V21.126 Deemed supplies

V21.126 Deemed supplies

Use of commodities by utilities and producers

An electricity or gas utility or producer of other taxable commodities may consume some of those commodities for routine business purposes (eg lighting and heating of a general administration building). In order to achieve 'fairness' compared to similar activities in other sectors, such supplies are deemed to be self-supplies on which utilities and producers must account for CCL in addition to their supplies to third parties.

If an electricity utility does not supply a quantity of electricity but causes it to be consumed in the UK, the utility is deemed to make a supply to itself of that electricity1.

Where a gas utility holds gas in a gaseous state, and does not supply a quantity of that gas but causes it to be burned in the UK, the utility is deemed to make a supply to itself of that gas2.

A person is deemed to make a supply to himself of a quantity of a commodity3 where:

  1.  

    (1)     he has produced a taxable commodity

  2.  

    (2)     the commodity is either a taxable commodity other than electricity, or electricity that has been produced from taxable commodities, and

  3.  

    (3)     as regards a quantity of the commodity, the person makes no supply of that quantity to another person but causes it to be burned (or, in the case of electricity, consumed) in the UK

HMRC may by regulations make provision for electricity to be treated for the purposes of 2 above as produced from taxable commodities unless prescribed

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