Have your say: Red diesel consultation to be launched by HM Revenue and Customs

by | Jul 16, 2019

HM Revenue and Customs are asking boat owners to have their say on proposed changes to the rules surrounding red diesel use in private pleasure craft.

The proposed change of rules is a result of a judgement of the Court of Justice of the European Union (CJEU).

Last year the CJEU ruled that taxation rules in the UK surrounding diesel use in private pleasure craft, went against the Fuel Marker Directive.

Therefore, HM Revenue and Customs has outlined an eight week consultation with boat owners to set out the changes that the government will be making to the laws. These changes are being made to bring the UK’s practice into line with the Directive.

The consultation will also be held in order to learn of the impact the changes may have on those individuals who use diesel powered craft as well as their fuel suppliers.

The Fuel Marker Directive itself is designed to detect the misuse of diesel crossing EU internal borders, given the variation in duty treatment in member states.

According to the Royal Yachting Association, the government is set to remove the 2008 scheme allowing users of diesel powered private pleasure craft (e.g. yachts, canal boats and motorboats) to purchase red diesel and pay the duty differential between red and white diesel on the fuel used for propulsion.

Those who own these vessels also look set to lose their right to use red diesel for propulsion, whilst mandating the use of white diesel. You will still be allowed to use red diesel for on-board, non-propulsion, as long as you have a separate fuel tank for this purpose.

Therefore, if you have just the one tank you will have to pay more tax than you currently do, as your fuel will be taxed at the higher white diesel duty rate for both propulsion and non-propulsion uses. Furthermore, white diesel isn’t eligible for the reduced rate of VAT, so you’ll also be required to pay the standard rate of VAT.

All responses to the consultation will be used to help determine whether a period will be required for suppliers, known as Registered Dealers in Controlled Oils (RDCOs), and users of diesel fuel to adapt to using only white diesel for propulsion of private pleasure craft and, if needed, the length of any such period.

You can access the consultation here and it closes at 11:45pm on 9 September 2019.

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