemption, and the beneficiaries of the relief are confined to those companies involved in actual production activity.

Examples of exempt and taxable uses are given in section 9.

Exemption from the main rates of CCL can be claimed on a supply of a taxable commodity if it is to be used for producing electricity in a non-CHP generating station, provided that it is not deemed to be a self-supply of electricity (see Excise Notice CCL1: a general guide to Climate Change Levy).

From 1 April 2013, this includes supplies to auto-generators and unlicensed suppliers, but excludes supplies to all small generating stations.

From 1 April 2013, the CPS rates of CCL apply to taxable commodities (other than electricity) that are used in a generating station with a generating capacity that exceeds 2MWs. The owner of the generating station is the person responsible for accounting for the CPS rates of CCL to HMRC.

The liability of supplies used in electricity generation is explained in more detail in Excise Notice CCL1/6: a guide to the carbon price floor.

From 1 April 2013, if you’re an auto-generator or exempt unlicensed electricity supplier with a generating capacity of more than 2MWs (and are not a CHP or stand-by generator), and you make self-supplies of electricity or make supplies of electricity direct to customers, your supplies of electricity will be subject to the main rate of CCL for electricity where these are produced from CPS rate commodities.

If you make supplies to an electricity utility, these supplies will not be subject to CCL as the electricity will be liable to the main rate of CCL for electricity when sold on to a consumer by the utility.

You’re an auto-generator if you generate electricity primarily for your own use and you have title to the input and output fuel. Primarily for your own use means you:

(a) are not treated as an electricity utility for the purposes of any supplies of electricity you make (b) have consumed, in the previous 3 months, no less than 75% of the electricity produced by you in that period.

If you’re generator with a combined generating capacity of 2MWs or less, you’re considered to be a small generating station and you will be charged the main rates of CCL on taxable commodities by your supplier. Paragraph 3.8 set outs the liability to main rates of CCL on supplies by small generating stations.

You do not need to register or account for the CPS rates of CCL, as there is no deemed supply when a quantity of a CPS rate commodity is delivered to the site of the generating station.

When calculating generating capacity for a non-CHP generating station, you must take account of all generators that you own or are owned by any person connected with you (even if they burn oil only), regardless of whether the electricity is generated from CPS rate commodities, but excluding any CHP stations or stand-by generators.

The liability of supplies used in electricity generation is explained in more detail in Excise Notice CCL1/6: a guide to the carbon price floor.

If you’re a small generator and pass some of the electricity you produce to an electricity utility for onward supply to a consumer, you may obtain relief from the main rates of CCL on the fuel that is used to generate that electricity. Relief from CCL on this fuel is obtained through the certification process outlined in section 6. There is no liability to the CPS rates of CCL for fuels used by small generators.

The electricity you pass to an electricity utility will be liable to the main rate of CCL on electricity when sold on by the utility.

Supplies of taxable commodities for use in stand-by generators are subject to the main rates of CCL charged by your supplier.

Stand-by generators, for the purposes of CCL, are generators used to provide emergency electricity supplies in the event of a failure of a building’s usual electricity supply, and used for no other purpose.

You do not need to register or account for the CPS rates of CCL, as there is no deemed supply when a quantity of a CPS rate commodity is delivered to the site of the stand-by generator, and you do not need to account for CCL on the electricity produced.

Generators that are used for the generation of electricity in order to supply to, or reduce demand from, the grid do not qualify as stand-by generators.

Running generators for routine testing and maintenance purposes does not disqualify them from being stand-by generators.

A supply of a taxable commodity may be exempt from the main rates of CCL where it is to be used in producing any outputs from either a fully exempt or partly exempt CHP station, a:

‘Outputs’ are any electricity or motive power produced in the station and any of the following supplied from the station, namely:

(a) heat or steam (b) air, or water, that has been heated or cooled

Supplier certificates are also required in order to obtain relief from the levy (see section 6).

Information on the extent of the CCL relief that is available on input fuel used in CHP stations can be found in section 3 of Excise Notice CCL1/2: combined heat and power schemes.

