CCL Reconciliation – 2023
As we come to the end of the CHPQA submission process, many CHP operators will have received their CHPQA certificates validating their performance for the calendar year 2022.
With receipt of your CHPQA certificate you must now undertake CCL Reconciliation for HM Revenue & Customs (HMRC). This is a mandatory requirement and must be carried out sixty (60) days from date of certification, otherwise penalties can be imposed.
HMRC guidance states:
“On receipt of a new CHPQA certificate, and following its submission to BEIS for Secretary of State Certificate purposes, you must review your PP11 Supplier Certificate and reconcile the amount of CCL relief claimed on taxable commodities used as fuel inputs against the actual performance of the station over the same period.”
CCL Reconciliation for CHP operators falls into two categories: Gas Consumed by the CHP unit and Electricity Generated by the CHP unit.
Gas Consumed by the CHP unit
Your CCL exemption rate is based on the ratio between your Qualifying Fuel Input (QFI) against your total site gas input. Your QFI is shown on your CHPQA certificate; thus if your:
QFI = 1,616 MWh
Total Gas Input = 3,232 MWh
Then your CCL exemption = 1,616 / 3,232 = 50%
This calculation assumes no other exemptions are applicable (e.g. Climate Change Agreements) and is calculated using HMRC form PP10 (Climate Change Levy Relief supporting analysis), a copy of which you must send to HMRC.
Once the exemption rate has been calculated this is transposed to the PP11 Supplier Certificate and sent to your gas supplier to be applied to the appropriate account.
So your CCL exemption rate going forward is based on the previous year’s CHP validated QFI and total gas consumption. Simply put your CCL exemption in 2022 was based upon the validated QFI and total gas consumption data for 2021; likewise your CCL exemption in 2023 will be based on the validated QFI and total gas consumption data for 2022.
This is where CCL reconciliation comes in; you have to review your actual performance and CCL exemption in 2022 against the predicted exemption rate (based on the 2021 figures) for the year.
So if in 2021 your PP10 calculation showed an exemption rate of say 60% for 2022, but upon receipt of your CHPQA certificate for the 2022 calendar year your calculation showed an exemption of 50%; then there has been an underpayment of CCL. You were claiming a 60% exemption in 2022 but were only entitled to a 50% exemption and a repayment to HMRC of the difference is required.
The 2021 QFI and operational data gave the Leisure Centre a 58% exemption rate; however upon receipt of the new CHPQA certificate the QFI/Total Gas Consumption calculation showed an exemption of only 52.73%. So reconciliation must be carried out to determine the repayment to HMRC:
|Period Covered||Total Site Gas (kWh)||Billed CCL Discount (%)||CCL Payment Billed (£)||CCL Discount (%)||CCL Payment Due (£)||Reconciliation Payment (£)|
In this case a repayment of £300.64 is due and payment should be made using a self-declaration to HMRC for the amount shown.
Electricity Generated by the CHP unit
CCL reconciliation on CHP electricity is much easier to calculate, it is based on the difference between the schemes Total Power Output (TPO) and the Qualifying Power Output (QPO); both of these are shown on your CHPQA certificate.
The amount owed is calculated by subtracting the QPO from the TPO and multiplying the difference by the relevant rate of CCL for electricity.
From the 2022 CHPQA certificate we have the following values:
TPO = 485 MWh
QPO = 400 MWh
Therefore the amount owed would be:
485 – 400 = 85 MWh x 1,000 = 85,000 kWh x £0.00775 = £658.75
As there is no means to make a self-declaration for CCL reconciliation on electricity, the CHP operator would be required to register to pay CCL using HMRC form CCL1 and thereafter complete quarterly returns.
If you need help submitting your CCL reconciliation, or don’t know where to start, it’s not too late to get help. 2EA can assist you and support you in gathering the relevant documentation. Contact us now by emailing us at email@example.com or calling us on 01293 521350 for further information.