EGL22520 - Exemption for new investments: the new investment condition

F(2)A23/S311A(2) expresses this condition by asking whether, as at 21 November 2023 (i.e. immediately before the exemption was announced), it would have been reasonable to conclude that there was a significant likelihood of the “qualifying project” not proceeding.  “Significant” here will be interpreted by HMRC as being of importance rather than there being some trivial, fanciful or insignificant risk to the project.   

Major infrastructure projects will typically reach a stage referred to as the Final Investment Decision (“FID”), which is a commercial concept that the EGL legislation does not attempt to define. But broadly, the exemption would not apply where a formal FID has taken place before 22 November, nor where the factors pointing to FID (even where there was no formal process) have taken place before that date. 

The factors that would point to a substantive decision to proceed with a project having been made may include: 

• A main board level commitment to undertake the project; 

• An approval of the total financial commitment required for the project; 

• The release of project funding by major investors; 

• The commitment to contracts regarding generating equipment and installation activity;  

• Where relevant, the triggering of options to acquire the interests in land required for the site of the station; 

• The approval of a credible timetable or programme for the project demonstrating that the facility can reasonably be expected to be commissioned;  

• Public statements announcing the decision to go ahead with the project, which may include announcements made for regulatory purposes. 

The absence of one or more critical agreements at 21 November 2023 may indicate that no substantive decision to invest has been made by that date. For example, where a project does not have funding in place, or there are no agreements in place for the supply of the key generating equipment.