Why is it so hard to buy diesel?

[Neil2]

12 minutes ago, Rose Narrowboats said:

That's a myth not helped by some poorly worded official looking advice. Here's what HMRC says:

As an RDCO, you must take every reasonable precaution to make sure that your supplies of controlled oil (as defined in paragraph 1.5) are only to persons who will use that oil as permitted by the law. This is a legal obligation, imposed under Regulation 8 (2) of the Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations 2002.

If HMRC considers that you have failed in that obligation, they can take enforcement action against you, ranging from a variation of the conditions of your approval to a warning letter and, in more serious cases, withdrawal of your approval, civil penalties and even prosecution.

So, put yourself in my position. A boat that isn't local turns up and wants to buy 30 litres of diesel at 100% domestic into his main engine tank. Would you risk the ongoing viability of your business or prosecution to save a complete stranger £5? I'd rather decline the business than loose the ability to buy red diesel to run our fleets.

And HMRC DO check - we were inspected about 6 months into the new scheme, and our approach and record keeping was described as "exemplary".

My personal experience is most suppliers don't take this view, though there are quite a few that insist that a certain percentage must be declared for propulsion, usually 10%.  It would be interesting to hear if other members' experience is similar. 

[Rose Narrowboats]

Elsewhere (and I can't find it atm) there is some guidance where residential is defined as being on a bona-fide residential mooring in the local area - which as I read it rules out anyone else making a 100% declaration into a tank connected to the main engine. Don't get me wrong - our records will show plenty of continuous cruisers who've come bought diesel in the winter months and declared at 90% domestic which I'd regard as perfectly credible and thus in line with my duty of care.

The view of the two inspectors I met was that they would regard us putting fuel into the main tank at 100% domestic on a boat that we did not know was going straight back to a permanent residential mooring as no different to putting it straight into a road vehicle.

What is clear is that someone can turn up with some ropey old plastic drums in your car, buy fuel at whatever declaration they like as we have no means of verifiying what it will be used for (so we're off the hook), take it to their boat and spill it everywhere as they pour it in, and everyone's happy!

Edited August 30, 2017 by Rose Narrowboats

[Alan de Enfield]

Having a sailing boat complicates things further.

The only propulsion we use is less than a 0.5 litre (to get out of the marina) - once the sails are 'up' any running of the engine is purely for hot water &/or battery charging, diesel is used for the heating (eberspacher)

We have 2x 100 litre tanks.

Topped up in Hull at 100% domestic - when topping up (40 litres) next time (at another Marina) explained our situation but they said it was their policy to do only 60/40.

Our actual usage is probably 1% (or less) propulsion and 99% 'domestic'. but how many will allow us to declare that ?

[blackrose]

1 hour ago, StephenA said:

but excise-notice-554 states:

Stephen A's post seems pretty conclusive. Perhaps some diesel suppliers don't  really know their own business as well as they may think?

[Rose Narrowboats]

In theory, anyone who accepts that the sails are the primary propulsion, but probably not many if they've ever dealt with HMRC. I don't agree with the philosophy of only supplying at 60/40 (it's tanatamount to forcing someone to sign a false declaration), but I can see why some people have gone down that route.

I recall a routine VAT inspection at a major chandlers who had supplied a large amount of equipment to a chap doing a self-fitout. He had provided a letter from HMRC confirming that as a house boat the goods were zero rated. The VAT inspector was satisfied with the letter, but then asked for proof that the boat had actually been used as intended, which the owner of chandlery could not provide, and ended up paying the VAT on the goods.

A boat builder I worked for built a community boat, again with the relevant paperwork confirming zero rated VAT status, but which several years later was not deemed to comply with the scheme. I never did find out all the finer points, but I know he ended up footing the bill as he had failed in his duty to collect the tax...

I freely admit that those instances influence my judgement when deciding whether it might be better in the long run to turn business away, because I wouldn't put it past HMRC to demand proof from me that diesel I supplied had been used in the manner declared on an "odd" looking transaction.

I know of one mobile fuel supplier who used to routinely supply at 100% domestic who they put out of business.

Edited August 30, 2017 by Rose Narrowboats

[Ratkatcher]

My first 'fill up' was only 30 litres, but then I didn't know how much (actually little) my engine used when running so was surprised so little when use had been around 40 hours of gentle cruising.

The kind lady in the chandlers, recognising a complete newby, explained that the declared split between cruising and domestic should be what I anticipated the delivered fuel use to be, allowing me to choose a sensible split for early April. If I had cruised less than anticipated the 'loss' in tax for me was my fault - likewise a 'benefit' otherwise.

