3 September 2019

The key concern is the cost and work involved for boat yards to install additional supply tanks for white diesel, or to convert existing storage facilities, which would be neither cheap, quick nor easy, and the consequence of which would appear likely to be a reduction in the number of boatyards stocking diesel for resale to boaters.  This has implications of boaters having to lug cans of fuel around from roadside fuel stations with potential environmental and safety risks.  There would also be the impracticability and cost for boaters to fit a second diesel tank to their vessel for separate diesel supplies for cooking and heating should they wish to continue to use untaxed red diesel for this purpose.

The cause of the proposed new requirements is a ruling from the European courts following a complaint from the Belgian government that it was difficult for them to detect people illegally using untaxed red diesel in Belgium if its sale was still permitted in Britain.  As sales of red diesel for propulsion are already taxed at the same rate as for white diesel, there is no intended revenue benefit to HMRC from the proposed change, and thus HMRC regard it as revenue neutral, albeit some boaters may find having separate tanks for heating and lighting all too difficult and be prepared to pay the additional cost for white diesel for heating and lighting regardless of it not being legally required.

HMRC has indicated that it has received a substantial response to its consultation, which IWA and others have strongly encouraged from boaters and others affected by the potential changes.  HMRC has listened carefully to our concerns and has indicated its sympathy with the issues raised.  Brexit may well have an impact on the situation.  If there is a ‘No Deal Brexit’ then the proposed changes to sale of red diesel will be paused until the situation becomes clearer.  Even if there is a deal, then the situation could still be unclear and would need ministerial review, and would unlikely be the highest priority on their agenda.  It also appears that HMRC are now persuaded of the need for a long implementation period if there is any change in regulations.  HMRC has also hinted that enforcement action, if changes are implemented, will, as now, be on a risk based approach – for example, it is likely that boating will be considered a lower risk and less enforcement unless other issues, such as suppliers licences, come into play.

There is still time (until 9th September) to respond to HMRC’s consultation to add your weight to IWA’s lobby on this issue.