HM Revenue and Customs Brief 01/13
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Issued 17 January 2013
Excise duty: Programme of Assurance - Registered Dealers in
Controlled Oils and Tied Oils Class Approval scheme
Purpose of this Brief
This Brief gives information about our intention to start a
programme of assurance visits to business customers of Registered
Dealers in Controlled Oils (RDCO), and business customers of
distributors trading under the Tied Oils Class Approval scheme who
purchase closed containers of 210 litres or less.
Who needs to read this?
RDCOs and their commercial customers who purchase controlled
oils (red diesel, rebated bio blend, kerosene, avtur) for business use,
users and distributors trading under the Class Approval scheme for tied
The RDCO scheme was introduced to support the UK Oils Strategy
with the aim of identifying and tackling commercial oils fraud. Under
the scheme all dealers in controlled oils register with HM Revenue
& Customs (HMRC). Controlled oils are liable to a rebated rate
of excise duty which is much lower than the full rate of road fuel
duty, and it is not allowed to be used in vehicles using public roads
other than in a limited number of excepted vehicles, where the use is
incidental to the main use.
Under the Tied Oils scheme, oils intended for use in an
industrial process may be delivered relieved of duty to traders who are
approved by HMRC to receive them. Products may also be released with no
payment of duty to customers of distributors under the Tied Oils Class
Approval scheme who purchase closed containers of 210 litres or less.
RDCOs and Tied Oils traders are obliged to keep records of
their sales, including details of who they are selling to. HMRC carries
out regular assurance visits to RDCOs and to Tied Oils traders to
ensure that the oils are put to an eligible end use and not diverted
for misuse as road fuel. Failure to comply with the requirement of the
scheme is subject to penalties.
HMRC is now planning a programme of assurance to ensure that
the oils are used for their intended purpose.
What are the changes?
HMRC intends to start a programme of assurance visits to:
- businesses purchasing rebated fuel from RDCOs
- customers of distributors trading under the Tied Oils Class
Approval scheme who purchase closed containers of 210 litres or less
What is an assurance visit?
An assurance visit may include:
- visiting your business premises to inspect goods, or
documents relating to your business
- visiting your business premises to check that you are
complying with the terms of any excise approval, registration,
authorisation or licence that you may hold
- the visit being notified in advance but officers can visit
Why are these changes being made?
The changes are being made to improve HMRC's control of the
controlled oil supply chain, and oils supplied relieved of duty under
the Tied Oils scheme, to ensure that the oils are put to a legitimate
use. The illegal use of cheaper rebated or duty relieved oils places
legitimate businesses at a disadvantage.
Who will be affected?
All commercial purchasers of rebated fuels for the purposes of
their business; commercial customers of oils from Tied Oils traders in
particular those purchasing oils in closed containers of less than 210
Customers purchasing rebated fuel for domestic purposes, for
example heating fuel, are not affected by this change.
What records must I keep?
You will need to keep your normal business records and produce
them to HMRC if asked to do so. These must include evidence of all your
purchases, such as invoices, of oils purchased for your business.
You will be required to provide evidence that you have used
the oils for your business purposes.
If HMRC establishes that the oils have not been used for a
legitimate purpose penalties may be applied.
What legislation is being changed or introduced?
No changes to legislation are being made.
HMRC will start an assurance programme of business customers
of RDCOs, and business customers of Class Approved traders in 2013.
Further information relating to:
- records required to be kept by those involved in any way
with goods or services liable to excise duty can be found in Notice 206
Revenue traders records
- the RDCO scheme can be found in Notice 192 Registered
dealers in controlled oils
- the Tied Oils scheme can be found in notice 184A Mineral
(Hydrocarbon) oil put to certain uses: Excise Duty relief
- the legitimate uses of controlled oil can be found in
Notice 75 Fuel for road vehicles
- general information and accounting of motor and heating
fuels for Excise Duty and VAT can be found in Notice 179 Motor and
heating fuels: General information and accounting for Excise Duty
About the Author
© Crown Copyright 2013.
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 2013-01-29 09:07:15 in Tax Articles