Red Deisel after 1/11/08

[cotswoldsman]

Right here we go again that subjest!!!!!

 

I have been at Wheaton Aston this week (Cost of diesel at Turners 63p pl) and hey presto the man from HMCE was there to explain what happens after 1 November 2008. I think I have provided a link belowe to HMCE explanation but as I am not a techy not sure if it will work.

 

Anyway as explained to me:

 

1. Red Deisel on the system will still be sold at the reduced price.

2. When you purchase deisel YOU will be asked to fill a declaration as to how you will use that deisel, you will have to give your licence number and the address where your BW Licence is sent.

3. The deisel you declare for propulsion will be charged at an extra 40.66 ppl.

 

As explained to me it is your declaration not anyone elses in other words a marina owner can not tell you that he is charging on the basis of 60/40 and then ask you to sign a declaration to that effect, and was advised if anyone tries to make you do so to refuse and contact HMCE. The reason being that in fact you might be a boater that uses for example 80% for propulsion, ie you use your boat in the summer for a 3 week cruise round a certain ring and cruise for 9 hours a day so majority would be for cruising and maybe a couple of hours for charging your electrics etc.

 

I was advised to print out the paperwork as per link and if a marina tries to make you sign a declaration other than the one you want to make then show them the relevant clause

 

Quote

 

RDCOs' responsibilities

If you supply red diesel to private pleasure craft, you will be required to charge the purchaser the full rate of duty on fuel used for propulsion and pay the duty to us. This is a new requirement for fuel suppliers.

 

You are not responsible for ascertaining whether the fuel you sell to an individual is for propulsion of a private pleasure craft, although, if you suspect that is the case, you should remind the purchaser of their legal obligation to make a declaration and pay the full rate of duty. You are not responsible if the user fails to make a declaration or makes a false declaration.

 

Unquote

 

I then used as example my own case where I am a CCer this year I have been on the boat 365 days covered 550 miles and loads of locks and my engine has run for just over 1,000 hours that is 2.74 hours per day it takes about 2 hours a day to charge my batteries longer in the winter when it get dark earlier. I was advised that I should declare 85/15 in other words had I filled up at Turners with 100 liters then all 100 would be at 0.63 p = £63 then I would fill in declaration of 15 liters as propulsion 15 X 40.66 p = £6.07 making a total bill of £69.07.

The 85/15 above is based on the fact that any 2 hours of a cruising day is for charging batteries.

 

Anyway doubt if the way I have explained it makes any sence but to me it is clear.

 

 

 

http://www.hmrc.gov.uk/briefs/excise-duty/brief4908.htm

 

 

 

John

[David Schweizer]

That is very helpful John. However, having read the Revenue & Customs Memorandum, I cannot find anything in it that would support your notion that the first two hours of cruising can count as generation of heat and electricity, rather than propulsion. Whilst some of the fuel used for propulsion will also be generating heat and electricity, I am certain that it would only be a small proprtion of the fuel used.

 

No doubt someone who understands the science of these things better than me, will be able to work out the exact proportion, but I doubt whether more than 10% of fuel used while cruising will not be for propulsion. It is worth a try but I doubt whether the arguement would stand close examination in a Court.

 

Ever since i aquired my boat I have maintained a full cruising log, and record the engine hours used separately for battery charging and heating domestic water etc. My calculatiions come very close to the 60% - 40% estimate referred to in the memorandum so that is what I will be going with.

 

One last thing, will there be a standard declaration form or will each supplier create their own? It occurs to me it would be a great deal more helpful if boat owners could complete most of the information in advance, thus reducing the inconvenience to the supplier.

[bottle]

David

 

From the document:

 

We are aware accounting methods and systems can vary from supplier to supplier, for

example, some may wish to preprint the declaration on invoice slips or till receipts.

 

Therefore, although the declaration must be in the following form of words, it is for individual

RDCOs to decide how to incorporate this into their existing accounting procedures and

records:

 

'I declare that [ ] % of the fuel purchased will be used for propelling a private

pleasure craft'.

 

The declaration must be signed and dated by the purchaser, and the RDCO supplier must

ensure that the purchaser’s name and address is noted in his normal records.

[cotswoldsman]

That is very helpful John. However, having read the Revenue & Customs Memorandum, I cannot find anything in it that would support your notion that the first two hours of cruising can count as generation of heat and electricity, rather than propulsion. Whilst some of the fuel used for propulsion will also be generating heat and electricity, I am certain that it would only be a small proprtion of the fuel used.

