1. This clause provides that the Commissioners may allow a rebate (lower rate of duty) on oil delivered for home use without the full amount of marker present. The clause also provides appeal provisions for decisions made for the purposes of regulations made under section 20AA of the Hydrocarbon Oil Duties Act 1979. The clause will take effect from Royal Assent.

2. Subsection (1) - provides for the amendment of the Hydrocarbon Oil Duties Act 1979.

3. Subsection (2) - inserts new subsections (3), (4) and (5) into section 11 of the Hydrocarbon Oil Duties Act 1979.

4. New subsection (3) provides that the subsection applies to oil which is delivered for home use with marker present in less than the proportions set out in the regulations made under section 24 of the Act (undermarked oil).

5. New subsection (4) provides that a rebate may be allowed on undermarked oil at the time of delivery to home use if the Commissioners think it is appropriate to allow this.

6. New subsection (5) provides for the rate of rebate allowed on undermarked oil. Paragraph (a) allows the Commissioners discretion in determining the appropriate rate subject to the limits specified in paragraph (b). Paragraph (b) provides that the appropriate rate shall not be less than 95 per cent of, and shall not exceed, the rate of rebate specified in subsection (1) of section 11 of the Act.

7. Subsection (3)(a) amends section 20AA(2)(a) of the Hydrocarbon Oil Duties Act 1979 to provide that any relief allowed under regulations made under section 20AA may, as well as the existing repayment or remission, also take the form of an allowance to be set off against duty payable to the Commissioners by the person claiming the relief.

8. Subsection (3)(b) - inserts a new paragraph (ga) into section 20AA(2). The amendment enables regulations to provide for oil on

which relief has been allowed to be treated as oil on which a rebate has been allowed under section 11 of the Act.

9. Subsection (4) - inserts new subsections (4C) and (4D) into section 24 of the Hydrocarbon Oil Duties Act 1979.

10. New subsection (4C) provides that, where new subsection (4D) applies, the Commissioners can assess under subsection (4A) of section 24 (cases where a person contravenes or fails to comply with any requirement which is a condition of allowing the rebate on oil, and that rebate has been allowed), they may assess (and notify) an amount less than the full amount of the rebate.

11. New subsection (4D) defines the cases in which new subsection (4C) will apply. It applies where the Commissioners have power to assess under subsection (4A) of section 24 of the Act because the oil is undermarked.

12. Subsection (5) - inserts a new sub-paragraph (1A) into paragraph 4 of Schedule 5 to the Finance Act 1994. This Schedule lists the decisions made under the Hydrocarbon Oil Duties Act 1979 that are subject to review and appeal. This new sub-paragraph includes any decision made under or for the purposes of any regulations made under section 20AA of the Act about whether relief is to allowed.

13. Present legislation provides that as a condition of allowing the rebate (lower rate of duty) on hydrocarbon oil, the oil must be marked, and in the case of gas oil dyed, with a chemical marker. The regulations made under section 24 of the Hydrocarbon Oil Duties Act 1979 provide that the marker must be present in the oil in proportions not less than those laid down.

14. This means that if the oil is delivered with even slightly less than those proportions it does not qualify for the rebate. The Commissioners may either charge the full amount of duty on oil

which contains marker and which could not be used or sold as road fuel, or may remit the whole of the amount of the rebate on the grounds of equity.

15. Disallowing the rebate, which can amount to tens of thousands of pounds on a single marking, is a disproportionate measure when there is little real risk to the revenue. This clause gives the Commissioners power to allow the rebate (between 95 and 100 per cent of that which would have been allowed had the oil been completely marked) if it appears to them to be appropriate to allow it. This would be in cases where there is little real risk to the revenue because the oil contains sufficient marker to identify it as rebated oil. The Commissioners would also take into account the circumstances surrounding the undermarking for example whether the undermarking was a result of lack of care.

16. The clause also provides that any assessment made under section 24 of the Act because oil has been undermarked may be for an amount less than the full rebate.

17. The clause makes two other provisions in relation to reliefs allowed under section 20AA of the Act. It provides that any oil on which relief is granted should be treated for the purposes of the Act as though it were rebated oil, and it further provides that any decision taken for the purposes of regulations made under that section shall be a decision of which a review may be required.

18. These two provisions will support new regulations to be made allowing, subject to approval and conditions, the marking of oil which has been delivered to home use on payment of the full rate of duty. The relevant person may then claim relief on that oil, to the same level as the rebate which would have been allowed had the oil been marked prior to delivery to home use. These provisions will ensure that any such oil cannot be subsequently misused as road fuel and that the persons concerned can ask for a review if the Commissioners refuse any application for relief.

19. The clause will take effect from Royal Assent.