The cost implications of Red Diesel to the Marine Industry

There's bad news for pleasure boaters in the UK asstakeholders to develop the detail of the declaration
the Government makes known its verdict on Redprocess and apportionment of fuel for domestic use.
Diesel's future.Following that consultation process, HMRC will
But first...produce comprehensive guidance.
What is Red Diesel?'Our main concerns were availability and safety,' said
Up until now, UK leisure boaters have been able toNeil Northmore, the RYA's government affairs
fuel their boats with red diesel which is subject toadviser.
lower VAT. Coloured with red dye to distinguish it'We were aware that there was a danger that some
from the more expensive variety, red diesel isretailers in more remote areas would simply not
typically available for around 40p per litre, less thanbother selling to pleasure boats on the premise that it
half the national average for diesel on the forecourt.would be more trouble than it was worth to
The issue.distinguish between private and commercial craft, and
In recent years, permission to use red diesel becamethen process the paperwork.'
subject not only to national approval, but also theIncrease in duty.
EU's. The reason is down to EU policies that bring intoHoward Pridding, executive director of the BMF said:
line taxes on fuels and energy, and the fact that'We are pleased with how HMRC has managed the
consent to use red diesel depends on exemptionconsultation process and the position that they have
(derogation) from these EU rules.finally adopted. When buying fuel, people will be
The Royal Yachting Association (RYA) fought torequired to sign a declaration that states whether
extend the derogation that allowed UK leisuretheir boat is for private or commercial use.'
boaters to use lower duty red diesel. In OctoberIt will then be up to HMRC whether they wish to
2006, the British Government decided to support theinvestigate whether the purchase was correct or
case. However, EU officials failed to accept thenot, he explained.
government's arguments and have decided that theThe Future of Red Diesel.
derogation should end with effect from the end ofOn 28 February 2008, HM Revenue & Customs
December 2006. There is now a grace period in forcerevealed that from 1 November this year, boaters will
for the phasing out of red diesel in the UK. Inbe paying a duty rate of 56.94 pence per litre,
pleasure craft, red diesel will remain usable legally untilinstead of the current rate of 9.69 pence per litre.
November 2008.Boaters will be forced to keep records of all diesel
Honesty is the best policy.purchases, as it will become a criminal offence to
Now the RYA and the British Marine Federation (BMF)have diesel on board for propulsion that you cannot
say Her Majesty's Revenue and Customs (HMRC) hasprove was bought at the higher rate of diesel.
decided private users can continue to use markedDiesel bought for use as heating fuel will still be
fuel (red diesel) provided they make a simpleavailable at a rebated rate. So to add further
declaration to the supplier and pay the full duty ratecomplication, there will be a system in place where
for heavy oil.you can declare that a proportion of the diesel you
The Registered Dealer in Controlled Oils (RDCO) willare taking on is for 'domestic purposes'!
then be responsible for declaring the duty collectedOnly time will tell how this news will hit the market,
to HMRC. What makes the situation less clear is thatbut it's not hard to imagine it having some impact.
fuel which is intended for domestic use (not forregularly publishes boating articles in addition to listing
boating) will still be available at the lower tax rate.thousands of boats and yachts for sale and charter
'Availability and Safety'.all over the world. Sign-up to TheYachtMarket's
The HMRC's Dave Fitzgerald confirmed the corenewsletter to get the latest marine news and boats
policy had been fixed but that HMRC would bedelivered to your inbox.
working closely with the RYA, the BMF and other