1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136 
Red-handed
Page 24
Page 25
If you've noticed an error in this article please click here to report it so we can fix it.
Red diesel has always been legal for use in off-road vehicles, and only those hauliers caught using it on the roads face penalties. Now HMRC has new powers to hit fuel cheats.
Words: Roger Brown Red diesel is meant to be used in vehicles intended for off-road use such as tractors, excavators, cranes in sectors such as agriculture and construction.
Thefuel chemically marked and dyed red to show that it has borne a rebated and reduced rate of excess duty is about 65p a litre cheaper than regular diesel, the legitimate road fuel.
Hauliers caught illegally using red diesel for their vehicles risk having them seized, or in more serious cases forfeited, with the possibility of an unlimited tine together with a jail sentence of up to two years.
Financial penalties
However. from 1 April. new regulations contained in schedule 41 of the 2008 Finance Act came into effect. meaning new potential financial sanctions for red diesel cheats.
The new civil penalties. which are not specific to rebated fuel, and generally deal with administrative inaccuracies, can apply where someone: • Handles red diesel, and other products such as alcohol and tobacco on which excess duty has not been paid or deferred: • Uses a product in a way that means more excise duty should have been paid; • Or, supplies a product at a lower rate of excise duty knowing that it will be used in a way that means a higher rate of duty should be paid.
The new penalties range from of the possible lost revenue to the exchequer to 100%, depending on how much help individuals give HM Revenue & Customs (HMRC), as well as taking into consideration their intent.
This can be avoided if the business can show that it has taken "reasonable care" to avoid this by, for example. setting up systems and procedures to prevent the wrongdoing.
From 1 April. HMRC has also had the power to "name and shame" individuals and companies that it penalises for deliberately evading at least V5,000 of their tax obligations by publishing their names and details.
HMRC estimates that about £350m of tax is lost through use of illegal diesel in the UK annually.
Lion's share
In 2007-08 a total of 3,154 roadside detections of illicit fuel 76% of all detections related to commercial businesses, with the majority in the road transport sector.
Michelle Potts, HMRC spokeswoman. adds: "We aim to support people who take care to pay the right amount of tax, and part of that support is to come down hard on those who deliberately evade paying.
"These new penalties are tougher and more consistent, defrauding excise is not worth the risk."
HMRC says its current enforcement approach regarding red diesel is based on its Oils Strategy, launched in September 2002.This includes: • Limiting the opportunities available to fraudsters to obtain illicit fuel for laundering by ensuring that Registered Dealers in Controlled Oils (RDCO) traders are exercising a duty of care when selling diesel, kerosene and aviation turbine fuel (AVRJR), and issuing appropriate sanctions when this has not been the case.
• 'through the RDCO network, ensuring that the opportunities for fraudsters to sell illicit fuel are limited and that the legitimate retail sector is protected from those supplying laundered fuel. • Maintaining highly visible roadtesting units that act not only as a deterrent. but also increase the likelihood of those using illegal fuel being caught.
• Ensuring that fraudsters arc not able to exploit supply chains for other types of fuel, such as tied oils and marine fuel, through working with industry and by deploying rigorous controls.
• Looking to maximise the opportuni ties arising out of technological development in the testing and identification of illicit fuel. Potts says the organisation takes the problem of oils fraud "very seriously" and has put in place a "comprehensive strategy" to tackle it. She adds: "Using laundered or adulterated fuel can damage your vehicle, engine, catalyst and increase harmful emissions.
"Any company willing to use illegal fuel has an unfair advantage and makes it more difficult for legitimate companies to compete." •