HMRC loses the battle against European Court of Justice for private pleasure boaters to use red diesel

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Her Majesties Revenue and Customs (HMRC) has lost its battle with the Court of Justice of the European Union over the right of private pleasure boats to use red diesel.

It’s a system that has allowed owners to use the same fuel suppliers as commercial boats, ensuring availability as well as allowing HMRC to reach an agreement in which users are allowed to self declare a proportion of fuel for domestic use for the purposes of fuel duty.

The European Commission took action against the United Kingdom of Great Britain and Northern Ireland, claiming that it had failed to fulfill its obligations under Council Directive 95/60/EC of 27 November 1995 on fiscal marking of gas oils and kerosene, initially by indicating its intention to commence infraction proceedings against the UK in 2011.

A formal request that the UK amend its legislation was made in May 2013 “to ensure that private pleasure boats such as luxury yachts can no longer buy lower taxed fuel intended for fishing boats”, issuing a reasoned opinion to the UK Government, which HMRC indicated its intention to challenge in July 2013. 

In 2014 the European Commission indicated that it had decided to refer the UK to the Court of Justice of the European Union. The judgment means that the UK must bring its practices into line with this ruling.

Currently the HMRC is examining the judgment and will announce how and when the UK will adjust its practices in due course. Muddying the waters further is Brexit, the effect of which on this and other boating matters remains unclear.