Citation and commencement

1. These Regulations may be cited as the Finance Act 1995, Section 127(12), (Designated Transactions) Regulations 2007 and shall come into force on 12th April 2007.

Transaction designated as an investment transaction

2. —(1) A transaction is designated as an investment transaction for the purposes of section 127 of the Finance Act 1995 (persons not treated as United Kingdom representatives) if conditions A to C are met.

(2) Condition A is that the transaction is a transaction—

(a) in Community tradeable emissions allowances, or

(b) in transferable units issued pursuant to the Kyoto Protocol.

(3) Condition B is that the transaction does not give rise to a chargeable gain falling within section 10 of the Taxation of Chargeable Gains Act 1992(non-resident with United Kingdom branch or agency)( 2 ).

(4) Condition C is that the transaction does not otherwise fall within section 127(12).

(5) For the purposes of this regulation—

“Community tradeable emissions allowances” are transferable allowances which relate to the making of emissions of greenhouse gases, and are allocated as part of a system made for the purpose of implementing any Community obligation of the United Kingdom relating to such emissions;

“Kyoto Protocol” means the Kyoto Protocol to the United Nations Framework Convention on Climate Change signed at Kyoto on 11th December 1997;

“section 127(12)” means section 127(12) of the Finance Act 1995(meaning of “investment transaction” for the purposes of determining whether a person is capable of being the UK representative of a non-resident taxpayer); and

“units” include assigned amount units, certified emission reductions, emission reduction units and removal units.