 

No doubt someone who understands the science of these things better than me, will be able to work out the exact proportion, but I doubt whether more than 10% of fuel used while cruising will not be for propulsion. It is worth a try but I doubt whether the arguement would stand close examination in a Court.

 

Ever since i aquired my boat I have maintained a full cruising log, and record the engine hours used separately for battery charging and heating domestic water etc. My calculatiions come very close to the 60% - 40% estimate referred to in the memorandum so that is what I will be going with.

 

One last thing, will there be a standard declaration form or will each supplier create their own? It occurs to me it would be a great deal more helpful if boat owners could complete most of the information in advance, thus reducing the inconvenience to the supplier.

 

As explained to me you take the anual hours run byengine divide by the days spent on the boat to give you daily engine total and deduct the hours required to charge batteries etc. Calculation is done at 1 hour per litre but again the main thing is you are making the declaration.

 

Sorry one fairly important fact that I forgot to mention is that you are declaring for the fuel you are putting in at that time not on the fuel you have used, so if you miss callculated then you should repay that next time you fill up. Think the reason I forgot to mention it is because this where it can become complicated. So for example you put in your 100 litres declare 70/30 but next time you fill up and again go for the 70/30 but actually the time before you actually used 50/50 then you should pay the duty on the 30 you have just had and an extra 20 litres for the time before (now that is complicated and relise on a lot of honesty) so was advised just to use an average formula and keep a log.

 

The guy also told me that it will run this way for 2 years if during that period they feel that the vast majority of boaters have under declared then duty on all diesel will be charged at the time of purchase and each boater will then have to claim back the duty for non propulsion giving a detailed breakdown of propulsion to non propulsion.

 

As the declarations will be going to HMCE if they feel that anyone is underdeclaring then they will send an invoice for what they think has been under paid and this will then have to be paid, after that yoou can then send an explanation of why you don't think you have underpaid and if they agree the duty overpayment will be rebated. If the invoice remains unpaid then your licence number will be sent to all suppliers and they will be told that you are only to buy deisel at the full duty paid rate.

 

Guess that has now really made it more complicated than it is. In other words boaters taking the p**s can make it very complicated for other boaters in 2 years time.

 

John

[Lesd]

Hi John,

Thanks for the update, very useful indeed.

 

Have just run some figures, iam I understanding your correctly ?

 

1. 500 engines hours per annum

2. This gives approx 1.4 hrs per day based on live aboard full time

3. Winter charge 2 hours per day

4 summer charge 2 hours every 4 days or 0.5 hour per day (use of solar panels reduces charging)

5. Average daily charge hours 1.25

6. ratio 1.25 to 1.4 equates to approx 11:89

 

So a cc'r moving slowly around the system every two weeks (minimum movement really) could genuinely claim 90:10 split ??

 

On that basis I think my own ratio will probably be 80:20 as we move round a bit more than the above example.

 

Rgds

Les

Edited October 11, 2008 by Lesd

[CanalWalker]

still no tax cuts for those who use unleaded petrol?

[cotswoldsman]

Hi John,

Thanks for the update, very useful indeed.

 

Have just run some figures, iam I understanding your correctly ?

 

1. 500 engines hours per annum

2. This gives approx 1.4 hrs per day based on live aboard full time

3. Winter charge 2 hours per day

4 summer charge 2 hours every 4 days or 0.5 hour per day (use of solar panels reduces charging)

5. Average daily charge hours 1.25

6. ratio 1.25 to 1.4 equates to approx 11:89

 

So a cc'r moving slowly around the system every two weeks (minimum movement really) could genuinely claim 90:10 split ??

 

On that basis I think my own ratio will probably be 80:20 as we move round a bit more than the above example.

 

Rgds

Les

 

Les

 

As it was explained to me you are correct.

 

The other thing to remember id that in winter you might use your webasco or what ever think unfortunatly it is important to keep a rough log.

[Lesd]

The other thing to remember is that in winter you might use your webasco or what ever .

 

Good point, that brings the ratio down a little further. Will have to run some numbers based on what Ive recorded on our boat to date. Thanks for you help though, its a bit less worrying that I thought now

 

Les

[Triton]

Based on the relatively low income involved, I can’t help wonder just how much time and effort HMRC will spend chasing up on folk claiming low levels of propulsion usage. Only time will tell.

[denboy]

I have an accountant to do my accounts after reading the above looks like you need another to work out the tax on red

Nah i wont bother

[Travis]

We have two tanks, one for the main engine, the other for the central heating/generator.

