Published on: 28 August 2023
Leisure marinas from all parts of the UK tuned in to British Marine’s recent webinar on the Sale of Red Diesel which involved a presentation by HMRC followed by a Q&A session. It was organised by British Marine’s Public Affairs team following discussions earlier this year at TYHA’s marina conference about the need for operators, as Registered Dealers in Controlled Oil (RDCOs), to meet their legal obligations. This is important in helping to retain the system that recognises not all fuel used by a private pleasure craft (PPC) is for propulsion and allows fuel used for non-propulsion purposes to be taxed less. It also enables marinas and fuel suppliers to supply all of their customers with red diesel, rather than have to supply two types of fuel.
British Marine Members can view HMRC’s presentation via the following British Marine webpage.
Members can stay fully up to date with any changes affecting RDCOs by registering for HMRC newsletters by emailing morcexciseeast@hmrc.gov.uk
Below is a summary of RDCOs obligation and the issues discussed during the webinar.
British Marine members were reminded that RDCOs must take “all reasonable precautions” to ensure rebated fuel is only sold or supplied to customers who have a legitimate use for it.
In terms of private pleasure craft in Great Britain, rebated fuel can only be sold/supplied for domestic use, such as onboard heating or generation of electricity, whereas fuel for propulsion is not eligible for rebated fuel. Therefore, marinas selling red diesel should check the integrity of their customers and, if necessary, remind customers of the rules and the need for them to provide an accurate declaration as to the proportion of the fuel they intend to use for propulsion versus the proportion of fuel intended for domestic use.
Marinas are advised against always assuming or applying duty based on a 60:40 split (propulsion v domestic use) but instead should charge according to the percentages set out in the customer’s declaration.
HMRC emphasised the point that it is an offence to knowingly sell red diesel for ineligible use and that, in such a case, a marina would be within its right to refuse the sale. However, where the situation is less clear, HMRC would encourage marina staff to remind customers of the rules and the need for them to provide an accurate declaration on the proportion of fuel that is intended for propulsion v domestic use.
Crucially if a false or inaccurate declaration is submitted, it is the purchaser, not the seller, who would be held liable. That said, HMRC asks that marinas keep records of any concerns and where fraud is clearly suspected that it is reported to the HMRC’s Fraud Hotline (Telephone 0800 788 8867).
The issue of staff training was also discussed. HMRC explained there was no specific syllabus but stressed it was important that RDCOs, such as marinas selling red diesel, make their staff aware of the rules as set out in Excise Notice 192. That notice includes a checklist of points to consider when assessing a customer’s eligibility for rebated fuel.
Marina staff should also be familiar with Excise Notice 554 which defines a ‘private pleasure craft’ and provides guidance on the procedures for charging and collecting excise duty on fuel used, and Excise Notice 75 which sets out the permitted use of rebated fuel.
Members questioned the current policy that requires marinas to invest in separate diesel tanks for fuel needed to operate essential on-site equipment, such as boat hoists and forklifts, which may, for example, only require 80 litres of diesel per month.
Given marinas are trusted by the Treasury to collect and return of fuel duty on all fuel sold, it seems both unnecessary and unreasonable to require marinas themselves to have to use a separate diesel tank for their on-site equipment. Having to install a separate tank with a spill kit etc is hugely expensive for marinas which are primarily small and micro businesses. HMRC has since raised these concerns with the Treasury and will feed back any response to British Marine.
Finally, some members suggested marinas were being left at a commercial disadvantage because of inland retailers selling red diesel in drums which can then be added to private pleasure boats without the purchaser having paid the higher duty that is required on fuel for propulsion use.
HMRC acknowledged that this was wrong, both on the part of the supplier and the user and said that if there is a commercial disadvantage, it is from people acting illegally rather than there being any rules that apply only to marina RDCOs and not to other suppliers. HMRC confirmed that anyone who buys red diesel from an RDCO (or from an unapproved dealer) and doesn’t make the required declaration is using it illegally if they put it into a private pleasure craft for propulsion. It is also illegal to supply rebated fuel where there is reason to believe that the fuel will be used in an illegal way.
HMRC would encourage anyone concerned they are being disadvantaged commercially by illegal activity to report the matter to HMRC’s fraud hotline Tel 0800 788 887.
If you have specific questions for HMRC regarding your obligations as an RDCO please email oils.policymail@hmrc.gov.uk or, if you have wider concerns relating to government policies please email publicaffairs@britishmarine.co.uk
