Red Diesel - HMRC defence in EU

[Blue Sunray]

A midrange D4 Eberspacher heater apparently uses 0.25lph on its medium setting so if you left it on all day and all night, thats 6l of fuel used. Thats enough fuel to keep my boat going for less than 2 mins at 20kts

60/40 youre having a laugh

I assume (yes, I know) that the same rules also apply to boat on rivers, canals etc which are more numerous and where the ratio is rather different though?

 

[Greg2]

If you applied that to any other industry it would quite rightly be called subsidy ?

Maybe but I think the simple point is that the tax regime for white diesel is designed around road use/consumption levels, which is entirely different to marine use. Indeed, red diesel is available for all ‘commercial’ use and not just fishing vessels’. It includes public services such as fisheries patrols, pilots, harbourmasters etc, as well as charter vessels, ferries etc so following that argument all ‘commercial’ users of red diesel could be said to be ‘subsidised’.

I think that a different tax regime has to be applied to something that does 1mpg as opposed to something that does 50mpg and perhaps that is in the minds of policy makers? Just a thought

 

[maby]

The RYA did a magnificent job hoodwinking HMRC into agreeing to that one. I should employ them as my tax accountants. Anyone who thinks that 60% of the fuel on a gas guzzling motor boat is used for propulsion and 40% for heating has never owned a motor boat

It is quite ridiculous! If it had not been for the 60/40 split, we might have been more successful at convincing the commission to turn a blind eye to the continued use of red diesel in our boats. As it stands, it is so obviously a tax dodge that it is impossible to defend. We own a sailing yacht - we can go long distances on a couple of gallons of diesel - but we are still offered 60/40 on a tank full of fuel in the middle of the summer.

 

[Greg2]

It is quite ridiculous! If it had not been for the 60/40 split, we might have been more successful at convincing the commission to turn a blind eye to the continued use of red diesel in our boats. As it stands, it is so obviously a tax dodge that it is impossible to defend. We own a sailing yacht - we can go long distances on a couple of gallons of diesel - but we are still offered 60/40 on a tank full of fuel in the middle of the summer.

Don’t think so. The 60/40 split arose because the EU were absolutey not going to continue to turn a blind eye and was the Govts way of trying to minimise the potentially damaging impact of full duty fuel and was actively lobbied for by recreational boaters. Of course there will be examples such as yachts where it could be argued that it is less justified but creating different classes of boats to which it applies would make it very difficult to administer.

It shouldn’t be forgotten that tax is still paid on the 60/40 split and why anyone would say that it is ridiculous to pay less tax in the overall context of what could be described as a punitive tax regime is a little beyond me

 

[maby]

Don’t think so. The 60/40 split arose because the EU were absolutey not going to continue to turn a blind eye and was the Govts way of trying to minimise the potentially damaging impact of full duty fuel and was actively lobbied for by recreational boaters. Of course there will be examples such as yachts where it could be argued that it is less justified but creating different classes of boats to which it applies would make it very difficult to administer.

It shouldn’t be forgotten that tax is still paid on the 60/40 split and why anyone would say that it is ridiculous to pay less tax in the overall context of what could be described as a punitive tax regime is a little beyond me

Don't get me wrong - I regard all taxation as theft! But the justification regularly put forward for the continued availability of red diesel to the leisure community is that the geography of Britain is such that a lot of boat owners would be unable to buy fuel if it were banned as the EU wants. We are south coast sailors and marina residents - if marked fuel was banned for us, the marinas would soon start selling red. The claim is that a lot of northern sailors would effectively have to give up if they were not allowed to take on red diesel in commercial fuel berths.

Look around marinas in the middle of the winter - the majority of boats are virtually unused from late October till late March. Very little of that 40% of untaxed fuel that is sold actually gets burned in heating - and the commission knows that full well.... It makes it very difficult to argue that the sale of red diesel can be justified on supply grounds!

 

[Greg2]

Don't get me wrong - I regard all taxation as theft! But the justification regularly put forward for the continued availability of red diesel to the leisure community is that the geography of Britain is such that a lot of boat owners would be unable to buy fuel if it were banned as the EU wants. We are south coast sailors and marina residents - if marked fuel was banned for us, the marinas would soon start selling red. The claim is that a lot of northern sailors would effectively have to give up if they were not allowed to take on red diesel in commercial fuel berths.

