diesel split

[canalchris]

Having had the taxman on my arse once before, so i really have every intention of playing by our cowardly governments rules. does anyone think it will be adequate to keep reciepts for deseil purchased on a domestic only basis, then keep a log of journeys undertaken with a record of daily start and finish enginehours. would i then be able to declare to HMRC in my self assesment the amount of duty i thuoght i owed. if stopped away from my home mooring during a cruise i would be able to show appropriate records. what do you think??

[WillC]

Please can someone explain to me in SIMPLE terms what the new 60/40 diesel split is all about. Hubby and i love our holidays on the canals and are hoping to buy our own nb in 2 years time when he retires. We are more than a little confused about the above mentioned and what it means (never having to purchase fuel in that respect, as always used hire boats). Thankyou.

 

Basically, until Nov last year we could use low tax/duty agricultural diesel for recreational use. Due to EU rules that has now changed and we must now pay the full rate of tax/duty. However, through some excellent lobbying by user groups - notably the RBOA - a compromise was reached whereby we only have to pay the higher rate on diesel used for propulsion. Any used for domestic use remains at the lower rate.

 

So there are basically now two prices for diesel - last time I filled up at Barton Turns the two prices were 65p/l domestic and 108p/l propulsion. According to the rules the user is allowed to declare their usage and will be charged accordingly. The so-called average is 60:40 propulsion:domestic and some sellers have adopted that rather than allow the user to declare a ratio.

 

Being able to declare a ratio means that a static live-aboard, for example, could declare 100% domestic, and in the winter someone like me with diesel heating could declare more for domestic than cruising. In other words, it is down to the user to work out their usage ratio (which is likely to change with the seasons) and be prepared to back it up if they were ever challenged.

 

Personally, I think this is a near perfect compromise and I hope no-one abuses the system to the point that it will be changed.

 

On the other hand, in the spirit of tax avoidance rather than evasion, it does occurs to me that if a boat needs to run its engine 4 hours a day simply to charge its batteries, then the owner could probably argue that as long as they don't cruise for more than, say 3 hours a day, then they could declare 100% domestic. Hhhm, sounds very close to the pattern of most continuous cruisers and very close to what we do during our long summer cruise.

 

Perhaps I'll bite the bullet and ask HMRC.

 

Cheers

 

Will Chapman

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[chris w]

...............................it does occurs to me that if a boat needs to run its engine 4 hours a day simply to charge its batteries........

Based on a typical NB usage (say 100AH/day), you cannot charge your batteries in just 4 hours of cruising. It can't be done; substitute 8-10 hours for that figure.

 

Chris

[Ray]

I only use my engine for propulsion (aside for the battery charging element of any cruising). I have nothing on the boat other than the engine that uses diesel fuel.

 

As I don't appear to have a reason to pay other than the full whack all the time, that is what I propose to do. For the relatively limited amount of cruising that we do I can't be bothered with all the faff of working out how much of my diesel is spent on charging my batteries and I don't think I could justify paying the 60/40 split.

 

Do I therefore have to make any form of declaration and, more to the point, do I need to keep receipts other than to verify that my credit card had the correct amount assigned to it if I want to?

 

How will HMRC know when my engine hours were used up and how will they know that I didn't buy all the fuel in my tank before the price went up? I'm not obliged to keep a cruising log.

 

I have enough of paperwork when I'm not cruising, I don't want more when I am.

[Keeping Up]

On the other hand, in the spirit of tax avoidance rather than evasion, it does occurs to me that if a boat needs to run its engine 4 hours a day simply to charge its batteries, then the owner could probably argue that as long as they don't cruise for more than, say 3 hours a day, then they could declare 100% domestic. Hhhm, sounds very close to the pattern of most continuous cruisers and very close to what we do during our long summer cruise.

 

Perhaps I'll bite the bullet and ask HMRC.

The boat will demonstrably use more fuel during 3 hours cruising than it would during 4 hours of battery charging, so it would be difficult to justify 100% domestic.

 

It's probably best NOT to ask HMRC. They like nothing better than saying NO when asked (for no good reason) and then using that as a precedent to issue a global NO to everybody. Don't ask; it is always easier to get forgiveness than to get permission!

[magpie patrick]

I know this wasn't where it started, but...

 

You can't argue that because you'd have to run your engine for x hours anyway, that x can be deducted from y hours cruising and declared domestic. You have an engine, not a diesel generator. Indeed, most propulsion units are rather poor generators which is why Chris keeps pointing out how long it takes to recharge your batteries. If you move, it's propulsion.

