No: CE 18                                            28 November 1995

BUDGET 1995 : EXCISE

MINERAL OILS : NEW CONTROL FOR FOREIGN EQUIVALENTS OF "RED" DIESEL


The Chancellor announced that Customs and Excise will be given 
additional powers to prevent the use of diesel imported in the fuel 
tanks of vehicles if it has not been taxed as road fuel in its 
country of origin.  Customs already have some powers to prevent the 
misuse of diesel which has been taxed in the UK at the lower rate for 
off road use, or which is imported in the fuel tanks of commercial 
vehicles, but they did not previously have powers to deal with fuel 
imported in private vehicles. The measure will take effect from Royal 
Assent.


NOTES FOR EDITORS

1.     Most Member States of the European Union and some other 
countries provide reduced rates of excise duty for fuels not used to 
drive vehicles on the road. Such fuel for off-road use is marked to 
indicate that a reduced rate of excise duty has been charged. In the 
UK, diesel for agricultural or other off-road use (known as gas oil) 
is dyed red (hence its common name of red diesel) and contains a 
chemical marker. Following the Budget changes, the UK rate of duty on 
marked gas oil is 2.33p per litre compared to 34.3p per litre on 
unmarked diesel sold for road use.

2.     Generally, no marked oil may be used legitimately as road fuel 
in a road vehicle. However until 31 July 1995, fuel imported in the 
standard running tanks of road vehicles entering the UK was relieved 
from payment of UK excise duty in accordance with international 
agreements and EC Directives.

3.     This relief was being abused on a growing scale, particularly 
by drivers from Northern Ireland, who filled their vehicles' fuel 
tanks in the Republic of Ireland with marked gas oil and then drove 
their vehicles into Northern Ireland. A number of premises supplying 
Republic of Ireland marked gas oil had been set up along the land 
boundary with the Republic of Ireland leading to a real threat to 
legitimate oil distributors and hauliers in Northern Ireland and a 
loss of revenue to the UK Exchequer. 


4.     To meet this growing problem, Customs and Excise introduced 
the Travellers' Reliefs (Fuel and Lubricants) Order 1995. This 
provided that from 1 August 1995 relief from UK excise duty on fuel 
in commercial vehicle standard tanks arriving from other Member 
States should only apply to fuel that had borne the full road rate of 
duty. The presence of such non-road fuel currently renders the fuel 
and the vehicle liable to seizure and the owner liable to 
prosecution. The new legislation introduces penalties to cover 
foreign marked fuel in both private and commercial vehicles and puts 
such fuel on the same legal footing as UK marked fuel. 

5.     The overall revenue effect of this measure is negligible, but 
it is designed to combat a growing abuse and will provide significant 
support to the legitimate oils distribution sector who have been 
suffering from unfair competition from those who distribute foreign 
marked oil.

6.     Details for traders are available in Budget notice BN 118/95




ISSUED BY:             HM CUSTOMS AND EXCISE,
                       PRESS AND INFORMATION OFFICE,
                       NEW KING'S BEAM HOUSE,
                       22 UPPER GROUND, 
                       LONDON, SE1 9PJ

TELEPHONE:             0171 865 5468/5470/5471

FAX:                   0171 865 5625/5667