EGL71000 - Administration of EGL: application of corporation tax management provisions

Although the Electricity Generator Levy is a distinct charge it is administered through the corporation tax (CT) system: it is collected and managed “as if” it were CT, F(2)A23/S302(1).

General tax administration

This means that it is assessed and collected in the same way as CT, the receipts charged are those that arise in a qualifying period based on a CT accounting period and the wider CT administration framework concerning self-assessment, making of enquiries, charging of interest, penalties etc. apply to the EGL. F(2)A23/S302(3) provides a non-exhaustive list of the CT provisions that also apply for EGL purposes and F(2)A23/S302(4) ensures that EGL liability is included in the self-assessment return of a company liable to the EGL.

One significant difference from the usual CT rules is that in a group situation it is usually only the lead company that is responsible for reporting and paying the EGL on behalf of the wider group that is the “generating undertaking”. EGL32000 explains how the lead company is identified, including the process for nominating a group company for this purpose. More than one group company may be responsible for paying the EGL where an election is made to transfer part of the group’s liability to a member with a significant minority shareholder, as explained at EGL54000.

Liability for the EGL is calculated by reference to a “qualifying period” and the way the rules work means that this period will always fall within the lead company’s corporation tax accounting period although it may not coincide with the whole accounting period. This means that the EGL liability of the lead company is to be reported in that company’s CT self-assessment return for the relevant accounting period. See also EGL71000. The amount of EGL payable is to be added as the final item in the lead company’s CT return, F(2)A23/S302(4).

Generators not otherwise chargeable

It is possible for the rules for attribution to participants in a joint venture or to significant minority shareholders to result in a liability to EGL for a company that is not within the charge to corporation tax because it is a non-UK company, or a group with no members within the charge. F(2)A23/S303(1) & (2) ensure that a company tax return must be made in these circumstances and F(2)A23/S280(3)(b) effectively treats such a company as having an accounting period reflecting the calendar year.

A company that needs to notify that it is within the charge to the EGL should contact HMRC by email using egl@hmrc.gov.uk. It will then be provided with the details to register for Corporation Tax online using the Government Gateway.

Payment of interest

F(2)A23/S306(1) & (2) modify the rules in Taxes Management Act 1970 to ensure that EGL is payable at the same time as CT is due and that late payment interest may be charged accordingly. This also applies where CT is paid through a group payment arrangement.

EGL70000+ describes further aspects of EGL administration.