RYA advice on HMRC red diesel announcement
Your questions answered on the recent HMRC red diesel announcement.
RYA advice to boaters following the announcement by HMRC on 21 February 2012. The Ministerial statement indicated that, from 1 April 2012, the use of marked red diesel to propel private pleasure craft will be allowed only within UK territorial waters.
So can I still cruise to France, for instance, this summer using marked red diesel?
In practice, the proposed legislation would make no difference to your ability to cruise to France using duty-paid marked red diesel. The Hydrocarbon Oil Duties Act 1979, which regulates the use of marked red diesel in the UK, only applies within UK territorial waters. As such, the 1979 Act does not currently have any impact on the use of marked red diesel for propelling private pleasure craft outside UK territorial waters.
The draft amendment to the 1979 Act published by HMRC on 20 February 2012 for consultation does not propose to extend the territorial scope of the 1979 Act and this Act would therefore still neither prohibit nor authorise the use of marked red diesel for propelling private pleasure craft outside UK territorial waters.
Accordingly, the proposed amendments to the Hydrocarbon Oil Duties Act 1979 would not of themselves have any impact on the ability of UK vessels to visit the waters of France or any other country.
It remains the case, however, that other coastal states may apply their own legislation to vessels navigating in their territorial waters and, as set out in the 1982 UN Convention on the Law of the Sea, such legislation includes the customs and fiscal laws of the coastal state.
As a result of this proposed change in legislation will I be fined if I go to Europe with marked red diesel in my tanks?
The proposed legislation does not change the current situation if you go to Europe. Generally UK boaters cruise and race to France and other countries regularly throughout the year and do not incur fines for using marked red diesel.
As far as the RYA is aware, Belgium is the only country in which fines may be imposed on UK boaters (and indeed Belgian boaters) for the mere presence of marked red diesel in their yachts’ fuel tanks.
The RYA is challenging the Belgian authorities’ actions in this regard both directly and through the UK Government and the European Commission.
More information on using red diesel abroad.
Why has HMRC put forward this proposed amendment for consultation?
According to the Tax Information and Impact Note published by HMRC, the purpose of this proposed amendment is to satisfy the European Commission’s concerns over the availability of duty-paid marked diesel in the UK for use in private pleasure craft, which issue is currently subject to infraction proceedings against the UK.
More information on EC infringment proceedings against the UK.
What was the amendment intended to achieve?
Since 2008 it has been prohibited to use red diesel in the UK for propelling a private pleasure craft unless the person purchasing the fuel made a declaration in the prescribed form and paid the requisite additional duty at the time of purchase.
As explained in the Tax Information and Impact Note published by HMRC, this amendment was intended to take account of the European Commission's concerns and minimise the risk of a successful legal challenge by making users aware that if such fuel is used in the territorial waters of another EU Member State they will be subject to any prohibitions and restrictions that may be imposed by that Member State.
What does the amendment to the declaration mean?
As it stands, the proposed revised content of the declaration does not accurately reflect the position under either UK or international law and thus would effectively require signatories falsely to acknowledge that they are aware of restrictions on fuel usage that do not in fact exist.
If, on the other hand, the amended declaration were drafted such that it simply reminded recreational boaters that other coastal states may apply their own legislation to vessels navigating in their territorial waters then it would be consistent with the UK and international legal position.
What is HMRC doing now?
The RYA understands that HMRC is currently reviewing the proposed declaration with its solicitors and that it hopes that it will be in a position to come back to us in the next few days.
Why doesn’t the UK just change to white diesel?
Availability of fuel around the UK is a key concern. If you are cruising on the south or east coasts then, in general you have a many places in which you can refuel. However, for boaters cruising in the more remote parts of the country, such as Scotland, Northern Ireland and the West Country, fuel supply is more of an issue.
For many of the fuel suppliers in these more remote areas fishing vessels, rather than recreational craft, are their main customers. Commercial vessels still use red diesel at the rebated rate of duty and so it makes no sense for suppliers in these areas to switch to white diesel.
The costs of installing two pumps, one for white and one for red are prohibitive and so availability of fuel in these areas would be compromised.
In addition, land supplies of white road fuel are not necessarily a short walk or even a short drive away from the port or marina.
Research conducted by the RYA and the BMF in 2005 indicated that, had suppliers been obliged to supply only unmarked diesel to private pleasure craft, approximately one third of the suppliers then supplying diesel to leisure boaters would have ceased to do so and would have limited their supplies to marked diesel for commercial operators.
The converse was the case for the inland waterways. Nearly half of the suppliers supplying diesel to leisure boaters in 2005 indicated that they would have ceased supplying marked diesel. This would have had a significant impact on the availability of marked diesel for those narrowboats and barges (many of which are people’s homes) that rely on such fuel for providing heating and lighting.
For many of our members, the significance of the marked diesel issue depends on the type of boating they do.
However, the RYA represents the interests of all types of boating, whether under power or sail, inland or offshore, and the RYA is therefore working hard to secure a solution to this issue that is to the benefit of as wide a range of boating interests as possible.