A supply of coal or other solid fuel, LPG or gas after 1 April 2013 to a CHP station with a generating capacity of more than 2MWs is liable to the CPS rates of CCL if it is used to generate electricity. See Excise Notice CCL1/6: a guide to the carbon price floor.

More details about the CHPQA are available at CHPQA - Quality Assurance for Combined Heat and Power on the BEIS website.

A supply of a taxable commodity is exempt from the main rates of CCL if the person to whom the supply is made intends to use the commodity for non-fuel use (that is, other than for heating fuel or motive power). An example of such eligible use is electricity used in electrolytic processes.

A supply of a taxable commodity is also exempt where it is intended to be used partly as fuel and partly not (‘mixed use’), provided its primary use is other than as fuel.

A list of eligible non-fuel uses and mixed uses of taxable commodities may be found in section 10. If you consume energy for these eligible uses and wish to claim this relief you must certify to your supplier that this is the case (see section 6).

Supplies of electricity generated from renewable sources are exempt from CCL excluding such electricity generated on or after 1 August 2015. Suppliers may continue to exempt supplies of eligible electricity where generated before 1 August 2015 and supplied before or on 31 March 2018.

Electricity is ‘renewable source electricity’ if it is generated from sources of energy other than peat, fossil fuel or nuclear fuel and includes biomass and waste. Waste is regarded as a renewable source for the purposes of the exemption provided fossil fuel does not make up 90% or more of its energy content.

Fossil fuel means coal, substances produced directly or indirectly from coal, lignite, natural gas, crude liquid petroleum, or petroleum products (and ‘natural gas’ and ‘petroleum products’ have the same meanings as in the Energy Act 1976).

Renewable source technologies eligible for exemption (provided the electricity was generated before 1 August 2015) are:

Excise Notice CCL1/4: electricity from renewable sources provides guidance on when a supply of renewable source electricity is exempt from CCL, the conditions that must be fulfilled and the procedures involved in applying the exemption.

There is no requirement to provide forms Climate Change Levy: relief supporting analysis (PP10) and Climate Change Levy supplier certificate (PP11) to gain exemption. When claiming other reliefs renewable source supplies must be deducted.

CHP integrates the production of usable heat and power in a single process. CHP stations are energy efficient in operation, providing very significant fuel savings and as a result, cost and efficiency savings, over conventional forms of electricity generation and heat supply.

Where a CHP station is registered and certified annually under the CHPQA programme and in possession of a valid CCL Exemption Certificate issued by the Secretary of State for BEIS, it is treated for CCL purposes according to its CHPQA certificate.

Information on the CCL treatment of electricity from CHP stations, including advice about arrangements for the removal of the exemption from 1 April 2013 for electricity produced in a CHP station that is supplied to the final consumer by an electricity utility, can be found in Excise Notice CCL1/2: combined heat and power schemes.

From 1 April 2014 mineralogical or metallurgical processes are exempt from the main rates of CCL for energy used in mineralogical processes or metallurgical processes.

Businesses that currently participate in the Climate Change Agreement (CCA) Scheme (see section 4) and become wholly exempt from the main rates of CCL as a result of the introduction of these new exemptions may choose to withdraw from the CCA Scheme.

Where businesses continue to derive a benefit from the CCA Scheme (because not all of their energy use will qualify for the new CCL exemptions) they will be able to retain their agreements. To avoid the unintended consequence that businesses withdrawing from the CCA Scheme will become liable to enrol in the Energy Efficiency Scheme, an exemption from the scheme has been introduced that mirrors the scope of these new CCL exemptions.

A list of the mineralogical and metallurgical processes that qualify for exemption are found in Annex A. This annex also provides guidance on energy uses accepted as falling within the scope of the exemptions, where incurred in the course of a qualifying process.

To claim the exemption, customers must declare to their suppliers that the commodities are being consumed for qualifying purposes (see section 6).

From 1 July 2016 there are new reporting requirements for companies who hold a CCA. To find out if this applies to you see Climate change agreements: information to report to HMRC.

Energy intensive businesses that have entered into a CCA with the Environment Agency (EA) can claim the reduced rate of CCL, which is a reduction on the main rates of CCL.

