UK Government to ‘maintain position on red diesel

Marine industry representatives met with the Treasury and HM Revenue & Customs officials yesterday to discuss the UK government’s current position on the continued supply and use of red diesel to private pleasure craft.

The British Marine Federation (BMF) and the Royal Yachting Association (RYA) officials confirmed that UK government had not yet received formal notification from the European Commission confirming the latter’s intention to take UK government to the European Court of Justice, despite the announcement in mid July.

It is expected that formal confirmation would be received within the next few months. In the meantime there is no indication that the government intends to modify its longstanding supportive stance.

Currently, it is legal to purchase red diesel for propulsion, provided the full rate of duty is applied to fuel used for the purposes of navigation.It is also legal to red diesel use in pleasure craft in the UK for domestic purposes aboard a boat such as heating, lighting electricity generation, refrigeration, air conditioning or hot water, at the rebated rate of duty.

UK law does not require fuel distributors to have two separate fuel tanks to distinguish between the lower tax marked fuel and the fuel subject to the standard rate.

And the European Commission says ‘as a consequence, private leisure boats may not pay the right amount of tax.

‘BMF chief executive Howard Pridding and the federation’s head of external relations Brian Clark, both met with the HMRC officials on 31 July. Mr Clark said: ‘It’s important that we all work to ensure the continued availability of red diesel for recreational boating:

“We want to ensure members are not faced with having to make costly changes to their supply systems or hire fleets should the UK be forced to change to white diesel for private pleasure craft propulsion.”

‘Treasury and HMRC officials confirmed that they will continue to work with us and the RYA as the issue develops.

‘Gus Lewis, head of legal and government affairs at the RYA, said: ‘The crux of the matter is ensuring the continued availability of diesel for the leisure boating community.‘If the UK is forced to change to white diesel for recreational craft at the waterside suppliers will find it difficult to make the significant investment required to install additional tanks and pumps for white diesel.

‘It appears that the Commission’s primary concern relates to the colour of the fuel. Even with the 60:40 spilt UK boaters are paying on average 10% more duty that their French or Belgium counterparts.

Legal dispute
Under EU rules, fuel that can benefit from a reduced tax rate has to be marked by coloured dye. Fishing vessels, for example, are allowed to benefit from a lower taxed fuel but private leisure boats must use fuel subject to a standard rate.

The European Commission (EC) is concerned that by not requiring two fuel separate tanks, private leisure boat owners in the UK are often in a situation where they can only purchase marked fuel.The EC believes that not only does this go against EU excise rules, but it also puts private boats at risk of heavy penalties if they are checked by local authorities when they travel to another Member State.

A spokesman for the EC said: ‘The Commission sent a Reasoned Opinion to the UK on this matter in May 2013.’Its failure to bring its legislation into compliance with EU law is the reason why the case is now being referred to the Court of Justice.

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