 

For the last two years the boatyard where we fill up has kept a record of our diesel usage. It was suggested the owner might want to do this by HMRC when they visited to discuss how the owner was ensuring red wasn't being sold to the local taxi companies. Apparently this is the real area revenue is being lost, the visitors were quite amused when the thought of dipping boat fuel tanks was mentioned.

 

Anyway, as long as the diesel is going into the right tank I wont be charged any extra rate. For the engine tank I am thinking of using white. I can buy it legally through work, slightly below pump prices, one of the benefits of driving for a small company which operates 4 LGVs.

[Scotty]

The guy also told me that it will run this way for 2 years if during that period they feel that the vast majority of boaters have under declared then duty on all diesel will be charged at the time of purchase and each boater will then have to claim back the duty for non propulsion giving a detailed breakdown of propulsion to non propulsion.

I wonder what that means?

As it's an estimated declaration, there will be more people under estimating than over estimating and I doubt they will like the outcome.

 

How can anyone prove 'days spent using the boat' or 'hours spent charging' ?

[cotswoldsman]

Based on the relatively low income involved, I can’t help wonder just how much time and effort HMRC will spend chasing up on folk claiming low levels of propulsion usage. Only time will tell.

 

that is the reason the government won the argument to do it the way they are as apposed to how it is done in the rest of the EU where they work on the claim back system. It is not a tax that the UK government wanted to introduce.

 

Does not take a lot of working out if you say there are 50,000 boats on the system and they cruise an average of 60 days a year and are under propulsion for 5 hours a day

 

50,000 X 60 X 5 X 0.41p = £6,150,000.00 so just over £6 million and that is over the top.

 

The extra revenue from my boat is going to be less than £100 and if I had to pay it on every litre I bought it would only be £410 compared to the extra my son and daughter are having to pay on gas and electricity at the homes it is still in line if I did pay the £410.

[magnetman]

As explained to me you take the anual hours run byengine divide by the days spent on the boat to give you daily engine total and deduct the hours required to charge batteries etc. Calculation is done at 1 hour per litre but again the main thing is you are making the declaration.

 

Sorry one fairly important fact that I forgot to mention is that you are declaring for the fuel you are putting in at that time not on the fuel you have used, so if you miss callculated then you should repay that next time you fill up. Think the reason I forgot to mention it is because this where it can become complicated. So for example you put in your 100 litres declare 70/30 but next time you fill up and again go for the 70/30 but actually the time before you actually used 50/50 then you should pay the duty on the 30 you have just had and an extra 20 litres for the time before (now that is complicated and relise on a lot of honesty) so was advised just to use an average formula and keep a log.

 

The guy also told me that it will run this way for 2 years if during that period they feel that the vast majority of boaters have under declared then duty on all diesel will be charged at the time of purchase and each boater will then have to claim back the duty for non propulsion giving a detailed breakdown of propulsion to non propulsion.

 

As the declarations will be going to HMCE if they feel that anyone is underdeclaring then they will send an invoice for what they think has been under paid and this will then have to be paid, after that yoou can then send an explanation of why you don't think you have underpaid and if they agree the duty overpayment will be rebated. If the invoice remains unpaid then your licence number will be sent to all suppliers and they will be told that you are only to buy deisel at the full duty paid rate.

 

Guess that has now really made it more complicated than it is. In other words boaters taking the p**s can make it very complicated for other boaters in 2 years time.

 

John

I get a funny feeling they probably will 'feel that 'the vast majority of boaters have under declared' because it is convenient. It does make sense to shift the paperwork to the consumer otherwise boatyards might just pack in fuel sales altogether which would cause some problems.

[cotswoldsman]

I get a funny feeling they probably will 'feel that 'the vast majority of boaters have under declared' because it is convenient. It does make sense to shift the paperwork to the consumer otherwise boatyards might just pack in fuel sales altogether which would cause some problems.

 

Under the new sysstem the paper work is with the boater as it is the boater that has to fill in the declaration not the boatyard. The boatyard collects the extra duty puts it on deposit and then sends it to HMCE every 3 months the same as they do with VAT and the same as they would have to do with duty if it was all charged duty.

 

I can't imagine boatyards packing in fuel sales as on average they make 0.20 ppl so everytime I fill up with 200 l they are making £40 plus chances are I will be buying something I need from there over priced chandelry!!