For the purposes of the CCL, a taxable supply is a reduced rate supply if:

(a) the taxable commodity is supplied to a facility certified by the EA as a facility which is to be taken as being covered by a CCA for a period specified in the certificate, and (b) the supply is made at a time falling in that period.

The level of the reduced rate varies according to taxable commodity. The rates are set out in Excise Notice CCL1: a general guide to Climate Change Levy.

Energy intensive users are either those:

Facilities covered by a CCA are required to deliver energy efficiency or carbon saving reduction targets in return for paying a reduced rate of CCL.

The overall policy responsibility for the agreements lies with BEIS but the scheme is administered by the EA. Applications to join the scheme and queries regarding eligibility should be made to the EA. Our role is limited to overseeing the application of the reduced rate of CCL once a business has been certified by the EA as a participant of the scheme.

Once the EA has received, checked and accepted the agreement and eligibility forms from the sector association, a CCA certificate is issued to the agreement holder and a copy sent to the sector association. The agreement notices may be found on the EA website. The certificate is used by the facility to support a claim for relief of CCL from HMRC. It sets out the date from which the CCL relief will apply.

Further information about Climate change agreements is available.

In certain circumstances the EA might issue a variation certificate. If a variation occurs, the agreement holder must submit revised versions of the Climate Change Levy: relief supporting analysis (PP10) and Climate Change Levy supplier certificate (PP11) forms reflecting the change in their entitlement to CCL relief (see section 6).

Once a CCA is signed, CCA holders should use the certification process outlined in section 6 to tell their energy supplier that they’re entitled to pay the reduced rate of CCL (and, where appropriate, when they cease to be entitled). The reduced rate is applicable to supplies that are made at a time falling within the period covered by the agreement.

Performance under the CCA Scheme is reviewed regularly. If a facility has not met its targets under the scheme during one period, it may not be certified by the EA as eligible to continue to receive CCL reduced rate supplies during the next period. In these circumstances the CCA holder must submit a new Climate Change Levy: relief supporting analysis (PP10) and Climate Change Levy supplier certificate (PP11) (see section 6) to terminate the reduced rate relief.

From 1 April 2012, a lower rate of CCL applied for energy used in certain metal recycling processes. This was replaced by the exemption for energy used in metallurgical processes from 1 April 2014 (see paragraph 3.14).

With the exception of the exemptions for renewable source electricity generated before 1 August 2015 and certain supplies from a CHP, where you’re claiming a relief from the main rate of CCL you must complete 2 forms.

The first of these, Climate Change Levy: relief supporting analysis (PP10), sets out what reliefs you want to claim and requires you to estimate your usage against each relief. This information is then used to calculate your overall percentage relief entitlement. Examples of how to complete the table part of the form can be found in Annex B, and explanatory notes can be found on the form itself.

The second form, Climate Change Levy supplier certificate (PP11), takes the percentage relief calculated on your PP10 form for a given taxable commodity, so your energy supplier can apply the correct rate to your bill.

Customers must review the correctness of Climate Change Levy supplier certificates (PP11) no later than the earlier of the 60th day:

When a customer’s review identifies differences between actual relief entitlement and the amount of relief claimed in a review period, action must be taken in accordance with (a) or (b) where the:

(a) amount of relief claimed is found to be too high resulting in an underpayment of CCL, the excess is treated as being a taxable self-supply and you must notify us of your liability to register, although in certain circumstances exemption from registration may be granted (see paragraph 6.5) – you must not submit a retrospective certificate to your energy supplier to correct the previous percentage of relief applied (b) relief claimed is found to be too low resulting in an overpayment of CCL, a claim for tax credit must be made (see paragraph 6.6).

Where the relief entitlement claimed matches the actual entitlement, no action is required and your certificate remains in force.

A correct Climate Change Levy supplier certificate (PP11) can remain valid for a maximum of 5 years, after which a new one must be submitted to the energy supplier.

Where you no longer have any entitlement to any relief, you must submit a new Climate Change Levy: relief supporting analysis (PP10) form to us and Climate Change Levy supplier certificate (PP11) to your energy supplier showing a relief claimed of 0%.

