Renegade_Master
Well-Known Member
missed all this 60/40 bit Jez please explain
Red diesel duty confirmed as 60/40 split
- Thread starter Whitelighter
- Start date
sailorman
Well-Known Member
Red Diesel
Update Friday 12th September 2008
The BMF, RYA and IWA are pleased to provide an update on how the end of the derogation will be implemented as of 1 November 2008.
Introduction
We have been working closely with HMRC since early 2007 to produce a pragmatic and sensible solution to the implementation of the end of the derogation. Prior to that, from 2003, we successfully lobbied Government to seek the retention of the derogation but this was rejected by the European Commission in favour of its tax harmonisation agenda.
Once it was confirmed that the derogation had to come to an end, our key concerns were to:
• Secure the continued availability of diesel at the waterside
• Minimise the impact on the boater and industry
• Avoid safety and environmental implications of transporting fuel by hand
In February of this year when HMRC published its outline proposals we were pleased to see that our efforts had succeeded and that all of these concerns had been taken into account, particularly by allowing recreational boaters to continue to use red diesel. Since then, we have been endeavouring to ensure that the detail of HMRC’s proposals is as simple and effective as possible.
Successful Co-operation
The BMF, RYA, IWA and HMRC all agree that it was disappointing that the derogation was not renewed by the European Commission, despite what we all considered to be a very strong case. We also all agreed that the end of the derogation presented considerable difficulties in terms of implementation. We are very pleased, however, that the BMF, RYA, IWA and HMRC have been able to work together successfully on behalf of the industry and recreational boaters. HMRC has been very receptive to the concerns of suppliers and users and has managed the consultation process well.
HMRC Conclusions
• HMRC accepted the overwhelming wish of both suppliers and users that red diesel should continue to be available to recreational boaters.
• The loss of the derogation will only affect fuel used for propulsion, which will be subject to the full rate of duty.
• Red diesel at the rebated rate will continue to be available for domestic purposes, such as heating and lighting.
How will it work?
1. When recreational boaters buy diesel for their craft, they will need to make a declaration to the supplier if they intend the fuel to be used for propelling a private pleasure craft.
2. The recreational boater will also declare what percentage of the fuel will be used for propulsion (as opposed to domestic purposes such as heating and lighting).
How will the boater work out what percentage of fuel they intend to use for propulsion?
HMRC has understood our arguments about the potential difficulties for fuel suppliers in calculating duty and VAT – in particular for the smaller operators – when faced with customers claiming different percentages of fuel used for propulsion. HMRC also appreciates the concerns of users about the difficulty of calculating and apportioning their own intended usage accurately and their worries about unintentionally making an inaccurate declaration. However, the EU Energy Products Directive specifically refers to ‘fuel for the purposes of navigation’ (which is reflected in UK law as ‘fuel for propelling’), so there is no legal basis for imposing a single standard apportionment to be applied universally that pays no regard to actual usage for propulsion.
HMRC has therefore confirmed to the BMF, RYA, and IWA that their advice on this issue is as follows:
“Q. What will be the allowance for fuel used on boats for heating and lighting?
A. There is no fixed allowance. It is for the purchaser to declare the percentage of fuel used for propulsion. However, analysis by both the industry and HMRC suggests that a split of 60% for propulsion and 40% for domestic use (heating, cooking etc) probably reflects most people’s use and it is therefore likely that many users will declare such an apportionment. This will make it easier for suppliers (RDCOs) to work out additional duty and VAT. However, where a purchaser knows that their propulsion use may be more or less than the above apportionment split or a craft clearly has no domestic use, then they must declare their actual intended usage.
Q. What about residential boat owners where nearly all fuel is for domestic purposes – what can they declare?
A. We have recognised the status of residential boat owners whose primary residence is their boat. Some of these will be at fixed moorings or move just a very short distance along the tow path from permanent moorings. If they live aboard the craft permanently and hold certain documentation, such as a Houseboat Licence, Residential Mooring Licence, Council Tax Bill in respect of the mooring, or other peripheral documentation, invoices or bills which provides proof of permanent residency, they may purchase all their fuel at the rebated rate (as if they were a commercial vessel). They will still be required to make and sign a declaration saying that 0% of the fuel is for propelling purposes. It will be the responsibility of the declarant to ensure that they hold the requisite documentation should HMRC wish to check the validity of the declaration made in these circumstances. Continuous cruisers may not declare 0% under these arrangements, even if they reside permanently on their craft, they must declare their actual intended usage for propulsion.”
Registered Dealers in Controlled Oils (RDCO) will need to account to HMRC for the additional duty received from recreational boaters. RCDOs already owe a general duty of care to ensure that they only make supplies of controlled oil for legitimate uses.
Further Information
We will continue to work with HMRC to provide support to suppliers and users over the next few months. RYA and IWA will provide guidance to their members and the BMF will offer an information service for industry. HMRC has confirmed that it will provide supplementary guidance to RDCOs and that its emphasis as the new measures bed in will be to help and advise suppliers and users to get things right.
