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'Booze cruise' ruling set to slash fuel du
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A landmark ruling in the European Court of Justice could allovv hard-pressed UK hauliers to slash their fuel bills. Sally Nash reports.
UK HAULIERS stand to pay 70% less fuel duty if the European Court of Justice (ECJ) rules this week that goods can be purchased overseas at lower tax rates without the need to travel.
The decision has already been dubbed the booze cruise' ruling as internee and telephone ordering or low or no-duty alcohol and tobacco might become feasible. However, the ruling could also apply to the purchase or Fuel if the transaction takes place abroad.
Under the ECJ ruling.transixirt companies with bunkering facilities in the UK might be able to purchase low-priced fuel from foreign suppliers and pay the tax in that country rather than at the UK's higher rates.
Peter Penneycard, national director of tax at accountancy and business advisory firm PKE, says: "flue European Court's decision is likely to mean that companies with significant fleets of vehicles and the capacity to store fuel should be able to buy from abroad at lower duty rates and have it delivered to
the UK. But it's not going to cut prices at the pumps in the UK."
However, Penneycard sounds a warning that the UK government is likely to contest the ruling because of the potential lost revenue, particularly from the tax on alcohol and cigarettes.
PKF points out that the government is likely simply to ignore the decision and wait for the European Commission to take "enforcement action" to force the UK to comply. That process will probably take many months enough time for EU finance ministers to agree a permanent way to block such a change.
Many politicians. including ' tory
MEP CharlesTannock,support the move. Tannock says: "This is going to be a huge embarrassment to Chancellor Gordon Brown. It will also increase pressure on member states to harmonise excise duty.
But Damian Cox. an analyst at John Hall Associates. says he is sceptical about the idea:"We had a similar situation five or six years ago when someone wanted to send a tanker to fill up from a refinery in France to escape fuel duty. But when we spoke to Customs & Excise they said that UK duty rates would have to he paid."
Andrew Tinkler, chairman of Eddie Stobart, reckons that the move would make a "massive
differenceto the business if duty could he cut by as much as 70%.
"I can't see this happening overnight as someone would he left with a massive hole in their pocket," he remarks. "But if everything waslegal then we would have to go that way it would be silly not to, as all our competitors would be doing the same.
The UK domestic road trimsport industry has to pay the highest fuel duty rate in Europe -€782 on 1,000 litres of diesel while the lowest rate is currently in Latvia, where fuel duty is only €23.
The ECJ is expected to announce its decision on this issue today (23 November).