Where you cease to trade, a review of your certified entitlement to CCL reliefs must be carried out in accordance with the guidance in paragraph 6.3.

A review must also be carried out when a business changes hands. In this case, although the energy consumption position might not change, the tax liability cannot pass to the new owner. The new business owner will have to complete and submit their own Climate Change Levy: relief supporting analysis (PP10) and Climate Change Levy supplier certificate (PP11).

If you make taxable supplies, including taxable self-supplies, you must notify us accordingly and register for CCL. Unlike VAT there is no registration threshold.

Where a liability to register arises solely as a result of the review of relief entitlement, we may exempt a person from registration under certain conditions.

Further information on applying for exemption from registration and the conditions that must be satisfied can be found in Excise Notice CCL1/1: registering for Climate Change Levy.

There are 2 scenarios where you may have claimed too little CCL relief:

1) you’re entitled to CCL relief but do not have a Climate Change Levy supplier certificate (PP11) in place, or 2) a Climate Change Levy supplier certificate (PP11) is in place, but a review (see paragraph 6.3) identifies the percentage of relief claimed was too low

Sub-sections 6.6.1 and 6.6.2 explain what to do in these circumstances.

If you’re entitled to CCL relief but were charged CCL at a higher rate because:

In these cases there will not be an existing Climate Change Levy: relief supporting analysis (PP10) and Climate Change Levy supplier certificate (PP11) in place. You may submit retrospective PP10 and PP11 forms to HMRC and your energy supplier respectively, seeking any forgone relief entitlement up to maximum of 4 years.

This process does not apply to supplies for domestic or non-domestic charity use. You may seek retrospective claim for these supplies by submitting a VAT reduced rate certificate to your energy supplier.

If you have been claiming CCL relief using forms PP10 and PP11, but a review (see paragraph 6.3) identifies the relief percentage claimed was too low resulting in an overpayment of CCL, you can claim the difference back from HMRC, using form CCL200x.

You need to submit the completed form CCL200X along with adequate evidence to support your claim. If you do not supply adequate evidence we will not be able to process your claim.

Good quality evidence should include the following:

If you’re an agent acting on behalf of a claimant you must provide a letter of authority from them.

We expect to authorise repayment of an acceptable claim within a reasonable period – normally 30 days from the date the claim for tax credit is received. But if we have to make enquiries about your claim or sort out errors, the 30-day period can be extended while enquiries are made.

The level of relief that can be claimed may be changed from time to time. When relief level changes are made, changes will also be made to the formula used to calculate relief entitlement.

Businesses affected by any relief level changes must, by the time of their first annual review following the change, give HMRC a new PP10, and their energy supplier a new PP11 certificate. The new PP10 and PP11 must use the amended formula to calculate relief entitlement.

We strongly encourage claimants to submit new PP10 and PP11 forms as soon as possible following a change in relief level. This will help minimise the risk of over or under paying tax which would result in having to make a claim or paying back the difference.

You may give your supplier a further certificate updating the information in the original supplier certificate at any time to reflect anticipated or actual events.

In some cases, the final consumer may not receive its supply direct from a utility, perhaps because it is a tenant of the person who receives supplies from the utility, or because of some other arrangement such as bulk buying under which one person receives the supply from the utility and makes onward supplies to others.

Under normal circumstances, the consumer might be eligible for one or more of the reliefs detailed at sections 2 to 4 but unable to benefit from them because it cannot give the utility a supplier certificate.

In the following paragraphs the terms landlord and tenant should be regarded as applying equally to parties with similar supply arrangements unless otherwise specified.

A third party receiving the supply direct from the utility may give the utility a Climate Change Levy supplier certificate (PP11) on behalf of a consumer who intends to use the taxable commodities for transport purposes. This is because the legislation governing that exemption refers to the use of the taxable commodity for a purpose rather than by a person.

Where a CHP is operated by a third party on behalf of a principal and the third party purchases the input fuel, they may give the supplier a certificate declaring entitlement to CCL relief. This is because the legislation governing the exemption for input fuels used in a CHP refers to a supply to a person who intends to cause the commodity to be used in a fully exempt or partly exempt CHP.

