Red Diesel Duty

Channel Ribs · 07 October 2008, 11:45

How complex is the decision to split the use of marine diesel for duty purposes?!

Why didn't they just create a new mid-band? Which they have effectively done, but dressed it up in all kinds of fancy clothes!

Anyone hoping for some sense and clarity from the BMF may be dispapointed, the full text of which can be found on our Scuttlebutt site:

www.scuttlebut.org

jwalker · 07 October 2008, 12:38

So what's so difficult to understand? If you're a power boater, probably best not to fuss and just make use of the generous allowance for heating. Shoosh........

PS. You do have a heater fitted, don't you?

codprawn · 07 October 2008, 13:47

The problem is that with a RIB you almost have no chance of claiming that the fuel is being used for heating or power generation.

Live aboards have the best chance - gennies and heaters can be incredibly thristy.

of course what will happen is that most boats will become available for charter so they will all be commercial.

Nos4r2 · 07 October 2008, 13:54

Wonder if you could have a heater for the heads fitted in the console?

Channel Ribs · 07 October 2008, 14:28

Quote:

Originally Posted by Nos4r2

Wonder if you could have a heater for the heads fitted in the console?

Get one of those nice Taylors ones and you could do hot smoked salmon there! Then sell it off the quay and wahey you really are commercial.

Channel Ribs · 07 October 2008, 14:36

Quote:

Originally Posted by jwalker

So what's so difficult to understand?

From the document linked above:....

Charging duty and VAT
The following is an illustration /example of a calculation of duty and VAT under the new
arrangements. It is intended to be an illustration only. The proportion split between
propulsion and domestic usage will vary.
HMRC have confirmed that VAT is charged at the reduced rate of 5% on fuel for propulsion
and domestic use.
This example assumes a 60% (propulsion) and 40% (domestic) split for a purchase of 100
litres of red diesel (the price of diesel is assumed to be 0.70ppl which includes 9.69ppl duty
already paid to fuel supplier):
Propulsion calculation(i.e. 60%)
60 litres @ 0.70ppl = £42
60 litres @ 0.4066 = £24.40 (additional duty)
VAT @ 5% = £3.32
Propulsion Total = £69.72
Domestic calculation (i.e. 40%)
40 litres @ 0.70ppl = £28
VAT @ 5% = £ 1.40
Domestic Total = £29.40
Transaction Total = £99.12

Poly · 07 October 2008, 15:39

Quote:

Originally Posted by codprawn

of course what will happen is that most boats will become available for charter so they will all be commercial.

I doubt it. Extra kit required plus cost of survey etc means you need to use a lot of fuel to justify it. Then every skipper needs to be commercially endorsed. And personal use of a coded boat would still expect you to pay the duty.

jwalker · 07 October 2008, 16:27

My understanding is that, when purchasing fuel, the maximum that should be accepted as being used for heating is 40%, apparently based on a usage survey.

I guess, in practise, the buyer will tell the seller how much fuel they want for propulsion, the sale will be done and the receipt printed. Then the buyer will tell the seller how much they want for heating, the seller will check to make sure it's not more that 40% of the propulsion sale and the sale of that fuel will go through and a receipt printed. The complex calculation won't be necessary, it's just two sales for the selling company who will likely have a system in place for each type of sale.

Doug Stormforce · 07 October 2008, 17:06

Quote:

Originally Posted by malthouse

How complex is the decision to split the use of marine diesel for duty purposes?!

Why didn't they just create a new mid-band? Which they have effectively done, but dressed it up in all kinds of fancy clothes!

For a change the tax man has been good to us, he is effectivly saying you claim an incredibly generous 60 : 40% split and he will not argue.

A new band would be completly inappropriate, the red diesel rate applies to your heating (40%) and standrad rates apply to the fuel for propulsion (60%).

Remember it was Europe that insitsed we stop using red for leisure use some time ago

Paul Beaurain · 07 October 2008, 17:38

Hi
Malthouse
Firstly thank you for the breakdown you gave.

Yes I think in general terms leisure boaters (diesel) have had a slight reprive here - certainly for now...

So If we do use the boat commercially how will it work again on say a 100L purchase? using again say the 70 pence per litre?
Do we pay and claim back or simply pay less at the time of purchase?
thank you for helping me on this one.
Paul

Pete7 · 07 October 2008, 18:24

Will this affect Alderney prices?

Pete

Poly · 07 October 2008, 18:31

Quote:

Originally Posted by Paul Beaurain

Do we pay and claim back or simply pay less at the time of purchase?

pay less at purchase is my understanding.

codprawn · 07 October 2008, 22:21

Quote:

Originally Posted by Polwart

I doubt it. Extra kit required plus cost of survey etc means you need to use a lot of fuel to justify it. Then every skipper needs to be commercially endorsed. And personal use of a coded boat would still expect you to pay the duty.

I wasn't talking about RIBs - I was on about people with a 40' Fairline or Princess.

Doug Stormforce · 08 October 2008, 09:40

Quote:

Originally Posted by Paul Beaurain

So If we do use the boat commercially how will it work again on say a 100L purchase? using again say the 70 pence per litre?
Do we pay and claim back or simply pay less at the time of purchase?
thank you for helping me on this one.
Paul

Continue to pay the lower rate just as you always have done.

Quote:

Originally Posted by Pete7

Will this affect Alderney prices?

Shouldnt do, CIs are not part of Euro tax laws.

LURCHER · 09 October 2008, 17:43

If I had a tank at home of red for my tractor could I use it in the boat ?
Hypertheticaly of course.

Nos4r2 · 09 October 2008, 17:50

Quote:

Originally Posted by LURCHER

If I had a tank at home of red for my tractor could I use it in the boat ?
Hypertheticaly of course.

Red is red is red...unless Customs change the colours for agri use or you can't come up with a good reason why you're using so much for agri.

Wouldn't fancy being caught at it though and they have a habit of dipping diesel vehicles that are used in close proximity to big red tanks.

Channel Ribs · 09 October 2008, 19:05

"Red diesel VAT twist confirmed by HMRC...

The tale of red diesel has taken another dramatic twist with confirmation that all the fuel you take on from 1 November will be hit with a VAT rate of just 5%.

This is an abrupt shift in position from HM Revenue & Customs after briefing previously that 60% of your fuel would attract full VAT of 17.5%.

The reason for the about face is not known at present, but it is good news for boaters, and should mean prices stay below £1 a litre based on a current pump price of 70ppl."

Good, but what an about turn!?

codprawn · 09 October 2008, 19:59

In fairness HMRC didn't want this extra duty - it was our spineless government refusing to stand up to the EU - prob because 1/2 the Eurocrats come from the Labour party!!!

LURCHER · 09 October 2008, 19:59

'Red is red is red...unless Customs change the colours for agri use or you can't come up with a good reason why you're using so much for agri. '

We use it for heaters and generators in our tents ! Combines use about 1000 ltr a day too!

Nos4r2 · 09 October 2008, 21:28

Quote:

Originally Posted by lurcher

'red is red is red...unless customs change the colours for agri use or you can't come up with a good reason why you're using so much for agri. '

we use it for heaters and generators in our tents ! Combines use about 1000 ltr a day too!