Monday, 10 November 2008

Red diesel

So now that the deadline has passed there is still some confusion about who is responsible for what and what the ‘split’ actually means.

According to those who make the rules Red Diesel is sold with a 60/40% split. That means 60% (extra duty will be paid) for propulsion and 40% (no extra duty paid) for domestic use. A lot of boaters would argue that this is wrong because they never move their boat,they then can declare 100% Domestic. HMRC say '60/40 is only a guide'. A boater may if he so desires declare 50/50 as long as he can support that claim.

It is up to the individual boater to declare his Propulsion/Domestic ratio. Any supplier who insist on charging the increase on all fuel supplied is breaking the law. If a boater says to a supplier that his consumption is 10/90 then the supplier has to accept that and pass that extra duty on to the HMRC. He cannot insist that you declare 60/40. It is not his job. The responsibility to make a correct declaration lays with the boater not the supplier.

The supplier is merely a tax collector, the hard work has been done by HMRC, so he does not need your name and address. You on the other hand need to keep records of cruising and fuel bought so you can justify your declaration to HMRC. No one is going to slap the supplier if you make a false declaration.

The extra duty brought about by the deregulation of red diesel, 40.66 p per litre, is only due on that fuel used for propulsion other fuel used for heating lighting (charging batteries) is not subject to the new surcharge. This new duty will also incur 5% VAT so most suppliers will round up to 43p per litre

Should a supplier want to charge you 60/40 on all fuel purchased then you should only buy enough fuel to get you to a supplier that knows his responsibility. And don’t forget to report errant suppliers to the HMRC so they can receive a slap. I have heard of one supplier that is making a £15 surcharge if you declare other than 60/40. I personally would say this is illegal, not because he is charging, but because this may encourage you to accept 60/40 when this is not true. Hence the errant supplier may possibly be aiding and abetting you in making a false declaration, this is against the law.

HM Revenue & Customs has specifically stated in its briefing notes to sellers that they are not responsible for questioning what percentage a customer declares, nor for verifying the customers name and address.

So thats' it then, simple as V-A-T.

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