2 RED DIESEL RULING GOES AGAINST HMRC
Her Majesty’s Revenue and Customs (HMRC) has lost its battle with the European Court of Justice over the right of private pleasure boats to use red diesel. The court has ruled that the UK has failed to fulfil its obligations under Council Directive 95/60/EC on fiscal marking of gas oils and kerosene.
The ruling means that owners of leisure boats may soon be forced to use the same unmarked ‘white’ diesel as road cars and pay fuel duty on the full amount purchased.
Currently owners of leisure boats are free to use the same dyed ‘red’ diesel as commercial boats but must pay full duty on the fuel used for propelling the boat. However, they are allowed to self declare a proportion of that fuel for domestic use, which attracts a lower duty, usually based on a pre-agreed 60:40 split.
The European Commission has been on a mission to force through the changes since announcing its intention to commence infraction proceedings against the UK in 2011. It ramped up the pressure in May 2013 with a formal request that the UK government amend its legislation.
HMRC refused to comply on the basis that the UK’S uniquely long, and in places sparsely populated, coastline made it impractical for fuel retailers to install and maintain two separate pumps for red and white diesel. The concern is that instead of installing a second white diesel pump for leisure boat customers many retailers will stick to a solitary pump serving red diesel to their more profitable commercial customers only. This would create a potential safety issue for leisure boats with limited tank capacity and range. Despite this the European Commission pressed ahead with its demands referring the UK to the European Court of Justice in July 2014.
HMRC is examining the judgement and will announce how and when the UK will adjust its practices in due course. There is not yet a formal timeline for this.
Both the RYA and the Cruising Association have expressed their concerns over the latest ruling and promised to continue to campaign on behalf of their members.