Update Friday 12th September 2008
The BMF, RYA and IWA are pleased to provide an update on how the end of the derogation will be implemented as of 1 November 2008.
Introduction
We have been working closely with HMRC since early 2007 to produce a pragmatic and sensible solution to the implementation of the end of the derogation. Prior to that, from 2003, we successfully lobbied Government to seek the retention of the derogation but this was rejected by the European Commission in favour of its tax harmonisation agenda.
Once it was confirmed that the derogation had to come to an end, our key concerns were to:
• Secure the continued availability of diesel at the waterside
• Minimise the impact on the boater and industry
• Avoid safety and environmental implications of transporting fuel by hand
In February of this year when HMRC published its outline proposals we were pleased to see that our efforts had succeeded and that all of these concerns had been taken into account, particularly by allowing recreational boaters to continue to use red diesel. Since then, we have been endeavouring to ensure that the detail of HMRC’s proposals is as simple and effective as possible.
Successful Co-operation
The BMF, RYA, IWA and HMRC all agree that it was disappointing that the derogation was not renewed by the European Commission, despite what we all considered to be a very strong case. We also all agreed that the end of the derogation presented considerable difficulties in terms of implementation. We are very pleased, however, that the BMF, RYA, IWA and HMRC have been able to work together successfully on behalf of the industry and recreational boaters. HMRC has been very receptive to the concerns of suppliers and users and has managed the consultation process well.
HMRC Conclusions
• HMRC accepted the overwhelming wish of both suppliers and users that red diesel should continue to be available to recreational boaters.
• The loss of the derogation will only affect fuel used for propulsion, which will be subject to the full rate of duty.
• Red diesel at the rebated rate will continue to be available for domestic purposes, such as heating and lighting.
How will it work?
1. When recreational boaters buy diesel for their craft, they will need to make a declaration to the supplier if they intend the fuel to be used for propelling a private pleasure craft.
2. The recreational boater will also declare what percentage of the fuel will be used for propulsion (as opposed to domestic purposes such as heating and lighting).
How will the boater work out what percentage of fuel they intend to use for propulsion?
HMRC has understood our arguments about the potential difficulties for fuel suppliers in calculating duty and VAT – in particular for the smaller operators – when faced with customers claiming different percentages of fuel used for propulsion. HMRC also appreciates the concerns of users about the difficulty of calculating and apportioning their own intended usage accurately and their worries about unintentionally making an inaccurate declaration. However, the EU Energy Products Directive specifically refers to ‘fuel for the purposes of navigation’ (which is reflected in UK law as ‘fuel for propelling’), so there is no legal basis for imposing a single standard apportionment to be applied universally that pays no regard to actual usage for propulsion.
HMRC has therefore confirmed to the BMF, RYA, and IWA that their advice on this issue is as follows:
“Q. What will be the allowance for fuel used on boats for heating and lighting?
A. There is no fixed allowance. It is for the purchaser to declare the percentage of fuel used for propulsion. However, analysis by both the industry and HMRC suggests that a split of 60% for propulsion and 40% for domestic use (heating, cooking etc) probably reflects most people’s use and it is therefore likely that many users will declare such an apportionment. This will make it easier for suppliers (RDCOs) to work out additional duty and VAT. However, where a purchaser knows that their propulsion use may be more or less than the above apportionment split or a craft clearly has no domestic use, then they must declare their actual intended usage.
Q. What about residential boat owners where nearly all fuel is for domestic purposes – what can they declare?
A. We have recognised the status of residential boat owners whose primary residence is their boat. Some of these will be at fixed moorings or move just a very short distance along the tow path from permanent moorings. If they live aboard the craft permanently and hold certain documentation, such as a Houseboat Licence, Residential Mooring Licence, Council Tax Bill in respect of the mooring, or other peripheral documentation, invoices or bills which provides proof of permanent residency, they may purchase all their fuel at the rebated rate (as if they were a commercial vessel). They will still be required to make and sign a declaration saying that 0% of the fuel is for propelling purposes. It will be the responsibility of the declarant to ensure that they hold the requisite documentation should HMRC wish to check the validity of the declaration made in these circumstances. Continuous cruisers may not declare 0% under these arrangements, even if they reside permanently on their craft, they must declare their actual intended usage for propulsion.”
Registered Dealers in Controlled Oils (RDCO) will need to account to HMRC for the additional duty received from recreational boaters. RCDOs already owe a general duty of care to ensure that they only make supplies of controlled oil for legitimate uses.
Further Information
We will continue to work with HMRC to provide support to suppliers and users over the next few months. RYA and IWA will provide guidance to their members and the BMF will offer an information service for industry. HMRC has confirmed that it will provide supplementary guidance to RDCOs and that its emphasis as the new measures bed in will be to help and advise suppliers and users to get things right.
rickp
Well-Known Member
Re: Diesel Price Calculation -
[ QUOTE ]
Could someone tell me a simple way for working out what fuel will cost per litre with the 60/40 split.
