1. This clause amends Schedule 2A (mixing of rebated oils) to the Hydrocarbon Oil Duties Act 1979 to include provisions relating to the mixing of petrols. The clause shall take effect from a day to be appointed by statutory instrument.

2. Subsection (1) provides for Schedule 2A to the Hydrocarbon Oil Duties Act 1979 to be amended in accordance with Schedule 1 to the Finance Act 2000.

3. Subsection (2) provides the amendments made by Schedule 1 to the Finance Act 2000 shall take effect from such a day as appointed under section 5(6) of the Finance Act 2000. This day will be appointed by order made under statutory instrument.

4. Paragraph 1(1) inserts a new sub-paragraph (aa) into paragraph 1(1) of Schedule 2A toof the Hydrocarbon Oil Duties Act 1979. New paragraph (aa) makes it a contravention under paragraph (1) if leaded petrol is produced by the addition of lead to ultra low sulphur petrol.

5. Paragraph 1(2) substitutes a new sub-paragraph for the existing sub-paragraph (2) of paragraph 8 of Schedule 2A toof the Act. The new sub-paragraph provides that the rate of duty on a mixture which is leaded petrol shall be charged at the rate of duty applicable to light oil that is not ultra low sulphur petrol.

6. Paragraph 2(1) substitutes a new paragraph for the existing paragraph 2 of Schedule 2A toof the Act. The new paragraph provides that it is a contravention under this paragraph if higher octane unleaded petrol is produced by adding octane enhancers to unleaded petrol, ultra low sulphur petrol or any combination of the two. It also provides that it is a contravention to produce higher octane unleaded petrol by mixing higher octane unleaded petrol with ultra low sulphur petrol, unleaded

petrol or a mixture of the two. The new paragraph also provides that any such mixtures are subject to a direction under paragraph 3 of Schedule 2A to the Act. Paragraph 3 allows the Commissioners to direct that, in certain circumstances, a contravention has not taken place.

7. Paragraph 2(2) substitutes a new sub-paragraph for the existing sub-paragraph (3) of paragraph 8 of Schedule 2A to the Act. The new sub-paragraph provides that the rate of duty for any mixture that is higher octane unleaded petrol produced in contravention of paragraph 2 of Schedule 2A shall be charged at the higher octane unleaded petrol rate of duty.

8. Paragraph 3(1) inserts a new paragraph 2A into Schedule 2A to the Act. The new paragraph specifies that it is a contravention under this paragraph if the mixing of two or more different kinds of unleaded petrol produces a mixture that would be subject to a higher effective rate of duty than one or more of the ingredients of the mixture. The new paragraph also provides that any such mixtures are subject to a direction under paragraph 3 of Schedule 2A tothe Act. Paragraph 3 allows the Commissioners to direct that, in certain circumstances, a contravention has not taken place.

9. Paragraph 3(2) makes a consequential amendment to paragraph 3 of Schedule 2A to the Act.

10. Paragraph 3(3) inserts new sub-paragraph (3A) into paragraph 8 of Schedule 2A to the Act. The new sub-paragraph specifies the rates of duty for any mixture of unleaded petrol produced in contravention of paragraph 2A of Schedule 2A.

11. Paragraph 3(4) inserts a new sub-paragraph (2) into paragraph 10 of Schedule 2A to the Act. Paragraph 10 allows the reduction in the charge of duty on mixtures where the Commissioners are satisfied that duty has been paid on the ingredients. The new sub-paragraph disapplies the provisions of paragraph 10 so that where, for example, higher octane unleaded petrol is mixed to produce unleaded petrol there is no credit of duty allowable on the higher octane unleaded petrol.

12. Paragraph 4 - inserts new sub-paragraph (2) into paragraph 11 of Schedule 2A to the Act. This new sub-paragraph defines references within Schedule 2A to the effective rate of duty in relation to petrol of

any description as the rate of duty in force reduced by any applicable rebate.

13. Ultra low sulphur petrol offers environmental benefits over conventional unleaded petrol and a reduced duty rate, at 1 pence per litre less than the rate on unleaded petrol, will be introduced by clause 5. In order to obtain the maximum benefits, and to ensure that the public is able to make the decision to buy this cleaner fuel, it is essential that it is available at the petrol pump, on sale as ultra low sulphur petrol.

14. This clause ensures that if ultra low sulphur petrol is mixed with other petrol, after it has enjoyed the benefit of the 1 pence duty incentive, then it will become liable to duty at a higher rate. The rate of duty will depend upon the description of petrol which is produced by the mixing. If higher octane unleaded petrol is produced, then duty must be paid at the higher octane unleaded rate; if the mixture is unleaded petrol then that is the appropriate rate.