Reminder to energy intensive businesses to claim their energy tax reliefs on time

The Court of Justice of the European Union’s (CJEU) ruling in Shell Deutschland Oil GmbH (“Shell) case is a timely reminder for businesses to review their claims for tax relief on energy products and electricity (used for heating or manufacturing) and make sure that they file them in time. In this case the Court agreed that Shell’s late submission should be accepted, but only because of the particular circumstances involving an ongoing tax audit.

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Dale Cambridge-Sharpe, Jayne Harrold
Published: 26 Jan 2023 Updated: 09 Mar 2023
Tax Business tax

On 22 December 2022, the CJEU rendered its judgement in favour of the taxpayer in the case of Hauptzollamt Hamburg v Shell Deutschland Oil GmbH (C-553/21).

The facts of the case are that Shell submitted an application to the German Customs Office for tax relief on energy products which it used for business purposes during the period from August to November 2010. The German law required that the application should have been lodged with the Customs Office by 31 December 2011. Shell submitted the application in May 2012, which was late under the requirements of German law.  The Customs Office refused Shell’s application on the basis that Shell had filed the application after the statutory deadline.   The Customs Office, however, had opened an enquiry into the 2010 calendar year during 2011 and therefore the period under which it could make tax adjustments for 2010 had not expired at the time the application was received.

The referring German court observed that it would be contrary to EU law and the principal of proportionality to deny an energy tax relief solely on the basis that a formal requirement, filing the claim on time, had not been met. On this basis, the Court took the view that provided the extended period of assessment available to the tax authorities as a result of the open tax audit had not expired, the entitlement to a reduction or exemption of the energy tax shall not be denied. The only doubt in the mind of the referring Court was whether or not this conclusion was impacted by the fact the tax relief in question was an optional rather than mandatory relief provided for by the Energy Tax Directive.

The CJEU ruling provides legal certainty that the general principles of EU law, specifically effectiveness of rights (which requires that where EU law gives a person rights, national law should not take those rights away) and proportionality (that EU measures must be suitable, necessary and not burdensome on the taxpayer to achieve a desired end) must be interpreted so that a Member State may not refuse to grant an optional tax reduction after the period for submitting an application under national law has expired if the time period for making an assessment of tax has not yet expired.

While this was a very helpful decision for Shell, it was reliant to some extent on there being an open tax audit when the late application was made.  It is a timely reminder for businesses eligible for energy tax reliefs that claims should be made within statutory time limits.

In the UK, there are a number of energy tax reliefs available to energy intensive businesses, especially those with metallurgical processes, mineralogical processes, or climate change agreements. The reliefs need to be claimed by sending forms to the energy supplier and HMRC and need to be reviewed annually. If a business finds that it has been under claiming reliefs, it may be possible to make a claim for a 4 year period.

If you would like to discuss energy tax reliefs please contact Jayne Harrold.

Approval code: NTAJ14012305

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.

Tax legislation

Tax legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. You should always seek appropriate tax advice before making decisions. HMRC Tax Year 2023/24.