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Fuel duty


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I have found this to be the best guide when buying fuel.

 

http://www.noproblem.org.uk/blog/links/diesel_split.htm

 

Sue has done a lot of work on this and I am sure will not mind me posting the link.

 

John.

Interesting how regional the effect can be.....

 

For example I was unaware that it was that hard to choose your own split on the Southern Oxford, (although not everywhere is listed, I think).

 

We almost never encounter it, but perhaps that is because increasingly we buy from the boats if we possibly can.

 

It always seems odd to me that someone with only a back cabin and a mobile as their "office" can handle any split, and invoice you accordingly, but that major land based businesses with an office full of computers can't be bothered!

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I would have thought that in the UK you would pay duty of the fuel were used to charge propulsion batteries, are that is as much propulsion use as using the engine to drive a prop. Is that really not that case?

 

I had taken it the use of the fuel to charge domestic batteries is free of duty and in the case on a normally propelled NB, that even whilst cruising to is reasonable to attribute a certain amount of the fuel to the domestic charging that is taking place.

 

 

After re-reading, it may be that in the O.P.'s case they doesn't have to pay tax on their fuel as they are officially commercially trading.

 

Which is the same as here, as a commercially operating boat you're allowed to use the low-tax fuel.

 

Peter.

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The only way round the problem is to find a friendly farmer who will sell you a canful.

 

Of course, the farmer in turn would be breaking the law unless he happens to be a Registered Dealer in Controlled Oils as well as being a farmer.

 

George ex nb Alton retired

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Well not knocking your brother's view, unless he works for HMRC, I think we have to accept the answers that HMRC have chosen to give on the topic.

 

There is no excuse, I can see , for traders enforcing the 60/40, and I personally am dead against it, and would boycott them. But we are told they can if they so choose.

No, he's an independant who was once a C&E VAT inspector. Whilst we have to accept what HMRC say, that doesn't mean we have to accept that they are right. Unfortunately we're not a significantly large enough user group with the ability to mount a concerted legal challenge to address this rip off. If we were, HMRC might say something different. It would all boil down to them weighing up how much revenue they could afford lose out on if they were to fight & lose any court case. Assuming that it would be HMRC that was taken to court over this.

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After re-reading, it may be that in the O.P.'s case they doesn't have to pay tax on their fuel as they are officially commercially trading.

 

Which is the same as here, as a commercially operating boat you're allowed to use the low-tax fuel.

 

Peter.

 

That is my understanding also Boats operating on a trade licence irrespective of what they sell are exempt

John

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Of course, the farmer in turn would be breaking the law unless he happens to be a Registered Dealer in Controlled Oils as well as being a farmer.

 

George ex nb Alton retired

I'm sure that's true George, but I'm equally sure that if the boater asks no questions, the farmer won't either. It does happen.

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For charging batteries and heating,surely VAT at 5% is chargeable,same as domestic fuels.If you claim 100% use of red diesel for heating/battery charging 5% WILL be added to the bill.If you are a VAT registered trader(ie a trading boat),you will reclaim 100% of your VAT payments.There are other elements of tax involved in propulsion fuel,which is why,in some circumstances,you can be charged more for red diesel than derv(road fuel).Bearing in mind that this whole nonsence was forced on U.K. by the EEC and was not supported even by HMRC,it is easier to understand why they dont realy get stressed about the whole issue.Perhaps we should be gratefull for the status quo.If boatyards had to fund stocking derv,this would have a serious effect on their cash flow.A lot probably would not bother.One other unrelated issue.Fuel thefts are apparently a problem in some areas.Immagine the average narrow boat having £350 of diesel in the tank?The scallywags would have a field day.

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For charging batteries and heating,surely VAT at 5% is chargeable,same as domestic fuels.If you claim 100% use of red diesel for heating/battery charging 5% WILL be added to the bill.If you are a VAT registered trader(ie a trading boat),you will reclaim 100% of your VAT payments.There are other elements of tax involved in propulsion fuel,which is why,in some circumstances,you can be charged more for red diesel than derv(road fuel).

For clarity.....

 

All gas oil sold as boat fuel has fuel duty on it, whether it is for propulsion or for non-propulsion. The difference is the "per litre" amount of that duty, but even the non-propulsion has duty on at a rebated rate.

 

On top of that, it all has VAT on at the discounted rate of 5%, (same VAT percentage rate paid on "propulsion" and "non propusion").

 

That said, on a litre of fuel, you pay more 5% VAT in absolute terms on the "propulsion" stuff from the "non propusion" stuff, because you pay VAT on the fuel duty that has already been added, which is more in the case of the "propulsion", so you pay 5% VAT on that additional duty. (Yes, the VAT is indeed a tax on a tax, in this case).

Edited by alan_fincher
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I'm sure that's true George, but I'm equally sure that if the boater asks no questions, the farmer won't either. It does happen.

 

Very true. The only nagging problem I have is that, at present, HMRC are also "asking no questions" and letting boaters get on with it. I wonder for how long?

 

George ex nb Alton retired

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Interesting looking at the No Problem site how the yes/no question has a clear geographical split. Most are 'yes' but nearly all on the South Oxford are 'No;. I'm not directly familiar with that waterway, but I would have thought that anyone going for a split would get a significant increase in trade. Until the others went the same way. It does all suggest that they have come to some agreement amongst themselves.

Edited by dor
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Very true. The only nagging problem I have is that, at present, HMRC are also "asking no questions" and letting boaters get on with it. I wonder for how long?

 

George ex nb Alton retired

 

It would never be cost effective to even bother to check, although figures from tax return and v.a.t info would give a basic overview. The sums involved are a pittance and it's almost impossible to prove wrong doing needed to get conviction and any recompense.