 

A non-grumpy HMRC inspector will swallow that your engine uses 2 litres an hour propulsion only, and 2.5 when the batteries need recharging, thus the 0.5 is non-propulsion. A grumpy one may even question that.

 

Personally, I think this is a near perfect compromise and I hope no-one abuses the system to the point that it will be changed.

 

hear hear! What is the problem with being honest? we have been presented with a system that is basically an honesty box, please don't abuse it or it WILL be taken off us

 

When we do the Avon Ring this summer I'll declare at least 80/20, not because I couldn't get away with less (60/40 wouldn't be questioned) but because it's an honest estimate, and I owe it to my mate on Moonraker, liveaboard, and Odana, both who can honestly claim 20/80, to be honest. And to all the others who can honestly claim low propulsion percantages

Edited January 26, 2009 by magpie patrick

[Big John]

The planned increase in duty in October 2008 was postponed by the government (I think!),

Can anyone confirm that?

so the duty on gas oil / diesel used for propulsion remains at 50.35 pence per litre, whereas that used for non propulsion purposes only attracts the rebated rate of duty of 9.69 pence per litre.

 

So the actual difference in fuel duty is 40.66, but you pay VAT at 5%, even on the duty, (a tax on a tax), so the effective difference is 42.69 pence per litre, (or 43 ppl, rounded).

I find the different calculations on http://www.waterways.org.uk/News/OtherCampaigns/RedDiesel (Ready Reckoner) and http://www.reddiesel.info/ somewhat confusing. I think IWA have omitted VAT in one calculation.

 

Looking at the IWA page, it's ironic that nb Gosty only sells heating oil - not fuel for propulsion.

[denboy]

As we were getting ripped off by our diesel retailer we have decided to buy our propulsion diesel from the petrol station and our domestic diesel from our local red supplier. The local retailer has agreed we can have 100% domestic as long as we can prove to them we are using white/road diesel as well. We will get investigated by the tax man but we are keeping copies of all our reciepts so there shouldnt be an issue.

If they do visit you it will be to make sure its not going in the car

[nb Innisfree]

Continuous cruisers are not allowed to declare 100%, if you do then you are responsible, not the supplier. So if you declare 100% for a year will HMRC demand tax payment on 60% of fuel purchased? (60/40 split) Best not to try and pull a fast one. I think self declaration is quite reasonable.

 

sorry meant to say 0% propulsion not 100%

Edited March 9, 2009 by nb Innisfree

[Night Hawk]

Just out of curiosity, what ratio are you all claiming.

 

Since November last year we've not needed to buy fuel - huge tank and injured crew member has meant that we've not been far but have run the engine to service batteries. I've kept a log of how ofter the engine's been run, for how long, and if we've gone anywhere....Seems like 75/25 split for us...

 

What's yours?

[bottle]

Continuous cruisers are not allowed to declare 100%, if you do then you are responsible, not the supplier. So if you declare 100% for a year will HMRC demand tax payment on 60% of fuel purchased? (60/40 split) Best not to try and pull a fast one. I think self declaration is quite reasonable.

 

sorry meant to say 0% propulsion not 100%

 

Not quite true, if you have two tanks that cannot be connected to each other and one is used for propulsion (with a small amount of generation) and the other for generation [stand alone generator] and heating the generation/heating tank can be declared 0% propulsion. This has been checked with HMRC.

 

 

Just out of curiosity, what ratio are you all claiming.

 

Since November last year we've not needed to buy fuel - huge tank and injured crew member has meant that we've not been far but have run the engine to service batteries. I've kept a log of how ofter the engine's been run, for how long, and if we've gone anywhere....Seems like 75/25 split for us...

 

What's yours?

 

You can declare any split you like but just ensure you can prove it, if asked by HMRC.

 

 

Also when buying diesel the declaration is for the split you expect to use it for, not what you have used it for.

 

There is a proviso if the diesel has not been used as declared then the next declaration is expected to be adjusted.

[David Schweizer]

......A non-grumpy HMRC inspector will swallow that your engine uses 2 litres an hour propulsion only, and 2.5 when the batteries need recharging, thus the 0.5 is non-propulsion. A grumpy one may even question that......

It wouldn't be the HMRC Inspector who was grumpy if they insisted that I used an average of between 2 and 2.5 litres an hour cruising, it would be me.