Having just cruised from the Shroppie (along with the very helpful PeterX - a million thanks!) to the GU I'm quite glad that my tank should be good for the return trip also, there is quite a diference in the base price hereabouts!

The boat is waiting for the tender ministations of Martin Kedion - when done I look forward to doing the return trip and watching the diesel prices drop as we get closer to the home mooring

Apparently we passed by Mrsmelly's place on the way down, maybe we'll pop in on the return trip to say hello.

[Tesla]

Any ideas on best place to buy diesel around Kingswood Junction or south towards Stratford? 

[nicknorman]

50 minutes ago, Rose Narrowboats said:

In theory, anyone who accepts that the sails are the primary propulsion, but probably not many if they've ever dealt with HMRC. I don't agree with the philosophy of only supplying at 60/40 (it's tanatamount to forcing someone to sign a false declaration), but I can see why some people have gone down that route.

I recall a routine VAT inspection at a major chandlers who had supplied a large amount of equipment to a chap doing a self-fitout. He had provided a letter from HMRC confirming that as a house boat the goods were zero rated. The VAT inspector was satisfied with the letter, but then asked for proof that the boat had actually been used as intended, which the owner of chandlery could not provide, and ended up paying the VAT on the goods.

A boat builder I worked for built a community boat, again with the relevant paperwork confirming zero rated VAT status, but which several years later was not deemed to comply with the scheme. I never did find out all the finer points, but I know he ended up footing the bill as he had failed in his duty to collect the tax...

I freely admit that those instances influence my judgement when deciding whether it might be better in the long run to turn business away, because I wouldn't put it past HMRC to demand proof from me that diesel I supplied had been used in the manner declared on an "odd" looking transaction.

I know of one mobile fuel supplier who used to routinely supply at 100% domestic who they put out of business.

You are muddying the water a bit by introducing VAT into the argument.

The guidance notes quoted earlier seem pretty conclusive. You don't actually know why the mobile fuel supplier you mention was put (or went) out of business. In fact a mobile supplier is far more likely to legitimately sell diesel at 0% propulsion as he travels to static boats, rather than the other way round. Perhaps in fact the mobile supplier was taking money for fuel at >0% propulsion but recording it was zero, therefore passing on only duty at the domestic rate and pocketing the difference? Who knows! Only he and HMRC.

i come back to the point that you cannot be expected to know the history of a visiting boat. When one refuels, generally it is into an already partially full tank and it all gets mixed up. A boat that has had to pay for an unreasonably high duty rate can quite reasonably fill up with a lesser duty rate refuel in order to end up paying the correct amount of duty overall, in their opinion.

At our marina, we have some boats who never leave the marina and always get diesel at 0%, propulsion which seems entirely reasonable. Others such as us declare a varying amount depending on what the expected usage is. I have certainly been known to declare 0% on occasion as we have diesel heating.

There is now a sign up saying they won't sell diesel into containers brought by road - I presume this is in response to some issue with HMRC. Before this, they did seem to have quite a few customers arriving in vans, but who knows what the diesel sold was destined for.

[Rose Narrowboats]

1 hour ago, Neil2 said:

Interesting that Rose Narrowboats consider there's little profit in diesel these days, I can think of at least two boatyards I've had this conversation with, both expressing the opposite view.  I recall one telling me their diesel sales effectively paid the wages of one full time member of staff.  

I too can't understand why any supplier should enter into an argument about what percentage split is appropriate, nor do I understand why some insist on a minimum declaration for propulsion eg 60/40.   If you set up these disincentives then eventually boaters are going to go elsewhere.

Where I would sympathise is boaters failing to respect the hassle of the process and asking for a handful of litres.  I have to say I've never had the slightest problem buying fuel but I do tend to wait until I need 30 gallons then at least the supplier feels like it's a worthwhile task.  

We have a smallish tank - the plus side is fresh fuel, but it does affect our buying price a bit so my figures aren't dead on, but if you were to buy enough that you could mark it up by about 20p per litre and remain at a competitive retail price, then to to pay someone's (minimum) wages you'd need to be selling 90-100,000 litres a year.

That's about 7 boats a day every single day of the year. We get through less than a third of that (on a busy canal)- including what we put in our own boats.

Extrapolating that a bit further, (and ignoring the fact that they wont be there for132 of those days, so you'll have to pay someone else to do it) you then have to find something productive for that person to do for the other four hours a day, that they can stop almost immediately at any time to serve the next customer (and isn't time critical in case 14 people turn up one day), so that the business actually gains something from employing them.

