540A Disposal of certain emissions allowances.
(1) In this section—
“Agency” means the Environmental Protection Agency, being a competent authority designated under Article 18 of the Directive;
“aircraft operator” has the same meaning as in Article 3 of the Directive;
“Directive” means Directive 2003/87/EC of the European Parliament and of the Council of 13 October 20031 (as amended by Directive 2004/101/EC of the European Parliament and of the Council of 27 October 20042, Directive 2008/101/EC of the European Parliament and of the Council of 19 November 20083 and Directive 2009/29/EC of the European Parliament and of the Council of 23 April 20094);
“emissions allowance” means an allowance within the meaning of Article 3 of the Directive;
“installation” and “operator” have the same meanings respectively as in Article 3 of the Directive;
“permit” means a greenhouse gas emissions permit within the meaning of Article 3 of the Directive;
“relevant person” means—
(a) a person to whom a permit has been issued in accordance with Articles 5 and 6 of the Directive in respect of an installation in relation to which the person is an operator, or
(b) an aircraft operator;
“relevant scheme” means—
(a) a scheme of reconstruction or amalgamation in relation to which section 615 applies,
(b) a transfer of an asset in relation to which section 617 applies, or
(c) a transfer of a trade, or part of a trade, in relation to which section 631 applies.
(2) (a) Subject to paragraphs (b), (c) and (d) and notwithstanding section 110 or any other provision of the Tax Acts, where—
(i) a relevant person sells, transfers or otherwise disposes of an emissions allowance (in this section referred to as a “relevant emissions allowance”) received or receivable free of charge by that person from the Agency in accordance with the Directive, or
(ii) a company sells, transfers or otherwise disposes of a relevant emissions allowance which the company acquired under, or as part of, a relevant scheme,
such a sale, transfer or disposal shall constitute the disposal of an asset for the purposes of the Capital Gains Tax Acts and be treated as not being a disposal of trading stock for such purposes.
(b) References in paragraph (a) to the sale, transfer or disposal of a relevant emissions allowance shall include references to the sale, transfer or disposal of any interest or rights in or over such an allowance.
(c) Paragraph (a) shall not apply to a surrender and cancellation of an emissions allowance in accordance with Article 12 of the Directive.
(d) Paragraph (a)(ii) shall not apply to any sale, transfer or disposal of a relevant emissions allowance where, at any time before that event, the relevant emissions allowance was transferred from one company to another company in circumstances where the transfer was not made under, or as part of, a relevant scheme.
(3) For the purposes of the computation under this Part of any gain accruing to a relevant person or a company, as the case may be, on a disposal referred to in subsection (2)—
(a) no sum shall, notwithstanding section 547 or 552, be allowed as a deduction from the consideration for the disposal apart from incidental costs to the person or company making the disposal, and
(b) emissions allowances other than relevant emissions allowances shall be deemed to have been disposed of before relevant emissions allowances are disposed of by the person or company.
(4) Section 596 shall not apply where a relevant emissions allowance acquired by a person is appropriated as trading stock of the trade carried on by the person.