 

I have kept records for the last ten years and my average cruising fuel consumption is about 1.2 litres per hour. Even up stream on the Thames, flat out I was only using about 1.6 litres per hour.

 

I only have a little BMC 1.5, not a huge thumper (although I would love one!) and other people I know, get a similar fuel consumption from the BMC.

[nb Innisfree]

Not quite true, if you have two tanks that cannot be connected to each other and one is used for propulsion (with a small amount of generation) and the other for generation [stand alone generator] and heating the generation/heating tank can be declared 0% propulsion. This has been checked with HMRC.

 

 

 

 

You can declare any split you like but just ensure you can prove it, if asked by HMRC.

 

 

Also when buying diesel the declaration is for the split you expect to use it for, not what you have used it for.

 

There is a proviso if the diesel has not been used as declared then the next declaration is expected to be adjusted.

[ditchcrawler]

It wouldn't be the HMRC Inspector who was grumpy if they insisted that I used an average of between 2 and 2.5 litres an hour cruising, it would be me.

 

I have kept records for the last ten years and my average cruising fuel consumption is about 1.2 litres per hour. Even up stream on the Thames, flat out I was only using about 1.6 litres per hour.

 

I only have a little BMC 1.5, not a huge thumper (although I would love one!) and other people I know, get a similar fuel consumption from the BMC.

In my oppinion like everyone else you can't PROVE what you have used, You could disconnect the hour meter every other day or even have the hour meter running all night without the engine if it was your want. You can't PROVE that the engine was running and you were moored up or likewise you were moving all the time the engine was running. You can't PROVE that every entry in your cruising log is correct or that you didn't visit places and not log it.

In my case because I don't always buy my fuel at the same place HMRC will need to get together all my declarations from all over the system and compare them all to see what split I have been using, will they know if they have missed one where I declared 100% propulsion or if I ran short put a couple of Gerry cans of white from the garage in.

It will we a major task to follow up on anyone and prove they were committing fraud other than those who declare 100% domestic

[nb Innisfree]

I don't think I would be able to prove it, offer evidence maybe. Surely self declaration is based on trust.

In answer to Night Hawk we declare 80/20 as cont cruisers (liveaboard)

[ditchcrawler]

I don't think I would be able to prove it, offer evidence maybe. Surely self declaration is based on trust.

In answer to Night Hawk we declare 80/20 as cont cruisers (liveaboard)

I think you are spot on, trust. and if you don't give cause for none trust you will be OK.

I think the 40/60 was only a number plucked out of the air and has no scientific basis

[NB Alton]

The original Reply did ask for an answer in simple terms, but other people have gone into more detail some of which is now out of date.

 

As a retailer of red diesel the past few months have been far from simple and I have tried very hard to keep my customers happy and explain things as simply as possible.

 

When the new system started on 1st November the additional duty was 40.66p/l plus 5% vat

Then in December the general VAT rate of 17.5% was reduced to 15%,

I believe the fuel duty was then raised to ofset this reduction so that white diesel effectively remained the same price, so as not to loose the goverment revenue.

From 1st December the additional duty was therefore increased to 42.28p/l (plus 5% VAT for boat propulsion, or 15% VAT for white / road diesel)

 

I hope my explanation isn't too confusing *(this is a simplified version as I haven't discussed the basic duty already on red diesel which I pay the wholesaler which also rose 0.28p/l). But the effect has been to keep the price of white diesel constant and increase the price of red diesel for propulsion use.

 

Many suppliers of diesel to boats did not even realise the duty rate had changed (some still don't know) and when I rang the HMRC hepl desk, even they didn't understand their own system (admittedly this was the general helpdesk not specific to fuel duty). The system was originally explained in the HMRC Revenue and customs brief 49/08 but even their example calculation there does not seem to be correct as the base price of 0.70 ppl seems very cheap at less than a penny per litre when the final price for a 100 litres at 60/40 split comes to £99.12.

 

Anyway it seems that when something is on the web it last for ever, even when it's superseded. The latest current information can be found on HMRC Revenue and customs brief 68/08 issued 31 December.

 

You can wake up now!

 

Cheers, Brian

Edited March 10, 2009 by NB Alton

[cotswoldsman]

I have dieseled up twice since 1 November 2008 the first one was direct from a tanker that delivered direct to towpath and knew nothing about declarations for boats so made no declaration. Yesterday I filled up at Ellesmere Marina and declared 95/5 just to be clear that is 5% propulsion.