Is it as simple as adding £0.34 to the current pump price (£0.95 at the moment!)?
[/ QUOTE ]
Thats a reasonable guess, but its not exact because there are different vat rates at play. The duty rates come the 1st November will be 10.07p/litre for rebated usage and 52.35p/litre for propulsion.
Taking the price at my marina, we can work it out. Currently its 71p/litre (last time I checked, possibly lower now).
Remove 5% VAT and the current duty (9.69p/litre), gives 57p/litre as the base price + marina markup.
60% of that at the higher duty rate. So thats 60% of 57p/litre - 34p/litre + 60% of 52.35p/litre + 17.5% VAT, giving 78p/litre for the propulsion part.
40% of that is at the lower duty rate, so thats 40% of 57p/litre - 23p/litre + 40% of 10.07p/litre + 5% VAT, giving 29p/litre.
Sum the two parts, to give £1.07 per litre roughly.
If your starting price is 95p/litre, then it will be roughly £1.32 using the method above - shows how much you are being ripped off - as it will be cheaper to buy normal road fuel!
I think thats right - no doubt someone will correct me if not /forums/images/graemlins/smile.gif Wonder how marinas will cope with this for folks who are declaring a different rate? What will they put on the board as the price for instance? Will we see them all advertising a 60/40 price?
Rick
[ QUOTE ]
Could someone tell me a simple way for working out what fuel will cost per litre with the 60/40 split.
Is it as simple as adding £0.34 to the current pump price (£0.95 at the moment!)?
[/ QUOTE ]
Thats a reasonable guess, but its not exact because there are different vat rates at play. The duty rates come the 1st November will be 10.07p/litre for rebated usage and 52.35p/litre for propulsion.
Taking the price at my marina, we can work it out. Currently its 71p/litre (last time I checked, possibly lower now).
Remove 5% VAT and the current duty (9.69p/litre), gives 57p/litre as the base price + marina markup.
60% of that at the higher duty rate. So thats 60% of 57p/litre - 34p/litre + 60% of 52.35p/litre + 17.5% VAT, giving 78p/litre for the propulsion part.
40% of that is at the lower duty rate, so thats 40% of 57p/litre - 23p/litre + 40% of 10.07p/litre + 5% VAT, giving 29p/litre.
Sum the two parts, to give £1.07 per litre roughly.
If your starting price is 95p/litre, then it will be roughly £1.32 using the method above - shows how much you are being ripped off - as it will be cheaper to buy normal road fuel!
I think thats right - no doubt someone will correct me if not /forums/images/graemlins/smile.gif Wonder how marinas will cope with this for folks who are declaring a different rate? What will they put on the board as the price for instance? Will we see them all advertising a 60/40 price?
Rick
Nick_H
Well-Known Member
Re: Diesel Price Calculation -
All looks spot on to me. I don't agree (with others, not you) that it's such a burden on the fuel seller. No user can possibly be more accurate than 10%, so the seller just has the simplest of PC programmes that does the sum you did in your post for 90/10, 80/20, 70/30 etc., and every time the base price changes they stick the new number in the spreadsheet, print out a new table, and sellotape it to the wall. If they really can't afford to buy a 10 yr old PC on e-bay for £20, they can almost as easily use a calculator.
Anyway, i'm off to buy shares in eberspacher, I hear they're developing a new product to heat the bow lockers of small RIBS /forums/images/graemlins/grin.gif
All looks spot on to me. I don't agree (with others, not you) that it's such a burden on the fuel seller. No user can possibly be more accurate than 10%, so the seller just has the simplest of PC programmes that does the sum you did in your post for 90/10, 80/20, 70/30 etc., and every time the base price changes they stick the new number in the spreadsheet, print out a new table, and sellotape it to the wall. If they really can't afford to buy a 10 yr old PC on e-bay for £20, they can almost as easily use a calculator.
Anyway, i'm off to buy shares in eberspacher, I hear they're developing a new product to heat the bow lockers of small RIBS /forums/images/graemlins/grin.gif
rickp
Well-Known Member
Re: Diesel Price Calculation -
Another interesting point is that 60% of the road duty is roughly the same as the EU minimum duty they are required to charge. Co-incidence, or shocking pragmatism?
Rick
Another interesting point is that 60% of the road duty is roughly the same as the EU minimum duty they are required to charge. Co-incidence, or shocking pragmatism?
Rick
silver_boy
Well-Known Member
Re: Diesel Price Calculation -
Thanks for that Rick - makes sense now! Hopefully it will come down a bit from 95p before november.
I've made a little calculator to work out what you will paying in November, based on the current pump price - feel free to find any errors!
Nov08 Red Diesel Calculator (Excel file)
Thanks for that Rick - makes sense now! Hopefully it will come down a bit from 95p before november.
I've made a little calculator to work out what you will paying in November, based on the current pump price - feel free to find any errors!
Nov08 Red Diesel Calculator (Excel file)