HMRC decides to make the fuel vendor differentiate between commercial and leisure users; no self-declaration

TAGS:

The decision is this: red diesel is staying red, but boaters will have to pay the top rate of duty (56.94p) at the pump from 1 November this year.

UK boaters, therefore, can expect to see prices for a litre of diesel shoot to well over £1 a litre from November.

This also means that the fuel vendor is handed the responsibility of differentiating between commercial users, who will remain legally allowed to use red, and leisure users.

Red diesel is a more polluting fuel that standard Ultra Low Suplhur Diesel (ULSD) for cars, and is therefore subject to a higher rate of duty. Currently, red diesel has a rebated duty rate of just 9.69 pence per litre, so boaters will have to shoulder the difference between 56.94ppl and 9.69ppl (47.25ppl) from November.

The news came through today from HM Revenue & Customs, with the following wording: “Private pleasure vessels will continue to be permitted to use marked (red diesel) but at a rate for heavy oil, repaying the rebated duty via the Registered Dealers in Controlled Oils who will declare this to HMRC. An allowance for domestic use will be permitted.”

Boiled down into plain English – full whack at the pump for diesel for propulsion, but leisure users may declare that they intend to use a certain proportion of their tank of red for heating, or other “domestic uses”, which will be subject to a lower rate of duty.

The path chosen means the Government has not followed the example of Ireland, which decided last month to keep diesel prices fixed at the pump (see March MBM), but make the user self-declare the duty difference at a later date.

This decision by HMRC also means that boaters will be forced to carry records of fuel purchases, in order to be able to prove that they’ve paid the top rate for their diesel. The vendor will also have to keep accurate records, in order to declare the duty to HMRC.

This won’t lead to bands of customs men stopping boats and demanding to see records, HMRC’s Dave Fitzgerald told MBM, but he added that it would become a criminal offence to use red diesel for propulsion without proof that you paid the full rate of duty.

Just what this proof will constitute is still up for discussion, but Fitzgerald said he envisaged some form of copy invoice. Also still to be negotiated is just how boaters will inform fuel vendors how much of the fuel they’re taking on will be used for heating – it has already been suggested that there will be some “very thirsty Eberspachers” out there.

“The policy is fixed,” Fitzgerald said, “and it won’t be changed unless the law is amended during the Finance Bill process. It will be enacted in the summer and be implemented on 1 November.”