HM Revenue and Customs Brief 56/08
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Issued 5 December 2008
Marine fuels and marine voyages excise duty relief - proposed consultation
Purpose of this brief
Following a review of the treatment of marine fuels, we wish to advise the
industry of our intention to undertake a consultation exercise, with a view to
changing the legislation and guidance, and to confirm the current procedures
which should have been followed by suppliers of these fuels.
Particular emphasis is placed on the correct procedure which should have been
followed when excise duty is dealt with under the 'netting' procedures.
The review has drawn to our attention the fact that the procedures for
supplying marine fuels under the netting arrangements are not being applied
consistently across the industry. This is having a distortive effect on the
supply chain and has led to complaints of unequal treatment. There are other
changes that we would like to make, including a number of other practices that
have resulted from individual interpretation of the guidance, which also need to
be addressed by improving the guidance that we issue.
In respect of marine fuels, relief from excise duty is available on heavy oil
and light oil which are used as fuel for the machinery of eligible vessels
during a marine voyage ('eligible vessel' and 'marine voyage' are defined in
Public Notice 263 section 2.1 and section 2.3 respectively).
Relief is obtained by using:
- Duty-free heavy oil delivered direct to the vessel from a duty-suspended
mineral oil installation.
- Duty-paid light or heavy oil on which repayment is claimed using form HO
50 (claims can be made by the owner, commercial charterer or hirer or the
ship's master, a sole agent, or a supplier of the oil acting as sole agent).
- Duty-paid light or heavy oil supplied at a duty-exclusive price by an
approved duty-deferment trader who is also approved for netting. Supplies must
be delivered direct from a warehouse or refinery to the ship that will be
engaged on a marine voyage by the approved person (duty deferment holder or
The netting procedure restricts the relief to 'direct deliveries' only. The
following delivery examples are therefore not acceptable under the current
- Deliveries to land based storage tanks/locations for onward delivery to
eligible vessels engaged on marine voyages. This would not preclude deliveries
to an authorised Export Warehouse where the product would move under the W8
- Deliveries to eligible vessels engaged on marine voyages where fuel is
sold to a third party prior to delivery at the ship's flange.
- Where a third party collects the fuel in their own transport from the
refinery or warehouse.
We are aware that different interpretations of the regulations surrounding
these procedures may have led businesses to set up systems based on incorrect
application of our policy. The recommendations on which we intend to consult
will address these issues along with others relating to the supply of marine
One recommendation concerns the issue of netting. Currently, netting is not
appropriate where marine fuel is purchased by and delivered to an intermediary
(third party who takes title) who then delivers the oil to a ship. In this
situation the intermediary is required to buy the oil at a duty-inclusive price
and sell it on at a duty-inclusive price, and the ship owner or other qualified
claimant is entitled to repayment of duty under the Marine Voyages Relief (MVR)
Our consultation proposes that this situation could be addressed by extending
the netting arrangements to allow an approved person (deferment holder) to
supply marine fuel, at a duty-exclusive price, to an intermediary. This third
party would also be able to supply at a duty-exclusive price, whether or not
they take title to the oil. This would be dependent on the intermediary
delivering the oil directly to a ship and providing the necessary supporting
evidence of delivery to the ship to the duty deferment holder.
As the current irregularities have been tolerated for a number of years, it
is our intention to allow a period of grace before requiring businesses to amend
their procedures in line with the results of our consultation. This period of
grace will run at least up until the publication of the consultation findings.
The consultation document will be issued shortly via our website and we
welcome your responses.
About the Author
© Crown Copyright 2008.
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Article Published/Sorted/Amended on Scopulus 2008-12-11 21:58:48 in Tax Articles