HMRC (Her Majesty's Revenue and Customs) has indicated to the RYA that the Government intends to challenge the European Commission over the continued use of red diesel by recreational craft in the UK.
In May the Commission formally requested that the UK Government amend its legislation to ensure that private pleasure boats were not allowed to purchase lower taxed fuel intended for commercial vessels. This was despite the fact that, since 2008, recreational boaters have had to pay the full rate of duty on fuel purchases except where the fuel is to be used for domestic purposes, such as heating and lighting.
Gus Lewis, Head of Legal and Government Affairs "The RYA and the BMF have been working together with HMRC for the last ten years to support the continued use of red diesel in the UK. Following the Commission's announcement in May, we met with HMRC to discuss the Government's position and we provided HMRC with detailed arguments to supplement the Government's own legal advice."
If the UK were forced to require recreational boaters to use white diesel then this could have serious consequences for recreational boating:
Many suppliers of diesel to recreational craft only have a single diesel tank and pump and, if these suppliers were obliged to supply only white diesel to private pleasure craft, they would be faced with the cost of either installing a second fuel tank and pumping equipment or flushing their old tank and equipment and thereafter only supplying white diesel.
It is clear that for many fuel suppliers the costs of installing a second tank and pump for white diesel would be prohibitive. This would effectively result in fuel being unavailable to recreational boats over significant sections of the UK coast, particularly in areas where the suppliers' main customers are commercial vessels such as the fishing fleet.
Even for marina operators that supply diesel primarily to recreational craft, the cost of conversion to white diesel may be prohibitive. According to the BMF, fuel sales only amount to about 10% of turnover for some operators and the profit margins may be insufficient to recoup the conversion costs. Such marina operators may decide to discontinue fuel supplies altogether.
Although most EU member states now supply only white diesel to recreational craft, there are many non-EU countries within a reasonable cruising range of the EU in which the only diesel available at the waterside is red diesel. Any recreational craft buying fuel when visiting these countries would be faced with the possibility of having to flush their fuel systems on return to the UK.
Those that live on board their boats and are dependent on diesel for heating and electricity generation are entitled to buy diesel at the reduced rate of duty for this purpose, in the same way that householders are. However, boaters would have to fit a second fuel tank if they were to avoid having to pay the full rate of duty on domestic fuel usage. Even then, the availability of red diesel waterside on the inland waterways would be reduced significantly.
"The UK Government has for several years supported recreational boating and the industry that serves it over the continued availability of red diesel for use in private pleasure craft in the UK and we are pleased that the Government has decided that it should challenge the Commission.
"We will continue to work with HMRC and the BMF on this issue we await with interest the Commission's response to the UK's position." concludes Gus.