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I believe the scam is this: the seller doesn't offer customers to declare their own split, instead using the standard 60/40 (and collecting the money for it). Then they 'invent' a bunch of splits eg 10/90 20/80, which results in their handing over less tax to HMRC and pocketing the difference.

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As a side topic, does any of your equipment run on kerosene (home heating oil) I've seen this supplied through some fuel stations on the road, It's the lowest rate of fuel tax if you are legally and practically allowed to use it. Eberspacher's will certainly accept it.

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As a side topic, does any of your equipment run on kerosene (home heating oil) I've seen this supplied through some fuel stations on the road, It's the lowest rate of fuel tax if you are legally and practically allowed to use it. Eberspacher's will certainly accept it.

 

Hi Arthur

 

We buy Kero from a local garage, I bought 100 litres about 6 weeks ago and it was just £0.70p

 

Topped up last week and it had gone up to 80p including tax, big jump I thought. The Bubble stove runs much better on it Too, I'll use it in the engine in future but with a little lubrication.

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Wow, didn't expect such a huge response from my mini rant. Since we hit the Calden 2 days ago we have been given and already put to good use much advice about local garages selling fuel with the right feeling. We have landed at the holly bush and the locals have proved to be friendly. Just to clarify the tax thing, we are licensed trading boat so our propulsion is not for leisure it's business. Although we have a diesel generator we have the battery capacity to marina hop on electricity bought with tax paid at the marina. And to be honest 99 % of our fuel has been used to keep our ageing bodies warm.

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So Kerosene where it may lawfully be used is about half the price of Derv with tax paid.

 

The duty on kero is the same as gas oil (red diesel) but the base price of the fuel tends to be 2-3p cheaper.

 

Kero may only be used lawfully in exactly the same applications that red would be lawful.

 

George ex nb Alton retired

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HMRC are apparently happy to accept red diesel sold with a flat 10% tax and many suppliers adopt that as policy and sell at a fixed rate in the order of 90p/litre without issue.

 

Following on from this I'm tempted to think that all the dealers adopting the split tax policy, whether fixed or with customer choice, are operating in ignorance, or fear of upsetting HMRC. Why else would they choose to antagonise their customers and create more work for themselves for no gain?

 

I'm concerned a review with HMRC to clear up this grey area may fall in favour of the more complex tax system though.

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Not read the whole thread so apologies if this is posted but if it has a reminder will not hurt.

 

Compiled by one of our forum members,Sue on No Problem.

 

http://www.noproblem...iesel_split.htm

 

Covers the whole country and is updated by fellow boaters.

 

Edit: predictive text.:(

Edited by bottle
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My understanding is that you are at 100% for heat AND battery charging , is that correct ?

It might be interesting to carefully consider the 'heat' category.

 

Many years ago I was taught that a typical diesel engine was approximately 40% efficient - i.e. 40% of the fuel was converted into useable energy (pushing a boat along in this case) while the remaining 60% was lost in the form of heat.

 

In a vehicle a small part of this lost energy is captured by the heating system but most is lost via the cooling system to the great outdoors. With a boat the situation is somewhat different. This lost heat energy is in fact retained to a greater or lesser extent in the form of water heating and, in the case of an internal engine room, space heating. Only when the thermostat opens and the coolant water is diverted to the skin tank are we finally not in a position to utilize 100% of the energy inherent in the fuel we purchase.

 

My point being that, in calculating the split for VAT purposes, should we not in fact be taking into account a far greater proportion of the fuel purchased to set against the non-propulsion (in this case 'heating') fraction?

 

In the case of my own boat, with its internal engine room, cruising in these current, and often sub-zero temperatures (where the thermostat rarely opens to allow water to flow to the skin tank) I should start off by claiming the full 60% (inherent in the heat losses) and add to that electricity generation etc.

 

Now that would represent the time when when I'm cruising. Any other use of the engine would be battery charging, heating or whatever and therefore qualify for the full 100% - further pushing up the equation to the point where a 60:40 split is, in fact, totally unrealistic.

 

In other words, taking into account my premise above, the 60:40 split is way too conservative and (depending on the type of engine installation; the way the boat is used - and when; etc) a split of 70:30, and upwards, would be a far more sensible reflection of reality in most cases.

Edited by Up-Side-Down
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Now that would represent the time when when I'm cruising. Any other use of the engine would be battery charging, heating or whatever and therefore qualify for the full 100% - further pushing up the equation to the point where a 60:40 split is, in fact, totally unrealistic.

 

In other words, taking into account my premise above, the 60:40 split is way too conservative and (depending on the type of engine installation; the way the boat is used - and when; etc) a split of 70:30, and upwards, would be a far more sensible reflection of reality in most cases.

 

As I understand it, the '60%' in the 60/40 split is the propulsion element. It was picked by HMRC based on inland boats and included a large number of cruisers where little if any of the fuel would be used for other than propulsion.

 

When I was selling diesel, most people asked for a 20/80 or 30/70 split as they were already taking into account the proportion of fuel used by the engine that was in fact used for heating (i.e. calorifier). Some of course asked for 10/90, whilst others even asked for 100% non-propulsion which rather put you in the position of "aiding & abetting" when they had just cruised in to the marina!

 

10/90% might not be unreasonable in the winter when you spend quite a bit of time (every weekend or more) on your boat but do not travel far from your mooring.

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For genuine CCers, (yes there are still some) who have to run their engine each day for 3/4 hours for domestic purposes, then surely the propulsion element of fuel use is almost a bi product of everyday living.

 

Over a year the actual fuel used solely for propulsion i.e. when domestic heating and charging duties have been fulfilled will be miniscule.

 

 

Diving for cover!

 

cheers.gif

A

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