Originating department:	Commercial Services
Company Circular No:	LCH.Clearnet Ltd Circular No 2709
Service Circular No:	LCH EnClear No 309
Date:	01 November 2010
To:	All LCH.Clearnet EnClear Clearing Members

VAT: proposed reverse charge accounting for businesses trading in emissions allowances

Budget Note 49 (24 March 2010) announced the introduction of legislation for a reverse charge with effect from 1 November 2010

With effect from 1 November 2010 the reverse charge accounting mechanism will apply to:

• a transfer of an allowance, as defined in Article 3 of Directive 2003/87/EC (concerning the EU emissions trading scheme)

• a transfer of a certified emission reduction which can be used by an operator for compliance with the scheme established by the Directive

Members are therefore advised that from Monday 1 November 2010 reverse charge accounting will apply to all invoices produced resulting from  the delivery of an EU Allowance of Certified Emission Reduction under the EnClear service.

Contract	Contract Code
EUA Forward Contract	EUA
CER Forward Contract	CER
EUA Sport Contract	EUS
CER Spot Contract	CES

Invoices from 1 November 2010 will state additionally that:

• This invoice is subject to the reverse charge mechanism
• You must pay output tax as indicated to HMRC

Members will pay or receive a net amount in relation to contract settlement

Please refer to the HMRC website for further information.

http://www.hmrc.gov.uk/budget2010/march/bn49.htm

If you have any questions relating to this circular, please do not hesitate to contact me on +44 20 7426 6323 or [email protected].

Yours sincerely,

Jason LaBrooy

Energy, Freight and Emissions Markets 
Commercial Services