Fuel duty

[Paul C]

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.

 

It will never be 100% because some heat is lost through the exhaust gases.

[Dave_P]

It will never be 100% because some heat is lost through the exhaust gases.

And noise, and general heat loss through the engine itself, and mechanical inefficiency and so on and so on...

 

I suspect that the amount of kinetic energy in the turning propellor is already less than half of the total energy latent in the diesel. With that in mind, even if I only ever used by fuel for proportion, no heating or charging required, I would declare more than 40 propulsion/60 domestic.

 

Now where's the tongue-in-cheek smiley gone?

[Neil Corbett]

More to the point, has any boater or diesel seller been prosecuted for false declaration since the new law came in? I suspect its below HMRCs worry line.

[nb Innisfree]

All HMRC are interested in is the amount of fuel used for moving the boat, period.Assuming it takes, say, 1 litre per hour on average to just turn the prop, ignoring any extra diesel used for additional engine loads, then any by product in the form of heat can be either utilised free of tax or discarded, neither will have any impact on the 1 lph usage. So out of whatever total amount of diesel in litres is used the propulsion percentage in litres will be equal to the time in hours that the gearbox is engaged.

[bottle]

 

SNIP>>>>>>>>>>>>>>>>>>>>>>>>>>>

 

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.

 

<<<<<<<<<<<<<<<<<SNIP

 

Must be well below freezing then if your engine is not up to temperature and the thermostat open after about five to ten minutes.

[OldGoat]

More to the point, has any boater or diesel seller been prosecuted for false declaration since the new law came in? I suspect its below HMRCs worry line.

 

 

All HMRC are interested in is the amount of fuel used for moving the boat, period.Assuming it takes, say, 1 litre per hour on average to just turn the prop, ignoring any extra diesel used for additional engine loads, then any by product in the form of heat can be either utilised free of tax or discarded, neither will have any impact on the 1 lph usage. So out of whatever total amount of diesel in litres is used the propulsion percentage in litres will be equal to the time in hours that the gearbox is engaged.

 

 

Must be well below freezing then if your engine is not up to temperature and the thermostat open after about five to ten minutes.

 

HMRC is unlikely to persue any narrow boater or inland waterways cruser, perhaps a bit more for a coastal oil guzzler who takes the mickey.

It's just no worth their while.

 

As to the percentage claimed HMRC have stated from the start that anyone may / might be asked to justify the percentage claimed.

If a 60/40 split for a power boat consuming several gallons per mile is considered fair, what would the appropriate figure for a NB? I reckon 10% propulsion would be reasonably supportable by a quick calculation.

 

This all has been said many, many times before, and still comes up as a contentious subject.

 

HMRC desided it was not their job to police the dealers' returns, nor would they challenge a forced 60/40 split. If anyone is agrieved by a forced split then:-

 

 

• refuse to sign the declaration
• avoid the dealer in future
• publicise them as a pile of poo
• write to HMRC and challenge their registration
• keep a record of all purchase (it's not difficult) and buy your next lot with a lower declaration

I reckon the only reason that some dealers force 60/40 is because it's a nice little earner - they only have to pay over the extra duty once per year. Helps their cashflow no end. There's no other good reason fo doing so.

 

 

 

 

[ditchcrawler]

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.

Thought about this but would require a new tank installing somewhere. I have oil heating at home so could decant into 25lt drums with no problem, but I think it would take a long time to recoup the outlay.

[Ex- Member]

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!

 

A

 

Well I agree, I'm in actual fact fitting a small diesel generator which will draw fuel from the main tank, he main engine will only be used for generation if it happens to be cruising.

 

When we first go on the water, we'll only be cruising in such a manner to keep in line with the rules. This could mean only moving/cruising every 14 days or even more. As there's no great distance required or defined that you must move then you can limit your cruising greatly, especially using the the guide of at least moving to another neighborhood, which could be just a couple of miles. so if only moving every 14 days which would require 26 movements, even at 5 miles a move that's just 130 miles per year.

 

Of course the reality is we'll move more often just for the joy of cruising, but even then it really would be a small proportion of total fuel use. I will declare 90/10 and take the hour reading from the engine and assess after 6 months. We also have separate bow tanks for heating, so of course we require 100% for those.

[Pretty Funked Up]

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!

