Readers’ forum: Carbon credit

We have a client who has been contacted by an agent to sell carbon credit offsetting units and are unsure what the tax treatment of these may be.

The units in question are identified as non-compliance market credits which we understand HMRC to consider to be outside the scope of VAT (see HMRC’s VAT Supply and Consideration Manual at VATSC06582) but there seems to be no guidance on direct taxes.

The client is a limited liability partnership operating a commercial woodland which benefits from the income tax exemption under ITTOIA 2005 s 768 on income arising from the woodland that is not otherwise charged elsewhere.

Since there appears to be no guidance published by HMRC readily available on this subject we are interested to know readers’ thoughts as to whether the disposal of these carbon credits would be subject to income tax or covered by the...