Look around marinas in the middle of the winter - the majority of boats are virtually unused from late October till late March. Very little of that 40% of untaxed fuel that is sold actually gets burned in heating - and the commission knows that full well.... It makes it very difficult to argue that the sale of red diesel can be justified on supply grounds!

I agree that the solution (60/40 split) to the EU imposed decision to stop the use of red diesel by recreational boaters is a bit clunky and hard to justify but I guess it was the best they could come up with in the circumstances. Interesting that the EU are still pursuing it when they know we are leaving and they have discontinued our involvement in various things on that basis.

 

[BruceK]

I love the term rich few used here. That was before the boat. Owning a boat is a great leveller imo.

 

[Leighb]

I may be wrong but as I understand the point the EU don’t care, even if you have paid the full rate of duty, if it has any traces of dye it is illegal and you can be fined.

 

[Tranona]

I may be wrong but as I understand the point the EU don’t care, even if you have paid the full rate of duty, if it has any traces of dye it is illegal and you can be fined.

The EU directive was intended to remove the differential tax regimes in individual states on competition grounds and the simplest way was to limit the sale of marked diesel for pleasure use so that tax would be the same as for road use. The laws to enact this directive were different in different states and not all used marked fuel as the discriminator. The UK law meets the directive by specifying what the fuel is used for (as per directive) - that is for propulsion. So fuel used for non propulsion such as heating and generating electricity is not taxed. This is particularly important for boats on the inland waterways where the majority of fuel is for non propulsion purposes.

So the HMRC argument is that our law meets the intention of the directive, whereas other states such as Belgium claim it intends a total ban on the use of marked fuel in pleasure boats. Hence the court case which may result in a definitive ruling.

 

[MapisM]

Bet the Italians cannot wait for us to snuggle up to that special person on the other side of the pond just dying to hoover up all our ex EU imports
We present saviour of the exiteers.....Mr Donald Trump ESQ.

That was a cunning plan wasnt it Mr Farage ?

You're overestimating Italians, oldgit.
We are a very simple lot, used to an easier approach in the competition with Brit builders - namely, just build better boats...

 

[maby]

The EU directive was intended to remove the differential tax regimes in individual states on competition grounds and the simplest way was to limit the sale of marked diesel for pleasure use so that tax would be the same as for road use. The laws to enact this directive were different in different states and not all used marked fuel as the discriminator. The UK law meets the directive by specifying what the fuel is used for (as per directive) - that is for propulsion. So fuel used for non propulsion such as heating and generating electricity is not taxed. This is particularly important for boats on the inland waterways where the majority of fuel is for non propulsion purposes.

So the HMRC argument is that our law meets the intention of the directive, whereas other states such as Belgium claim it intends a total ban on the use of marked fuel in pleasure boats. Hence the court case which may result in a definitive ruling.

All quite true - and we might have got away with it if it were not for the 60/40 and HMRC taking it on trust that we will be honest and declare the ratio that we really use. Somewhere in all the reams of EU documents on the subject, there are words to the effect that any untaxed (and, by implication, marked) fuel must be carried in a tank that cannot be connected to the engine fuel supply. If all fuel sold to the leisure market was taxed at the full rate, we might possibly have been able to convince them to turn a blind eye to it. People buying many hundreds of litres of marked diesel in the middle of the summer and claiming that 40% of it was going into the heating is exactly the sort of thing that the rules are trying to forbid - hardly surprising that they are taking action to enforce them!

 

[gjgm]

It is quite ridiculous! If it had not been for the 60/40 split, we might have been more successful at convincing the commission to turn a blind eye to the continued use of red diesel in our boats. As it stands, it is so obviously a tax dodge that it is impossible to defend. We own a sailing yacht - we can go long distances on a couple of gallons of diesel - but we are still offered 60/40 on a tank full of fuel in the middle of the summer.

