Citation and commencement

1. These Regulations may be cited as the Finance Act 2003, Paragraph 3(3) of Schedule 26, (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 Schedule 26 to the Finance Act 2003(non-resident companies: transactions through investment manager and others) 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 10B of the Taxation of Chargeable Gains Act 1992( 2 ) (non-resident company with United Kingdom permanent establishment) (and accordingly taken into account for the purposes of section 11(2A) of the Income and Corporation Taxes Act 1988( 3 ) (profits attributable to a permanent establishment)).

(4) Condition C is that the transaction does not otherwise fall within paragraph 3(3).

(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;

“paragraph 3(3)” means paragraph 3(3) of Schedule 26 to the Finance Act 2003(meaning of “investment transaction” for the purposes of determining whether a person is an agent of independent status in respect of investment transactions);

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