HMRC Expiry of derogation for fuel used by private pleasure craft
The
following has been received from Dave Fitzgerald, Senior Policy
Adviser, Environmental taxation. The policy now decided on red
diesel
will not change, but the exact implementation is to be discussed, and
the RBOA will be meeting with HMRC for this purpose shortly after the
Budget.
Please find attached a copy
of our summary of responses to last year’s consultation exercise and a
copy of the Impact Assessment covering the new arrangements for private
pleasure craft. Both of these documents will be published on the HMRC
website in the next couple of days but I thought you would welcome an
advance copy.
There are some details of the new policy we will need to get together to discuss (see below) but the headlines are:
- Private users can continue to use marked fuel (red diesel) provided they make a simple declaration to the supplier and pay the full duty rate for heavy oil;
- Registered Dealers in Controlled Oils (RDCOs) will be responsible for declaring the duty collected to HMRC; and,
- Fuel purchased for domestic use (i.e. not for propulsion of the craft) can continue to be supplied at the rebated rate.
The changes will take effect from 1 November 2008.
The Budget and Finance Bill process will introduce the necessary legislation for the new arrangements. I had hoped to copy the draft legislation to you along with the above but regret I am not in a position to do that. I will look to circulate the draft as soon as it is ready.
I will briefly flesh-out the detail of the new scheme, as we envisage it, to try and anticipate some of your questions but I emphasise that I will be contacting you again shortly to help inform precisely how the various elements of the scheme are to be implemented.
The scheme will comprise a simple system of declarations (made, for example, on a copy invoice) by the purchaser/user to the supplier (RDCO) at the point of sale, stating that the fuel purchased is intended for a private pleasure craft and declaring the proportion of the fuel purchased which is intended for domestic use; the RDCO will charge and account for the duty due on the transaction accordingly. There will be a system of penalties to cover false declarations.
Naturally, we will be issuing proper guidance to RDCOs in due course but the framework of the new accounting procedures is as follows.
Beyond their existing duty of care, RDCOs will not be required to verify the validity of declarations made to them by users; they need only retain the declaration in their records to support their own duty return to HMRC. We intend to utilise an existing system of returns RDCOs make in respect of amounts of fuel they supply, to keep the additional administrative burden of accounting and declaring duty collected to an absolute minimum. Furthermore, we hope to offer the facility for annual accounting under this scheme.
I hope that gives you a broad idea of how the scheme will
work.
As I say, I will be contacting user groups to convene a meeting(s) re the declaration process and apportionment of fuel for domestic use. I will also be in touch with RDCO representatives to discuss those issues and accounting procedures. After that consultation period we will draft and issue proper guidance.
In the meantime, do not hesitate to contact me to discuss the above. I am happy to take calls via the RBOA Officers. (Contact Rex Walden by email if possible, otherwise phone 07768 605841)