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HM Revenue and Customs Brief 30/14 - Fuel duty exemption

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Issued 14 August 2014

Excise Duty: Fuel duty exemption for fuel used in air navigation and navigation within EU waters

Purpose of this brief

This HM Revenue and Customs (HMRC) brief provides information about changes made to the charging and collection of excise duty (fuel duty) on the fuel used in private pleasure craft and for private pleasure-flying.

Who needs to read this?

  • purchasers and users of fuel used in private pleasure craft and for private pleasure-flying
  • companies that own corporate jets and yachts and use these for transporting staff

Background

Following 2 decisions of the Court of Justice of the European Union (CJEU) in the case C-79/10 (Helmholtz GMBH) and case C-250/10 (Haltergemeinschaft), the scope of the fuel duty exemption for fuel used in air navigation and navigation within EU waters has been narrowly defined.

The exemption for fuel used in air navigation and navigation within EU waters does not apply to fuel used in private pleasure craft or for private pleasure-flying.

Both Court judgments, which related to air navigation, ruled that the exemption does not apply if the supply of the transportation services is not provided for consideration.

The UK’s interpretation of ‘private pleasure’ to date has been fairly narrow. It excludes journeys for corporate purposes, such as employee transport on corporate jets and yachts.

Changes to the interpretation of the definition of private pleasure craft and private pleasure-flying

These Court judgments broaden the meaning of ‘private pleasure’ to include journeys where no payment has changed hands even if employees are being transported to undertake company business.

This means that businesses that use corporate jets fuelled with aviation turbine fuel (Avtur), and/or corporate boats for transporting their own staff for no consideration (that is no payment) will no longer be eligible for this exemption. They will have to pay fuel duty of 57.95 pence per litre (current rate) for domestic flights or voyages.

In summary:

  • the UK definitions will now be interpreted in line with the rulings in these 2 cases - as the UK takes its definitions of private pleasure-flying and private pleasure craft from the Energy Products Directive
  • HMRC has amended both paragraphs 9 and 13 of Public Notice 554 (Fuel used in private pleasure craft and for private pleasure-flying) to ensure they align with these rulings

Timing

These changes will come into effect on 1 September 2014.

What do I have to do?

Purchasers and users of fuel used in private pleasure craft and for private pleasure-flying and companies that own corporate jets and yachts and use these for transporting staff should:

  • familiarise themselves with the up to date interpretation of the definition of private pleasure craft and private pleasure-flying and follow the procedures for accounting for excise duty as outlined in paragraphs 4 and 13 of Public Notice 554

Further guidance

Public Notice 554 - Fuel used in private pleasure craft and for private pleasure-flying has been amended and provides detailed guidance.


About the Author

© Crown Copyright 2014.

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 2014-08-18 14:01:40 in Tax Articles

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