 

A

 

Totally agreed. I sometimes move purely to charge because its charges better than standing still. I'm not moving for pleasure I'm just efficient!!!! and eco friendly

 

sometimes that will be midnight! batteries are at 12.1 if lucky its 10pm and i need power, a one hour or two hour cruise (if its warm) kills 2 birds

Edited March 28, 2013 by Pretty Funked Up

[smithwrecker]

Last summer I came very close to running out of fuel but carry a couple of Jerry cans just in case(empty), I walked to a petrol station close to the canal and bought 40litres at FULL duty, a couple of days later I fuelled at a well known hire base went in to pay and the little scrote that served me tried to insist that I could only claim a 90/10 split, I tried to explain that as I had bought white diesel at full duty I had overpaid the neccesary tax amount anyway he refused to accept this and so to me the answer was very very simple, I asked him in no uncertain terms to remove his diesel from my tank and I would buy elsewhere. I explained that the amount of duty to declare is solely my responsibility, I gave him 5 minutes to either accept my payment at 10/90, remove his diesel or I was leaving and offered him the telephone number of the police!!!

He accepted my payment.

[Mac of Cygnet]

Last summer I came very close to running out of fuel but carry a couple of Jerry cans just in case(empty), I walked to a petrol station close to the canal and bought 40litres at FULL duty, a couple of days later I fuelled at a well known hire base went in to pay and the little scrote that served me tried to insist that I could only claim a 90/10 split, I tried to explain that as I had bought white diesel at full duty I had overpaid the neccesary tax amount anyway he refused to accept this and so to me the answer was very very simple, I asked him in no uncertain terms to remove his diesel from my tank and I would buy elsewhere. I explained that the amount of duty to declare is solely my responsibility, I gave him 5 minutes to either accept my payment at 10/90, remove his diesel or I was leaving and offered him the telephone number of the police!!!

He accepted my payment.

 

I presume you kept and produced the petrol station receipt? Otherwise anyone could cruise into a boatyard with this story, and of course unless they had proof, it would from the boatyard's point of view impossible for a 0/100 declaration to be genuine.

[Paul C]

I presume you kept and produced the petrol station receipt? Otherwise anyone could cruise into a boatyard with this story, and of course unless they had proof, it would from the boatyard's point of view impossible for a 0/100 declaration to be genuine.

 

But its not the boatyard's responsibility to say what the split is - so there's no requirement to prove anything to them. All they can do is choose not to sell fuel unless at a particular split.

[Ex- Member]

I presume you kept and produced the petrol station receipt? Otherwise anyone could cruise into a boatyard with this story, and of course unless they had proof, it would from the boatyard's point of view impossible for a 0/100 declaration to be genuine.

 

The seller is not the enforcer of the law, they do have to obtain the details of the person they are selling to. It has nothing to do with the seller how much the purchaser desires to declare. The customer does not have to show anything to the seller, the seller is not an agent of enforcement they are simply a seller.

 

Once they have a signed declaration they have nothing to fear. Any problem with that purchase becomes a problem for customs and excise no the seller.

 

 

it would from the boatyard's point of view impossible for a 0/100 declaration to be genuine.

 

Well clearly is possible under the circumstances given. Or indeed the purchaser the last time they purchased fuel equated hey paid over the odds and is reclaiming that overpayment by purchasing at a declared 100& non Prop. Again this has nothing to do with the seller, if Customs think this sale is suspicious they will go for the customer not the seller. the seller has done nothing wrong.

 

Exactly why the declaration was created and required.

[nb Innisfree]

There hasn't been much in the way of HMRC prosecutions to say what would happen but I think the seller still has a duty of care to the buyer, if he/she sold at a split that they had reasonable grounds to suspect was incorrect and didn't advise the possibly naive buyer to that effect, it could be that HMRC might look to the seller as being responsible or at least sharing some of the blame?

[BEngo]

There hasn't been much in the way of HMRC prosecutions to say what would happen but I think the seller still has a duty of care to the buyer, if he/she sold at a split that they had reasonable grounds to suspect was incorrect and didn't advise the possibly naive buyer to that effect, it could be that HMRC might look to the seller as being responsible or at least sharing some of the blame?

 

 

Not according to HMRC. The seller can take at absolute face value the purchaser's declaration. If it is fraudulently wrong there will be no HMRC comeback against the seller but they may use the seller's records and the purchaser's declaration as part of any evidence needed against the purchaser.

 

The original HMRC consultation document is worth a read. If you are any good at translating Civil Service speak it is also very illuminating. The expected tax take (as a proportion of overall petroleum taxes) is in there as is the expected enforcement effort.

 

 

N

[Ex- Member]

There hasn't been much in the way of HMRC prosecutions to say what would happen but I think the seller still has a duty of care to the buyer, if he/she sold at a split that they had reasonable grounds to suspect was incorrect and didn't advise the possibly naive buyer to that effect, it could be that HMRC might look to the seller as being responsible or at least sharing some of the blame?

 

As bengo says. It has nothing to do with the seller, none of his/her/their business. The purchaser is responsible for how the fuel is used. It's strange the paranoia about this, I'm sure people will be getting fed up with such pedant sellers.

 

Again it's part of the reason why the declaration exists.

Edited March 29, 2013 by Julynian