Fuel Duty Increase for Leisure Craft
0 Comments
»
At last, the UK Government's position on the future of Red Diesel is revealed and it's not looking good for pleasure boaters.
But first...
What is Red Diesel?
Up until now, UK leisure boaters have been able to fuel their boats with red diesel which is subject to lower VAT. Coloured with red dye to distinguish it from the more expensive variety, red diesel is typically available for around 40p per litre, less than half the national average for diesel on the forecourt.
The issue.
In recent years, permission to use red diesel became subject not only to national approval, but also the EU's. The reason is down to EU policies that bring into line taxes on fuels and energy, and the fact that consent to use red diesel depends on exemption (derogation) from these EU rules.
The Royal Yachting Association (RYA) fought to extend the derogation that allowed UK leisure boaters to use lower duty red diesel. After much lobbying, the British government agreed in October 2006 to support their case. However, EU officials failed to accept the government's arguments and have decided that the derogation should end with effect from the end of December 2006. There is now a grace period in force for the phasing out of red diesel in the UK. It will be legally usable in leisure craft until November 2008.
Honesty is the best policy.
Her Majesty's Revenue and Customs (HMRC) has decided that pleasure craft users can carry on using red diesel as long as they make a declaration to the supplier and pay the full rate of tax for heavy oil.
The Registered Dealer in Controlled Oils (RDCO) will then be responsible for declaring the duty collected to HMRC. Confusing the situation slightly, fuel purchased for domestic use (ie, not for propulsion of the craft) can continue to be supplied at the rebated rate.
'Availability and Safety'.
The HMRC's Dave Fitzgerald confirmed the core policy had been fixed but that HMRC would be working closely with the RYA, the BMF and other stakeholders to develop the detail of the declaration process and apportionment of fuel for domestic use.
Following that consultation process, HMRC will produce comprehensive guidance.
'Our main concerns were availability and safety,' said Neil Northmore, the RYA's government affairs adviser.
'We were aware that there was a danger that some retailers in more remote areas would simply not bother selling to pleasure boats on the premise that it would be more trouble than it was worth to distinguish between private and commercial craft, and then process the paperwork.'
Increase in duty.
Howard Pridding, executive director of the BMF said:
'We are pleased with how HMRC has managed the consultation process and the position that they have finally adopted. When buying fuel, people will be required to sign a declaration that states whether their boat is for private or commercial use.'
It will then be up to HMRC whether they wish to investigate whether the purchase was correct or not, he explained.
The Future of Red Diesel.
On 28 February 2008, HM Revenue & Customs revealed that from 1 November this year, boaters will be paying a duty rate of 56.94 pence per litre, instead of the current rate of 9.69 pence per litre.
Boaters will be forced to keep records of all diesel purchases, as it will become a criminal offence to have diesel on board for propulsion that you cannot prove was bought at the higher rate of diesel.
Diesel bought for use as heating fuel will still be available at a rebated rate. So to add further complication, there will be a system in place where you can declare that a proportion of the diesel you are taking on is for 'domestic purposes'!
Only time will tell how this news will hit the market, but it's not hard to imagine it having some impact.
But first...
What is Red Diesel?
Up until now, UK leisure boaters have been able to fuel their boats with red diesel which is subject to lower VAT. Coloured with red dye to distinguish it from the more expensive variety, red diesel is typically available for around 40p per litre, less than half the national average for diesel on the forecourt.
The issue.
In recent years, permission to use red diesel became subject not only to national approval, but also the EU's. The reason is down to EU policies that bring into line taxes on fuels and energy, and the fact that consent to use red diesel depends on exemption (derogation) from these EU rules.
The Royal Yachting Association (RYA) fought to extend the derogation that allowed UK leisure boaters to use lower duty red diesel. After much lobbying, the British government agreed in October 2006 to support their case. However, EU officials failed to accept the government's arguments and have decided that the derogation should end with effect from the end of December 2006. There is now a grace period in force for the phasing out of red diesel in the UK. It will be legally usable in leisure craft until November 2008.
Honesty is the best policy.
Her Majesty's Revenue and Customs (HMRC) has decided that pleasure craft users can carry on using red diesel as long as they make a declaration to the supplier and pay the full rate of tax for heavy oil.
The Registered Dealer in Controlled Oils (RDCO) will then be responsible for declaring the duty collected to HMRC. Confusing the situation slightly, fuel purchased for domestic use (ie, not for propulsion of the craft) can continue to be supplied at the rebated rate.
'Availability and Safety'.
The HMRC's Dave Fitzgerald confirmed the core policy had been fixed but that HMRC would be working closely with the RYA, the BMF and other stakeholders to develop the detail of the declaration process and apportionment of fuel for domestic use.
Following that consultation process, HMRC will produce comprehensive guidance.
'Our main concerns were availability and safety,' said Neil Northmore, the RYA's government affairs adviser.
'We were aware that there was a danger that some retailers in more remote areas would simply not bother selling to pleasure boats on the premise that it would be more trouble than it was worth to distinguish between private and commercial craft, and then process the paperwork.'
Increase in duty.
Howard Pridding, executive director of the BMF said:
'We are pleased with how HMRC has managed the consultation process and the position that they have finally adopted. When buying fuel, people will be required to sign a declaration that states whether their boat is for private or commercial use.'
It will then be up to HMRC whether they wish to investigate whether the purchase was correct or not, he explained.
The Future of Red Diesel.
On 28 February 2008, HM Revenue & Customs revealed that from 1 November this year, boaters will be paying a duty rate of 56.94 pence per litre, instead of the current rate of 9.69 pence per litre.
Boaters will be forced to keep records of all diesel purchases, as it will become a criminal offence to have diesel on board for propulsion that you cannot prove was bought at the higher rate of diesel.
Diesel bought for use as heating fuel will still be available at a rebated rate. So to add further complication, there will be a system in place where you can declare that a proportion of the diesel you are taking on is for 'domestic purposes'!
Only time will tell how this news will hit the market, but it's not hard to imagine it having some impact.
Article Source: ABC Article Directory
Boating articles are regularly published on TheYachtMarket.com as well as listings for thousands of boats and yachts for charter and sale. Subscribe to the newsletter to have the latest boats for sale and marine news delivered to your inbox.
Posts