The supplier has no obligation other than to keep your record and your signed declaration. It is your obligation to buy fuel at the rates at which you intend to use it.
It isnt offered to you at 60.40...it is for sale at whatever rates you believe you will use the fuel. The responsibility is yours, not the supplier's.

 

[maby]

The supplier has no obligation other than to keep your record and your signed declaration. It is your obligation to buy fuel at the rates at which you intend to use it.
It isnt offered to you at 60.40...it is for sale at whatever rates you believe you will use the fuel. The responsibility is yours, not the supplier's.

And I do declare 100% propulsion in the summer - but I have had several suppliers ask me "Are you sure?"

 

[Greg2]

The supplier has no obligation other than to keep your record and your signed declaration. It is your obligation to buy fuel at the rates at which you intend to use it.
It isnt offered to you at 60.40...it is for sale at whatever rates you believe you will use the fuel. The responsibility is yours, not the supplier's.

Yes, although HMRC made it clear that they would accept 60/40 as the norm requiring no ‘proof’ which is why it is the usual default offering at the pumps

 

[Sneds]

I am reading this correctly?
Sounds like some want to pay 100% full rate, why when HMRC says you can have 60/40?
Don't forget that while your engine(s) are running batteries are being charged and domestic hot water heated. Ut's not all for your Eber, indeed you don't need an Eber HMRC are happy at 60/40 no questions asked.
I am hoping we will soon go back to the fully rebated cheap price ie the 40% price for the whole lot, that's how it should be, it's not DERV we are using.
I won't be holding breath

 

[Assassin]

It appears that people have forgotten the agenda, the agenda is to remove diesel entirely and replace it with petrol in the interim and hope battery technology makes sufficient progress to become viable, in either case HMRC know they will lose revenue and are already looking how to replace it.

 

[maby]

I am reading this correctly?
Sounds like some want to pay 100% full rate, why when HMRC says you can have 60/40?
Don't forget that while your engine(s) are running batteries are being charged and domestic hot water heated. Ut's not all for your Eber, indeed you don't need an Eber HMRC are happy at 60/40 no questions asked.
I am hoping we will soon go back to the fully rebated cheap price ie the 40% price for the whole lot, that's how it should be, it's not DERV we are using.
I won't be holding breath

Very wise!

We're a sailing boat, so out fuel consumption in the engine is pretty low. I do try to be honest in the ratio that we claim - the next fill-up will probably be declared as 100% heating and, taken over the full year, we generally burn more diesel in the Eberspacher than we do in the Yanmar. I guess we burn about one tank full between March and October which is entirely propulsion and two or three tanks full between October and March - almost 100% heating.

 

[oldgit]

You're overestimating Italians, oldgit.
We are a very simple lot, used to an easier approach in the competition with Brit builders - namely, just build better boats...

Ouch....... but we do nostalgia and living in the past so much better than you, devoting much time and energy clinging to myths and listening to iconoclasts who prefer warm beer.
We also spend fortunes propping up useless redundant old buildings such as the Houses of Parliament, your lot just let stuff fall down and spent to money on fast cars and wimmin.

 

[Otter]

Discussing this last night in club. Question was, Do you think HMG is going to give up single farthing of this self collected tax. ?

My understanding is that it's revenue neutral, the amount of tax versus the costs of collecting, administering and enforcing. Remember it's not paid by commercial users, fishing boats or almost any of the very large motor boats.

 

[NormanS]

All quite true - and we might have got away with it if it were not for the 60/40 and HMRC taking it on trust that we will be honest and declare the ratio that we really use. Somewhere in all the reams of EU documents on the subject, there are words to the effect that any untaxed (and, by implication, marked) fuel must be carried in a tank that cannot be connected to the engine fuel supply. If all fuel sold to the leisure market was taxed at the full rate, we might possibly have been able to convince them to turn a blind eye to it. People buying many hundreds of litres of marked diesel in the middle of the summer and claiming that 40% of it was going into the heating is exactly the sort of thing that the rules are trying to forbid - hardly surprising that they are taking action to enforce them!

News to me that marked fuel should be kept in a tank which cannot supply the engine. I don't suppose you can provide any proof for your assertion?