From 1 April 2013, the CPS rates of CCL apply to taxable commodities (other than electricity) that are used in a generating station with a generating capacity that exceeds 2MWs. The operator of the CHP station is the person responsible for accounting for the CPS rates of CCL to HMRC.

The liability of supplies used in electricity generation is explained in more detail in Excise Notice CCL1/6: a guide to the carbon price floor.

Where there is a single agreement covering an entire site (for example, the site and facility boundaries coincide) a landlord can give their energy supplier a Climate Change Levy supplier certificate (PP11) on behalf of the tenants as well as themselves where:

(a) all occupants of the site or facility are entitled to pay the reduced rate of CCL and have no entitlement to any other reliefs (b) the landlord is entitled to receive the CCL exemptions for supplies for non-fuel use or for use in metal recycling processes in addition to the reduced rate, but the tenants are only eligible for the reduced rate

Since the landlord’s Climate Change Levy supplier certificate (PP11) will cover both their own and their tenants’ energy consumption, they will be held responsible for any underpaid tax should the certificate prove to be incorrect.

Similar arrangements will apply where there are 2 or more operators on a site and energy is supplied to one of the operators who in turn supplies to the others.

Where there are separate facilities on different parts of a site, and the facilities have separate agreements, the landlord can give the supplier a Climate Change Levy supplier certificate (PP11) on behalf of the tenants as well as themselves, provided both the landlord’s and tenants’ premises are facilities covered by agreements and one of the criteria at (a) or (b) is met.

The landlord may not give a Climate Change Levy supplier certificate (PP11) on behalf of tenants who are entitled to receive the exemptions for supplies for non-fuel use or for use in mineralogical or metallurgical processes because these exemptions apply only to the person to whom the supply is made. Where the utility supplies a landlord who then makes an onward supply to the final consumer, this requirement is not met.

The following are examples only. Businesses in a landlord and tenant relationship or with similar arrangements must determine which of these solutions, if any, are suitable for them.

(a) The tenant could obtain a dedicated supply direct from a utility. Although this will not always be physically possible it is the ideal solution as the final consumer will themselves be able to give the supplier a Climate Change Levy supplier certificate (PP11) and obtain relief for their own use.

(b) A landlord may apply to us for ‘directed utility’ status. If we accept an application and direct that a landlord is to be treated as a utility for CCL purposes, supplies to them from a licensed utility will be outside the scope of CCL. As a directed utility the landlord will have to fulfil certain obligations including registering with us, accounting for CCL when taxable commodities are sold on, and obtaining Climate Change Levy supplier certificates (PP11) from customers to evidence their relief entitlement.

Where taxable commodities are used by the directed utility themselves, this will be a self-supply on which they will need to account for CCL. If the directed utility is entitled to claim relief on such self-supplies, they will in effect need to claim relief from themselves, and should follow the Climate Change Levy: relief supporting analysis (PP10) and Climate Change Levy supplier certificate (PP11) process (see paragraph 6.1 and paragraph 6.2).

We will only make directions in 2 situations:

In the second situation, we will only make a direction on the request of the person who wishes to be treated as a utility.

We will only direct that someone be treated as a utility for CCL purposes where:

Where you decide to change supplier, any Climate Change Levy supplier certificate (PP11) delivered to the earlier supplier ceases to have effect. You must provide the new supplier with a certificate in order to obtain any CCL relief due.

Should your supplier change other than at your request, providing your Climate Change Levy supplier certificate (PP11) has been transferred to your new supplier, continuity of that certificate is retained.

This section applies to those previously in a contract for CCL exempt renewable or indirect good quality CHP supply and are eligible for other CCL exemptions.

Indirect supplies of good quality CHP electricity are not exempt from CCL for electricity generated on or after 1 April 2013. Suppliers could continue to provide the exemption up to 31 March 2018 provided they met certain conditions.

Similarly, supplies of renewable source electricity are not exempt from CCL for electricity generated on or after 1 August 2015. Suppliers could continue to provide the exemption up to 31 March 2018 provided they met certain conditions.

