European Commission Takes UK to Court Over Red Diesel01 August 2014
IWA continues to be concerned at the implications for boat owners and boatyard operators following the decision by the European Commission to take the UK Government to court over current UK laws which allow leisure boaters to purchase off-road diesel that is used by the farming and fisheries industries, commonly known in the UK as red diesel.
This is despite the agreement made with Her Majesty's Revenue and Customs (HMRC) in 2008 whereby boaters can purchase red diesel for propulsion whilst paying the required standard rate of tax, with a form of self-declaration allowing a proportion of the diesel used for heating and lighting to be purchased at a lower rate of tax.
The European Commission has referred the matter to the European Court of Justice, stating that the UK is "not properly applying" European excise rules.
The outcome may mean the end of the use of red diesel for any leisure boating, with boatyards and fuel suppliers having to supply unmarked (white) diesel. Whilst red diesel could continue to be used for heating, it would have to be in a separate tank, and there would be no dispensation for any proportion of fuel used by the engine for generating heat and light. Commercially operated boats would still be able to purchase and use red diesel, but this would require fuel suppliers and boatyards to have two separate tanks (and pumps) for the different fuels.
IWA is concerned at the increased costs that will be faced by both boat owners and boatyard operators if this change is implemented. Whilst accepting that any fuel used solely for propulsion should be subject to the higher rate of tax, IWA considers that it is unfair for boat owners to have to purchase fully taxed white diesel for heating and cooking.
IWA is also concerned at the costs to boatyards and other fuel suppliers in having to install a new or second tank and pump in order to be able to supply white diesel.
IWA considers that it is not practical for most boats that use the inland waterways to have two tanks – one for red diesel and one for white; that inappropriate modifications would raise safety concerns; and that many diesel suppliers would simply not supply both red and white diesel.
Now that the issue has been referred to the European Court of Justice, IWA will continue to make representations to the UK Government to resist pressures from Europe that will cause both additional cost and inconvenience to UK boat owners.
Further background to the situation can be found in IWA’s Briefing Note on Red Diesel, which can be found on IWA’s website.