HM Revenue and Customs Brief 09/12
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Issued: 21 March 2012
Excise duty: Changes to use of red diesel in private pleasure
Purpose of this brief
This brief gives information about changes to the procedures
for the use of red diesel in private pleasure craft from 1 April 2012.
From 1 April 2012 legislation will make clear that the use of
red diesel with full duty paid for propelling private pleasure craft is
permitted under UK national legislation within UK waters. When red
diesel is used outside UK waters it will be subject to any prohibitions
and restrictions that apply in the waters of the Member State or
country in whose waters it is used.
Who needs to read this?
Registered Dealers in Controlled Oils (RDCOs) who supply red
diesel for private pleasure craft and private pleasure craft users.
At the end of 2006 a UK derogation to the Energy Products
Directive, permitting the use of rebated red diesel as fuel for
propelling private pleasure craft expired and such fuel became subject
to the full rate of duty.
A consultation exercise on options for implementing the new
requirements resulted in overwhelming support from boat users and
suppliers for the retention of red diesel. The reasons included the
cost to suppliers and likely subsequent supply problems of installing a
second supply stream if a switch to white was required and the fact
that red diesel could continue to be used for domestic purposes on
board at the rebated rate.
In November 2008 new procedures were introduced to allow the
use of red diesel to propel private pleasure craft on condition that
full duty is paid.
The European Commission has challenged the UK practice,
maintaining that it contravenes the fiscal marking directive (95/60/EC)
and that it makes it difficult for other Member States to control the
improper use of marked oils, as marking usually indicates that the oil
bears a rebated rate of excise duty. The changes being introduced aim
to take account of the European Commission's concerns and minimise the
risk of a successful legal challenge.
The changes clarify that the use of full duty paid red diesel
for propelling private pleasure craft as permitted under UK legislation
applies only to UK waters. This does not affect any prohibitions and
restrictions that apply outside UK waters, including any prohibitions
and restrictions under the law of another Member State which apply
within the territorial waters of that Member State.
Informal consultation with a number of representative
organisations has emphasised the importance to both suppliers and users
of the continued use of red diesel rather than the use of white diesel.
What are the changes?
Under the current arrangements any person purchasing red
diesel for a private pleasure craft must make a declaration at the time
of purchase of the proportion of fuel being used for propulsion
From 1 April 2012 the declaration will change to include an
acknowledgement that the use of full duty paid red diesel to propel
private pleasure craft is a UK procedure applicable to UK territorial
waters under UK national legislation. Users must be aware that if full
duty paid red diesel is used to propIssued 21 March 2011el pleasure
craft within the territorial waters of another Member State they will
be subject to the national legislation and consequently any
prohibitions and restrictions of that Member State.
What is the declaration?
The wording of the required declaration is:
I declare that [ ]% of the fuel purchased will be used for
propelling a private pleasure craft.
I am aware that the Hydrocarbon Oil Duties Act 1979, which
permits the use of marked diesel to propel private pleasure craft, only
applies within UK waters. I acknowledge that nothing in that Act, or
the making of this declaration, affects any restrictions or
prohibitions that may apply to the use of fuel for propelling private
pleasure craft outside UK waters, including any restrictions or
prohibitions under the law of another Member State that apply within
the waters of that Member State.
Under the current procedures suppliers must retain a copy of
the declaration in their records and this continues to be the case.
There is no standard form for the declaration and suppliers should
incorporate the declaration into their records in the most appropriate
There are no other changes to suppliers' obligations.
It remains the purchaser's responsibility to declare the
proportion of fuel used for propelling the craft, and sign and date the
Purchasers are currently advised to retain evidence that they
have made a declaration and paid duty on the fuel used for propulsion,
in order to facilitateany checks that HMRC or the relevant authorities
in other Member States wish to make. This continues to be the advice.
These changes come into effect on 1 April 2012. However, HMRC
recognises that where, for example, suppliers have the declaration
incorporated into pre-printed stationery, it may take suppliers some
time to reflect the changes fully.
Notice 554 - Fuel used in private pleasure craft and for
private pleasure flying will be amended.
About the Author
© Crown Copyright 2012.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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Article Published/Sorted/Amended on Scopulus 2012-03-22 15:08:18 in Tax Articles