Motorboat & Yachting - - This Month's 10 -

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.

Leisure boats will have to stop us­ing red diesel

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