EU Challenges UK Government on Red Diesel

The European Commission has recently announced that it intends to take legal action against the UK regarding the way in which the Government has implemented their decision that removed the derogation that allowed for a lower rate of duty on fuel used for marine leisure purposes.

HMRC listened to the industry’s concerns about the cost burden that the withdrawal of red diesel would bring to waterside fuel suppliers and recognised that a lower rate of duty applied to fuel used for non propulsion purposes by boaters. The Government agreed to the continued use of red diesel by recreational boaters with a differential rate of duty being applied (60% propulsion/40% non-propulsion). The Commission is now suggesting that this approach breaches European law.

The BMF, along with the RYA, have met with HMRC this week to discuss the situation and understand the legal process. Following the meeting, Howard Pridding, BMF’s Executive Director commented:-

“This development is obviously a cause for concern but there is no immediate need to panic. Infringement procedures by the European Commission is a legal process that can take years to complete and there will be no change to the current duty situation until it is finished. The BMF will be working closely with our colleagues from the RYA and the Inland Waterways Association, together with HMRC officials, to vigorously contest the Commissions view. As a first step, the BMF is writing to Treasury Minister, Justine Greening MP, setting out the adverse impact that any change to the current red diesel situation would have on the industry. “

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