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The cost implications of Red Diesel to the Marine Industry

There's bad news for pleasure boaters in thefuel  for  domestic  use.
UK as the Government makes known its verdict
on  Red  Diesel's  future.Following that consultation process, HMRC
will  produce  comprehensive  guidance.
But  first...
'Our main concerns were availability and
What  is  Red  Diesel?safety,' said Neil Northmore, the RYA's
government  affairs  adviser.
Up until now, UK leisure boaters have been
able to fuel their boats with red diesel'We were aware that there was a danger that
which is subject to lower VAT. Coloured withsome retailers in more remote areas would
red dye to distinguish it from the moresimply not bother selling to pleasure boats
expensive variety, red diesel is typicallyon the premise that it would be more trouble
available for around 40p per litre, less thanthan it was worth to distinguish between
half the national average for diesel on theprivate and commercial craft, and then
forecourt.process  the  paperwork.'
The  issue.Increase  in  duty.
In recent years, permission to use red dieselHoward Pridding, executive director of the
became subject not only to national approval,BMF  said:
but also the EU's. The reason is down to EU
policies that bring into line taxes on fuels'We are pleased with how HMRC has managed the
and energy, and the fact that consent to useconsultation process and the position that
red diesel depends on exemption (derogation)they have finally adopted. When buying fuel,
from  these  EU  rules.people will be required to sign a declaration
that states whether their boat is for private
The Royal Yachting Association (RYA) foughtor  commercial  use.'
to extend the derogation that allowed UK
leisure boaters to use lower duty red diesel.It will then be up to HMRC whether they wish
In October 2006, the British Governmentto investigate whether the purchase was
decided to support the case. However, EUcorrect  or  not,  he  explained.
officials failed to accept the government's
arguments and have decided that theThe  Future  of  Red  Diesel.
derogation should end with effect from the
end of December 2006. There is now a graceOn 28 February 2008, HM Revenue & Customs
period in force for the phasing out of redrevealed that from 1 November this year,
diesel in the UK. In pleasure craft, redboaters will be paying a duty rate of 56.94
diesel will remain usable legally untilpence per litre, instead of the current rate
November  2008.of  9.69  pence  per  litre.
Honesty  is  the  best  policy.Boaters will be forced to keep records of all
diesel purchases, as it will become a
Now the RYA and the British Marine Federationcriminal offence to have diesel on board for
(BMF) say Her Majesty's Revenue and Customspropulsion that you cannot prove was bought
(HMRC) has decided private users can continueat  the  higher  rate  of  diesel.
to use marked fuel (red diesel) provided they
make a simple declaration to the supplier andDiesel bought for use as heating fuel will
pay  the  full  duty  rate  for  heavy  oil.still be available at a rebated rate. So to
add further complication, there will be a
The Registered Dealer in Controlled Oilssystem in place where you can declare that a
(RDCO) will then be responsible for declaringproportion of the diesel you are taking on is
the duty collected to HMRC. What makes thefor  'domestic  purposes'!
situation less clear is that fuel which is
intended for domestic use (not for boating)Only time will tell how this news will hit
will still be available at the lower taxthe market, but it's not hard to imagine it
rate.having  some  impact.
'Availability  and  Safety'.regularly publishes boating articles in
addition to listing thousands of boats and
The HMRC's Dave Fitzgerald confirmed the coreyachts for sale and charter all over the
policy had been fixed but that HMRC would beworld. Sign-up to TheYachtMarket's newsletter
working closely with the RYA, the BMF andto get the latest marine news and boats
other stakeholders to develop the detail ofdelivered to your inbox.
the declaration process and apportionment of



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