Guidance

Force of law guidance for Climate Change Levy

Published 30 March 2023

Completing a Climate Change Levy return form

The following text has the force of law by virtue of regulation 4(5) and 4(6) of The Climate Change Levy (General) Regulations 2001:

You must submit returns for each accounting period by completing the Climate Change Levy return form. You can download the form, complete it, and post it to HMRC.

If you get a blank return form sent to your registered address by HMRC, you can complete this instead of downloading the PDF. You will still need to post it back to HMRC. If you do not receive a blank return form, you will need to make a return using the downloaded PDF form.

Correcting errors on your return

The following text has the force of law by virtue of regulation 5(4) of The Climate Change Levy (General) Regulations 2001:

If you made any errors on previous returns, you must correct these. You must correct errors with a value of more than £50,000 by making a disclosure in writing to HMRC.

If the error is of a value less than £50,000, in certain circumstances, you can make the correction by adjusting your next return. If you do this, you need to record the adjustment in your levy account and the reason for it.

If you’re not VAT registered, the limit for these corrections is £10,000. You must correct errors of more than £10,000, provided they are not over 1% of the turnover figure of your VAT return (before correction), for the VAT return period in which you are making the correction.

If the net amount is over these limits, do not include the amount on this return. Instead, you must tell us by a disclosure in writing.

More details of the requirements for error correction are set out in the notes section of the Climate Change Levy return form.

Making a disclosure in writing

When you make a disclosure in writing. you must include:

• the error amount
• the accounting period
• which boxes on the return were under or over-stated
• an explanation of how the error happened

Changing from a quarterly accounting period to an annual accounting period

The following text has the force of law by virtue of regulation 6B(2) of The Climate Change Levy (General) Regulations 2001:

To change from a quarterly accounting period to an annual accounting period, to pay and account for Climate Change Levy, you must apply to HMRC in writing. Include details of:

• the date of your registration
• your registration number
• your total liability for the past 4 quarters (including any Carbon Price Support rates of levy)
• your expected total levy liability for the next year
• the date you want your accounting year to start

If your liability was more than £2,000 for the last 4 quarters, you should also explain why you think it will be lower next year.

Paying the levy

The following text has the force of law by virtue of regulation 6(2) of The Climate Change Levy (General) Regulations 2001:

You must pay the levy using the following methods:

• through your online bank account
• Direct Debit
• Faster Payments
• CHAPS
• Bacs

When to pay

The following text has the force of law by virtue of regulation 6(4) of The Climate Change Levy (General) Regulations 2001:

For both the main Climate Change Levy and Carbon Price Support rates, your payment is due on the same date as your return.

HMRC may offer a 7-day delayed payment concession if you pay by Direct Debit.

Keeping accounting documents

The following text has the force of law by virtue of regulation 7(4) of The Climate Change Levy (General) Regulations 2001:

As an energy supplier, you are required to keep levy accounting documents, including how you reached the total levy due for each period and itemised transactions.

An accounting document must show the:

• quantity of taxable commodities supplied
• period of supply
• supplier’s name and address
• customer’s name and address
• supplier’s reference number for the customer
• date of issue

You are also required to keep records of the following:

• commercial invoices for purchases and supplies of energy products
• credit and debit notes and similar documents you have sent or received
• a copy of the levy account document that you issued if you’re a supplier claiming bad debt relief

Records to keep when claiming reliefs

If you’re a business energy consumer and are charged the reduced rates of Climate Change Levy, or are exempt, you must keep records of the following:

• levy supplier certificates (PP11)
• supporting analysis form (PP10)

If you use supplies for domestic use, or for the non-business use of charities, you must keep a record of your VAT certificate.

If there is domestic or charitable, non-business use, and the intermediary has been excluded from the main rate of Climate Change Levy, they will need to keep a record of their levy declaration.

Record format and retention period

You must keep your records for 6 years. You must be able to convert computer records to paper if we ask you to.

You may keep records as paper records or as electronic copies.

Claiming reliefs through certificates

The following text has the force of law by virtue of regulation 37(2)(a) of The Climate Change Levy (General) Regulations 2001:

If you’re an energy consumer, you must complete 2 forms to claim relief from the main rate of Climate Change Levy, unless the exemptions for:

• renewable source electricity generated before 1 August 2015 apply
• certain supplies from a combined heat and power station apply

The forms are:

• Climate Change Levy: relief supporting analysis (PP10) — this sets out what reliefs you want to claim and requires you to estimate your usage against each relief (used to work out your overall percentage relief entitlement)
• Climate Change Levy supplier certificate (PP11) — this takes the percentage relief worked out on your PP10 form for a given taxable commodity, so your energy supplier can apply the correct rate to your bill

The supplier certificate (PP11) must be delivered to the supplier at a specified address. In this case, ‘address’ means a postal address, an email address or an internet address. Although energy suppliers must accept PP11s from their customers on paper, acceptance by email or the internet is at the supplier’s discretion.

Registering for Climate Change Levy

The following text has the force of law by virtue of regulation 2(3) of The Climate Change Levy (Registration and Miscellaneous Provisions) Regulations 2001:

If you are liable to register for Climate Change Levy, including the Carbon Price Support rates, you must register using the HMRC online service, through a Government Gateway account.

If you cannot register online, you can register using the postal form (CCL1) and return to HMRC. You will need to fill in an extra form (CCL2) if the business is a partnership.

Registering as a group

The following text has the force of law by virtue of regulation 8(5)(b) of The Climate Change Levy (Registration and Miscellaneous Provisions) Regulations 2001:

To register a company and other individual companies as a group, one member must act as the ‘representative member’. The representative member must have an established place of business in the UK.

The proposed representative member must set up a group by using the online form service, or by completing the form on-screen, then printing and posting it to HMRC.

The following text has the force of law by virtue of regulation 9(1)(b) and 9(4) of The Climate Change Levy (Registration and Miscellaneous Provisions) Regulations 2001:

To add, remove or change a group member’s details, use the online form service or print the postal form, fill it in and post it to HMRC.

Partnerships and other special cases

The following text has the force of law by virtue of regulation 14(4) of The Climate Change Levy (Registration and Miscellaneous Provisions) Regulations 2001:

We may require you, on notification of liability, to request approval for any person’s appointment as your tax representative if both of the following apply, you:

• are registered, or are required to be registered, for Climate Change Levy
• do not have any established place of business or usual place of residence in the UK

The following text has the force of law by virtue of regulation 14(6) of The Climate Change Levy (Registration and Miscellaneous Provisions) Regulations 2001:

To appoint a UK tax representative for Climate Change Levy if your business is not based in the UK, you must apply in writing by completing the relevant postal form.

The following text has the force of law by virtue of regulation 15(3) of The Climate Change Levy (Registration and Miscellaneous Provisions) Regulations 2001:

To appoint a different tax representative, you must apply in writing by completing the relevant postal form.