The Minister’s announcement on 20 February 2012 regarding the use of marked red diesel, directly contradicted the proposed legislation it was supposed to herald. As indeed does the consultation page on the proposed legislation on the HMRC website.

This has caused a great deal of concern and some confusion over boaters’ ability to use red diesel. I hope that the following will help to clarify the situation further.

We have already objected to the proposed legislation and you can respond directly to the HMRC consultation with your comments via the HMRC website The consultation closes on 11 March 2012.

Will UK boaters’ ability to go abroad change if the proposed legislation went through?

No. UK boaters’ current ability to cruise or race to Europe with duty paid marked red diesel in their tank would be unchanged. UK boaters would still need to comply with any applicable regulations of a coastal state, as they do currently.

The crux of the matter lies with the proposed change to the legislation and not with the Ministerial statement, which is wholly misleading and inaccurate and has caused a vast amount of confusion.

The current legislation (the Hydrocarbon Oil Duties Act 1979) only applies within UK territorial waters. The 1979 Act does not have any impact on the use of marked red diesel for propelling private pleasure craft outside UK territorial waters.

It neither permits nor prohibits UK boaters from using duty paid marked red diesel outside UK waters and the proposed amendment would not change this.

Proposed revised declaration

The problem for UK boaters lies with the proposed revised wording for the declaration, which does not accurately reflect the position under either UK or international law. It would require signatories falsely to acknowledge that they are aware of restrictions on fuel usage that do not exist. This is unacceptable and we have objected to it.

The declaration does not, however, affect UK boater’s ability to use duty paid marked red diesel abroad.

If 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.

Will UK boaters ability to go abroad change if HMRC changed the declaration to that suggested by the RYA?

No. UK boaters’ current ability to cruise or race to Europe with duty paid marked red diesel in their tank would be unchanged. UK boaters would still need to comply with any applicable regulations of a coastal state, as they do currently.  

RYA action

The RYA has challenged the proposed revised content of the declaration in the strongest terms and has made it quite clear to HMRC that we are outraged at the inaccurate suggestion by the Minister that our members might not be permitted to use red diesel in international waters.

We have said to HMRC that it must amend or withdraw its proposal for a revised declaration and are currently in discussion with them. HMRC is fully aware that the RYA speaks for the recreational boating community and we are fully engaged with them in the interests of recreational boating. HMRC have informed us that they are consulting with their lawyers in the light of the RYA’s objection.

On the wider issue of whether the continued use of duty paid marked red diesel by the UK constitutes “improper use” the RYA gained specialist taxation advice to support recreational boating’s case. It has made that case to HMRC, (the relevant government department) the EC and the Belgian authorities directly and through a number of different channels, and continues to do so. Read more about marked diesel and EU law.

The RYA has worked with Government in order to ensure that they frame a robust defence for its citizens to the EU proceedings. However, the infringement proceedings are confidential and neither the RYA, nor any other organisation, is privy to the detail of the negotiations that are currently taking place.

It is worth bearing in mind, in the midst of the noise that currently is surrounding this issue, that over the past three years HMRC officials have worked to support UK boaters. Certainly when the infringement proceedings were opened last year officials were seeking to challenge the proceedings and were supported by the then Minister Justine Greening MP. Read more on the EU infringement proceedings.

It is vital that the UK Government gets this right for all UK boaters, wherever they are located in the UK and wherever they are either cruising or racing.

Representing all members interests

The RYA works for, and represents a wide range of leisure boating activity in different parts of the country. The fight to retain the lawful use of red diesel by UK boaters, either here in the UK or in Europe, is the fight to:

  • ensure continuity of supply for UK boaters in the more remote parts of the UK
  • ensure continuity of supply for UK boaters on the inland waterways
  • ensure lawful use of duty paid marked diesel for UK boaters in Europe 

Leisure boating to Europe

For those cruising to Europe at present the only country in which you risk being fined for the presence of duty paid marked ‘red’ diesel in your tanks is Belgium. This an on-going issue which the RYA is working to resolve. Just prior to the HMRC announcement the RYA met with the senior officials at the Belgian Embassy as part of our on-going lobbying. Advice on using red diesel abroad.

Leisure boating in UK waters

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. As far as we are aware this is still the case.

Although this would not affect a significant number of boaters on the East Coast, or the South Coast it would have a significant impact on the availability of diesel for leisure boaters in more remote parts of the country, especially where coastal harbours cater predominantly for commercial (fishing) craft. Such areas include Scotland, Northern Ireland and the West Country.

At a conference held in Scotland last weekend (25/26 February) Scottish boaters were unequivocal in their support to retain red diesel. Without its continued supply their cruising and racing in Scottish waters would be threatened.

Leisure boating on UK inland waterways

The converse is 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. Again, we understand this still to be the case today.

This would have a significant impact on the availability of marked diesel for those narrowboats and barges (many of which are people’s homes) that rely on the ability to obtain a rebate for heating and lighting. Fuel used for heating and lighting attracts a lower rate of duty. If there is only a supply of white diesel then the costs of heating their home will increase dramatically.