[magnetman]

Under the new sysstem the paper work is with the boater as it is the boater that has to fill in the declaration not the boatyard. The boatyard collects the extra duty puts it on deposit and then sends it to HMCE every 3 months the same as they do with VAT and the same as they would have to do with duty if it was all charged duty.

 

I can't imagine boatyards packing in fuel sales as on average they make 0.20 ppl so everytime I fill up with 200 l they are making £40 plus chances are I will be buying something I need from there over priced chandelry!!

 

I guess if the boatyard are already sending forms with full details of each transaction to the revenue it'd make no difference but I didn't think they currently did that. I've never given my address when buying diesel and some yards don't even want a boat name.

 

 

20ppl profit? is that right?

[alan_fincher]

20ppl profit? is that right?

Wlll I'd suggest that the ones who were charging £1.20 per litre, when it could be bough elsewhere for less than 80 ppl, might be doing even better than that. (It's called opportunistic profiteering, in my opinion).

 

But for the ones with keen pricing, I'd be surprised if the profit margin came anywhere close to 20 ppl.

 

I think some don't make huge margins on it, but hope when people call in they will be tempted to empty their wallet on other things. Because of this, even those with small profit margins would lose if they pull out of selling Red.

[chris w]

Where did this 2 hours per day battery charging time come from? No-one can charge their batteries after an overnight stop in just two hours. If you think you are, then your batteries are getting a severe undercharging each day. Remember too that an alternator is only 50% efficient so one is actually using twice the actual fuel to charge the batteries than one might think. (even after discounting the fact that the engine itself is only 25% efficient). Without a generator, one MUST run the engine for several hours, whether cruising or not, to recharge the batteries.

 

A typical cruiser with TV, fridge, lights, pumps and possibly a laptop will consume around 100AH per 24 hours. Due to the inefficiencies of battery physics, that requires a recharge of 50% more (ie: 150AH) to get the batteries fully charged again. I don't know anyone who has the capability of pumping in a constant 75A for 2 hours!!

 

Also, I believe the total number of boats on the system is close to 30,000 not 50,000, based on BW and EA registrations so the actual tax revenue is very small. Apparently, if we all paid 100% tax on diesel, it would amount to only 0.06% of all fuel duty collected by HMRC.

 

I wonder how the new regulations are going to get communicated to the vast majority of boaters who don't come on to this or any other Forum? I spoke to someone in my marina the other day who is not even aware that diesel duty is going up in November. (Well, he is now!)

 

Chris

[Nickhlx]

"Where did this 2 hours per day battery charging time come from? No-one can charge their batteries after an overnight stop in just two hours"

 

Is it a figure that has been "guessed at" as being a generous apportionment of the "average" cruiser's engine running time each day for charging batteries.

 

Yes of course the batteries are probably being charged for all the ? 6 to 8 hours that it may be running each day, but during that time perhaps only 10% of the fuel being used is actually down to the load being provided by the alternators or the heat going into warming the hot water.

 

Perhaps this was negotiated to be the best guess at what the figures should be ?

 

Nick

[tosher]

RDCOs' responsibilities

If you supply red diesel to private pleasure craft, you will be required to charge the purchaser the full rate of duty on fuel used for propulsion and pay the duty to us. This is a new requirement for fuel suppliers.

 

You are not responsible for ascertaining whether the fuel you sell to an individual is for propulsion of a private pleasure craft, although, if you suspect that is the case, you should remind the purchaser of their legal obligation to make a declaration and pay the full rate of duty. You are not responsible if the user fails to make a declaration or makes a false declaration.

 

 

John

 

The above states "supply red diesel to private pleasure craft" How will this work if you buy red diesel in containers from a garage forecourt that is many miles away from any canal ?? will agricultural users and construction firms who buy red diesel in this way have to make the same declarations.??? interesting.

[carlt]

The above states "supply red diesel to private pleasure craft" How will this work if you buy red diesel in containers from a garage forecourt that is many miles away from any canal ?? will agricultural users and construction firms who buy red diesel in this way have to make the same declarations.??? interesting.

If you fraudulently obtain diesel at the lower rate of duty, then you wil be liable.

 

The farmers and builders won't be tax dodging so, if investigated, will have nothing to hide.

[alan_fincher]

It's interesting that whilst you will need to make a declaration of use when you buy fuel at a canal location, there appears to be no requirement to keep any records (yourself) of what you have bought, used, or declared.

 

So if you are cruising extensively you will sign declarations all over the system. It takes some imagination to believe the revenue will be collating paper returns from multiple boatyards to build up a total picture of use by individual boats.

