Commentary

RCB/46/09 VAT—zero rating of emissions allowances with effect from 31 July 2009

Part V16 Forms and other HMRC material

RCB/46/09 VAT—zero rating of emissions allowances with effect from 31 July 2009

RCB/46/09 VAT—zero rating of emissions allowances with effect from 31 July 2009

Revenue & Customs Brief 46, Issue 46. 31 July 2009

This HMRC brief concerns the introduction of SI 2009/2093 to zero rate the supply of emissions allowances (also known as carbon credits) within the UK with effect from 31 July 2009 in order to prevent the risk of VAT fraud.

In response to the escalating threat of VAT fraud in connection with trading of emissions allowances (often called “carbon credits”), the Government has introduced legislation (SI 2009/2093) to zero rate the supply of emissions allowances within the UK with effect from 31 July 2009. This is an interim measure that the Government expects to remain in force until an EU-wide solution is implemented. It follows similar action taken by France and the Netherlands earlier in the summer. The UK has applied to the EU for a retrospective derogation to remove VAT from these products.

Background

Emissions allowances or “carbon credits” are issued by governments under various schemes designed to cut carbon emissions by businesses. Within the European Economic Area, member states issue

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