Guidance

Climate Change Levy: returns, records and appeals

Find out how to submit returns and what records you should keep.

Returns

You submit your return in the same way for both the main Climate Change Levy (CCL) rates and the Carbon Price Support (CPS) rates.

HM Revenue and Customs (HMRC) will send you a CCL100 return form every 3 months for you to complete and return.

Your deadline for sending the return back to HMRC will be clearly stated on the return. This is usually the last working day of the month following the end of the return period.

HMRC may issue you a penalty if you don’t file your return on time. You may also have to submit monthly returns in future.

You need to pay your CCL at the same time as filing the return.

Your completed return should be sent to:

HMRC
Central Collection Unit (AL)
Alexander House
21 Victoria Avenue
Southend-on-Sea
SS99 1AS

Annual returns for small businesses

Annual returns are designed to reduce the administrative burden on small businesses. You can apply if:

  • you’ve been registered for CCL for at least 12 months and have submitted at least 4 quarterly returns
  • your CCL liability will likely not be more than £2,000 for 12 months
  • you’re not registered as a group or a division of a larger business
  • in the 12 months before your application, you’ve not stopped making annual returns (including for CPS rates of CCL)

To apply, write to HMRC with details of:

  • the date of your CCL registration
  • your CCL registration number
  • your total CCL liability for the past 4 quarters (including any carbon price support rates of CCL)
  • your expected total CCL liability for the next year
  • the date you want your accounting year to start

If your liability was above £2,000 for the last 4 quarters you should also explain why you think it will be lower next year.

Correct an error on a return

Errors up to £50,000 (or up to £10,000 for non-VAT registered companies)

You can correct net errors on previous returns up to a maximum of £50,000 by making an adjustment on your next return. You should record the adjustment in your CCL account and the reason for it.

If you’re not VAT registered, the limit is £10,000.

Errors over these limits

You must write to HMRC about the error. Include:

  • the error amount
  • the accounting period
  • which boxes on the return were under or over-stated
  • an explanation of how the error occurred
  • details of cumulative under or over-declarations, where these have happened

Credit notes

If you’re a supplier and you make an error and overcharge a customer, you’ll need to issue a credit note to them. Account for the credit note in the accounting period you correct it in your business accounts.

If the error and the correction are made in the same accounting period, treat it as a current period adjustment. If it’s corrected later deal with it as an error on your return.

You should follow the instructions under the heading ‘Errors over these limits’ if your business is insolvent.

Tax credits

When you accidentally overpay CCL you can claim tax credit.

This usually happens when:

  • you charged the main rate of CCL on a supply and should have charged the reduced rate or nothing
  • you declared it in a previous return and then again by mistake
  • your customer isn’t entitled to claim a tax credit to adjust the CCL relief claimed on their relief certificate

The tax credit is an over-declaration of CCL. You should account for it on your return if the total cumulative over-declarations are within £50,000 (£10,000 for no-VAT registered companies). If the over-declaration total is over this amount you need to follow the instructions under the heading ‘Errors over these limits’.

Records you must keep

You must keep records that prove the amounts of CCL you declare are correct. You can use any of these formats:

  • paper
  • paper records copied to microfiche or microfilm
  • computer records, including removable storage such as CDs and memory sticks

You need to keep records for 6 years and make all records available to HMRC if it asks to see them. You must be able to convert computer records to paper if needed.

Climate Change Levy account

You must keep a Climate Change Levy account if you’re registered for CCL. For each accounting period you must summarise the total CCL due to support your return. It should include itemised transactions to show the accumulation of CCL.

Other accounts you need to keep

The other accounts you should keep depend on your business. The most common accounts are:

Account type Businesses that should keep this account
Credit and debit notes and similar documents issued or received All suppliers of taxable commodities
Climate Change Levy accounting documents (CCLADs) Gas and electricity suppliers
Special utility scheme records Utilities operating special utility schemes
Commercial invoices Suppliers of taxable commodities other than electricity and gas and those involved in making or receiving supplies of carbon price support rate commodities
Bad debt accounting records Suppliers claiming bad debt relief
PP11 CCL Supplier Certificates Suppliers who have customers that claim a relief from the main rates of CCL

Accounts your customers will need to keep

If you pay the main CCL rate your customers may have to show you’ve charged them correctly, usually through their business and commercial records.

When you charge them reduced rates or nothing, you must also supply them with relevant:

  • VAT certificates
  • CCL declarations
  • CCL certificates (PP11 and PP10)

If they made statements on any of these certificates, they must keep the necessary records to prove the statements.

Appeal a penalty

You have the right to appeal a penalty if you receive one from HMRC for not keeping the correct records or making returns.

HMRC will also take into account any reasonable excuse for making an error.

Published 18 December 2014