 

If I was asked to say exactly which boatyards I bought fuel at on our summer cruise, I probably couldn't, and there seems to be no obligation on me under the new scheme to actually know, any more than I would of in the past.

 

I'm in no way condoning abuse of the new system, either by declaring false percentages, or by using red bought elsewhere at the low rate of duty, but it does seem to me that it will be mightily hard for the revenue to do much about it.

 

In particular it seems nigh on impossible for them to prove that you have gone far more miles than you could have got on fuel you have declared as for propulsion.

 

Have I missed the obvious?

[cotswoldsman]

It's interesting that whilst you will need to make a declaration of use when you buy fuel at a canal location, there appears to be no requirement to keep any records (yourself) of what you have bought, used, or declared.

 

If I was asked to say exactly which boatyards I bought fuel at on our summer cruise, I probably couldn't, and there seems to be no obligation on me under the new scheme to actually know, any more than I would of in the past.

 

I'm in no way condoning abuse of the new system, either by declaring false percentages, or by using red bought elsewhere at the low rate of duty, but it does seem to me that it will be mightily hard for the revenue to do much about it.

 

In particular it seems nigh on impossible for them to prove that you have gone far more miles than you could have got on fuel you have declared as for propulsion.

 

Have I missed the obvious?

 

Alan

 

I am only the messanger in this post but having owned a number of bonded wharehouses can i suggest that you read the document and any nqueries you phone HMCE they are ver helpfull can i just quote this part of the document that I linked

 

Quote

 

Purchasers' responsibilities

You are responsible for declaring that red diesel purchased will be used to propel a private pleasure craft. Use of fuel without the appropriate declaration renders you liable to a civil penalty under the Hydrocarbon Oils Duties Act 1979, as amended by the Finance Act 2008. The form and manner of the declaration is explained in the next section.

 

It is your responsibility to declare the proportion of any fuel you buy which you intend to use for propulsion. That proportion will be subject to the full rate of duty. A declaration is required even if all of the fuel is intended to be used for propulsion purposes. The remaining proportion, which is intended for domestic use (heating, lighting etc), can continue to be supplied at the rebated rate of duty.

 

Both elements, propulsion and domestic, are eligible for the reduced rate of VAT (5%).

 

We recognise that the declaration made by you will be an estimate but you must make every effort to ensure it is as accurate a reflection of your usage as possible. Analysis by both the industry and us suggests that a split of 60% for propulsion and 40% for domestic use probably reflects most people’s use and it is therefore likely that many users will declare such an apportionment. This will make it easier for suppliers (RDCOs) to work out additional duty and VAT. However, where a you know that your propulsion use may be more or less than the above apportionment split or a craft clearly has no domestic use, then you must declare your actual intended usage.You are not required to obtain or retain evidence that you have made a declaration and paid duty on fuel you purchased for propulsion, but doing so will facilitate any checks made by us and make that a quicker and easier process for all parties.

[cotswoldsman]

I am not sure if it is a good idea to post this as I have been in the Hartley ay Wheaton aston since 5 pm........ While I was there I was talking to someone who works at a wharf about 5 miles from here who when i asked are you all ready for 1/11/08 said "yes we are going with the 60/40 formula for our diesel"

 

Can I please restate that this is illegal the marina can not state how you make your declaration.

[Hobson]

So if I understand the op corectly, basically, you can fill it up and declare 90/10 - heating/propulsion. Say you never go anywhere and challenge them to prove it if queried?

 

It sounds to me like HMRC can't enforce this and so isn't going to bother. They are just banking on 10% on your fill up bill going to them and leaving it at that.

 

There's no way I'd pay nearly 100% more for 80 litres of fuel if nobody was actually going to check.

 

As for farmers and builders, you have got to be kidding? I've never met a poor farmer, despite their (perennial) protestations of destitution and builders! Pah!

 

As for battery charging, it takes hours .. plural. 3-4 min. to do a cycle/recharge on a bank of 3-6 batteries. At least it does for me. That means the engine is running, including hot water, for at least 6 hrs a day when I am out and about. I worked out that it comes in at around £7-10 a day in diesel just to re-charge your batteries! One of the reasons I have ditched the fridge! Its probably cheaper to just pay for a mains hook up somewhere or buy a dedicated small bore charging generator.

 

Actual propulsion is a meagre percentage for most people, unless you are a CC? I can't see it being more than 25% of your consumption quota ..?

 

- Hobson

Edited October 12, 2008 by Hobson