Where any electricity was exempt from CCL under a renewable or indirect good quality CHP supply contract, that supply must not be included in any PP10 form calculation. Your electricity supplier should have automatically treated such supplies as CCL exempt.

From 1 April 2018 or once you’re no longer in a contract for CCL exempt renewable or indirect good quality CHP electricity supply (whichever is earlier), those electricity supplies should be included in the Climate Change Levy: relief supporting analysis (PP10) calculation.

We have agreed with the trade bodies representing LPG and solid fuel wholesale suppliers that the taxable commodities supplied to their customers for onward re-sale can be certified in a less formal way. If you’re in that situation you should contact us for further guidance on what information needs to be sent to HMRC.

The principles set out in section 6 cover the most common situations and especially those where a business’s energy consumption does not change significantly from year to year.

General guidance cannot cover every situation. If any other situation arises that is not covered in section 6 you should contact us and we will work with you to resolve it.

Use form PP10 Climate Change Levy: relief supporting analysis.

Use form PP11 Climate Change Levy supplier certificate (PP11).

All taxable commodities used on production premises are exempt from the main rates of CCL unless they’re clearly not necessary for, or directly related to, the production process.

Taxable commodities used by producers at remote sites may also be exempt if there is a strong link with the production process.

Examples of exempt and non-exempt uses are given in sub-paragraphs 9.1.1, 9.1.2 and 9.1.3. If the quantities supplied do not exceed the de minimis thresholds set out at paragraph 2.5, there is no liability to the main rates of CCL.

*Primary distribution terminals are those receiving supplies direct from a refinery.

The following processes using taxable commodities are exempt from the main rates of CCL.

Electricity in electrolysis for the production of:

Electricity in the following types of electrolysis:

Methane as a feedstock in producing higher paraffins and their derivatives.

Lower olefins as feedstock for conversion by chemical processes.

Propylene as feedstock in the manufacture of propan-2-ol (iso-propyl alcohol), polypropylene and cumene.

Petroleum coke in the manufacture of carbon and graphite electrodes.

These mixed uses are the only ones that involve relevant commodities being used partly as fuel and partly not, but which are specified as being uses that are not to be taken as being uses of those commodities as fuel.

Coke as a source of carbon dioxide in the ammonia soda process for producing soda ash

Coal, coke and anthracite used for its structural properties as a bedding agent in the extraction of gas from waste material

Natural gas as a reductant in emission control systems, for example, in the reduction of oxides of nitrogen

Natural gas in the manufacture of methocrylate monomers and polymers including that natural gas used for emission control which is an integral and essential part of the manufacturing process

Natural gas as feedstock in the production of carbon black

Liquid propane in the production of ethylene where heat is provided either by combustion of the waste products or from another source

Commodities in the reduction of chlorine

A number of mixed use exemptions from CCL were discontinued from 1 April 2014, since they’re metallurgical processes and will qualify for the new metallurgical exemption (see paragraph 3.14) from that date. A list of the discontinued mixed uses is provided in Annex A.

If you need general advice please contact the helpline.

Your Charter explains what you can expect from us and what we expect from you.

If you have any comments or suggestions to make about this notice, please write to:

HMRC Environmental Taxes Team 3rd Floor West, Ralli Quays 3 Stanley Street Salford M60 9LA

Please note this address is not for general enquiries.

For your general enquiries please phone our Helpline on Telephone: 0300 200 3700.

If you’re unhappy with our service, please contact the person or office you have been dealing with. They will try to put things right. If you’re still unhappy, they will tell you how to complain.

Find out how HMRC uses the information we hold about you.

This annex sets out the scope of the exemptions referred to in paragraph 3.14.

Processes that qualify for the mineralogical exemption are set out in section 2 of this annex.

Processes that qualify for the metallurgical exemption are set out in section 3 of this annex.

Section 4 of this annex provides an indicative list of energy uses accepted as falling within the scope of the exemptions where incurred in the course of a qualifying process.

Where energy costs incurred at a site relate to both exempt and non-exempt processes, the energy usage must be apportioned on a fair and reasonable basis.

Details of how to claim the exemptions are set out in section 6.

This includes the manufacture of flat glass, including wired, coloured or tinted flat glass.