[bottle]

Link to the HMRC brief mentioned by Brian (Nb Alton).

 

If you want to read it.

[David Schweizer]

In my oppinion like everyone else you can't PROVE what you have used, You could disconnect the hour meter every other day or even have the hour meter running all night without the engine if it was your want. You can't PROVE that the engine was running and you were moored up or likewise you were moving all the time the engine was running. You can't PROVE that every entry in your cruising log is correct or that you didn't visit places and not log it.....

What a bizzaire observation. I agree that whilst I may not be able to prove the record to be accurate, it would be possible to conduct a simple (albeit time consuming) test to demonstarte that the average fuel consumption portrayed in the records were an accurate reflection of actual usage. In fact a current fuel consumption test would probably show better fuel consumoption than that recorded over the previous years because it has improved since the recent complete engine re-build.

 

If a dispute over alledged fuel usage ever got to Court, it would be incumbant on the HMRC to prove that the figures I was presenting were false, not for me to prove that they were correct. That is how the law works in this country, and given that there are no criminal convictions against me, nor any allegations or Police enquiries, the Court would take the view that I was a person of "sound Character" and would be required to take that into account before reaching any decision.

 

The HMRC would be required to take the balance of probability into account before embarking on any legal action, and the balance of probality would be in my favour, particularly as I will be declaring a 60/40 split when I first re-fuel under the new tax rules. Interestingly the records I have maintained over the past 12 years demonstrate a remarkably close correlation to this theoretical balance, although there have been slight variations, both up and down over any individual year.

Edited March 10, 2009 by David Schweizer

[Keeping Up]

Interestingly the records I have maintained over the past 12 years demonstrate a remarkably close correlation to this theoretical balance, although there have been slight variations, both up and down over any individual year.

Do you have diesel heating David?

 

With gas and solid fuel heating I reckon it is nearer to 80/20 for me.

[chris w]

If a dispute over alledged fuel usage ever got to Court, it would be incumbant on the HMRC to prove that the figures I was presenting were false, not for me to prove that they were correct. That is how the law works in this country............

 

 

You've obviously never had any dealings with HMRC then............. they have far more power than the Police

[David Schweizer]

Do you have diesel heating David?

 

With gas and solid fuel heating I reckon it is nearer to 80/20 for me.

No, we have an Ellis Heatmaster Gas boiler, but I hardly ever use it. Most of the heat heat is generated by the engine, when running to re-charge the batteries.

 

I will be keeping a close watch on it this year, but at the moment, i am happy that a 60/40 split is about correct.

[alan_fincher]

My take on it, since they first announced what they intended to do is this.....

 

The HMRC brief, although not explicitly stating that they would accept 60% propulsion, 40% other from any declaration, comes about as close to saying that as they were ever likely to.

 

I suspect it matters not a jot if your heating is diesel, gas, solid fuel, any combination of these, or none, they will still leave someone declaring 60/40 alone.

 

Once your declaration moves to a higher percentage use at the lower rate, then I take the brief to say you need to be able to justify it, (and may be asked to).

 

However, as my local marina tells me that most of the declarations they are seeing are for only 0% to 10% propulsion, (from boats arriving under their own power), how the revenue is actually going to react once they see typical returns, I don't know.

 

I intend to declare 60% propulsion / 40% other, as I don't have the means at my disposal to analyse if it's right or wrong. It "feels" right to me, but I couldn't prove it. I doubt the customs man will come knocking at my door.

 

However, if enough people "extract the urine", I can't see the current arrangements being allowed to continue, though.

[magpie patrick]

However, if enough people "extract the urine", I can't see the current arrangements being allowed to continue, though.

 

a point I've made to tedium to those of us (yes, on this forum) who come up with evermore elaborate ways of beating the percentage down "I can see unburnt fuel in my exhaust, that's not being used for propulsion" (OK I exaggerate but some of you have come close)

 

Friend of mine Jon, on Moonraker, runs his engine five hours a day to have enough juice to power all his IT kit for the website consultancy that he runs. Once a month, he does a six mile round trip for pump out and diesel. His percentage will genuinely be very low, and of course, it's winter, so he needs diesel when others like me don't.

 

Me, come May, half way round the Avon Ring? lets see, engine ran for half an hour before set off from the marina and then nothing but propulsion until we return, and when I get back... engine not used until the next trip.