As for boaters going elsewhere, it seems to me that there are fewer yards supplying fuel now than even five years ago, driven I would think by the lack of margin in carrying on. Someone round here has just stopped retailing when faced with the prospect of shelling out £5k for a replacement pump, plus an almost equal amount to install to current standards.

30 gallons would make you a noteworthy customer - most people buy less than half that.

 

[Wanderer Vagabond]

3 hours ago, Rose Narrowboats said:

.....And HMRC DO check - we were inspected about 6 months into the new scheme, and our approach and record keeping was described as "exemplary".

Out of curiosity, have you been checked by HMRC since? The 'new' scheme came in on 1st April 2012 (5 years ago now) and all of the diesel vendors I have bought from over the past 4 years say that they have never been checked. This isn't casting any doubt on what you are saying since all of the points you have made are very valid, I just genuinely wonder how many actual checks are being made since the staffing at HMRC has been cut along with everything else.

[Rose Narrowboats]

1 minute ago, nicknorman said:

You are muddying the water a bit by introducing VAT into the argument.

The guidance notes quoted earlier seem pretty conclusive. You don't actually know why the mobile fuel supplier you mention was put (or went) out of business. In fact a mobile supplier is far more likely to legitimately sell diesel at 0% propulsion as he travels to static boats, rather than the other way round. Perhaps in fact the mobile supplier was taking money for fuel at >0% propulsion but recording it was zero, therefore passing on only duty at the domestic rate and pocketing the difference? Who knows! Only he and HMRC.

i come back to the point that you cannot be expected to know the history of a visiting boat. When one refuels, generally it is into an already partially full tank and it all gets mixed up. A boat that has had to pay for an unreasonably high duty rate can quite reasonably fill up with a lesser duty rate refuel in order to end up paying the correct amount of duty overall, in their opinion.

At our marina, we have some boats who never leave the marina and always get diesel at 0%, propulsion which seems entirely reasonable. Others such as us declare a varying amount depending on what the expected usage is. I have certainly been known to declare 0% on occasion as we have diesel heating.

There is now a sign up saying they won't sell diesel into containers brought by road - I presume this is in response to some issue with HMRC. Before this, they did seem to have quite a few customers arriving in vans, but who knows what the diesel sold was destined for.

I'm just using the VAT issues as an example of the way HMRC can behave.

Section 3.6 of Notice 554 refers to the duty of care and says: If a customer refuses to make a declaration (even a verbal statement that they are commercial), we would expect you to exercise your RDCO duty of care and refuse to supply the fuel until they indicate their status as commercial or private. If they say they’re commercial, supply as above. If they insist they’re private but unwilling to make a written declaration you should refuse to supply the fuel unless they do so. You’re not responsible if a purchaser makes a false declaration. See paragraph 3.8 below if the customer claims that all of the fuel is for non-propulsion purposes.

3.8 says In recognition of their status, residential boat owners, whose primary, or often their only, place of residence is their boat, are allowed to purchase all of their fuel at the rebated rate. The specific reference in that section to residential there implies to me that if you are not "residential" than you cannot buy all your fuel at the rebated rate

As for said fuel supplier, he was well known for selling at 100% domestic and cheerful and open in his disregard for HMRC -  until they caught up with when life suddenly became very unfair. There was never any hint of any allegation that he had defrauded anyone by pocketing the duty.

As you say, we cannot know the history of a visiting boat so we can only exercise caution to protect the business. If the owner of said boat disagrees with our stance then they can chose to move on and hopefully we part on friendly terms. I don't understand why some people get so upset if we can't agree terms.

As in your marina there are a few residential boats on permanent moorings in our area to whom we are quite happy to supply at 100% domestic because we do know the history, and can easily put our case across should HMRC query it.

We don't find selling in cans a problem - so long as the customer has a credible reason for buying the fuel i.e. generator, tractor, heating. So I'd suggest practical reasons (spill containment for example) might be the reason. We sell quite a bit of fuel in cans for all sorts - forklifts, gen-sets, a firm that hires bouncy castles, quite a lot of grounds maintenance companies, because we have a little bunded area to fill them in,  but we shouldn't put fuel directly into machines (ie mini digger, chippers) as we can't contain spills from them properly. Water is actually easier to contain fuel on than on ground where it can soak in.

[Mac of Cygnet]

Although the rules as outlined earlier seem perfectly clear, I have since the present system was introduced met every conceivable attitude to them imaginable, from serving me 100% domestic without me or them mentioning any split or paperwork (but sometimes asking how I was paying, or only accepting cash), through expressing amazement that I was declaring my usual 50/50, to (once) telling me that I didn't want to get it from them because they only did 100% propulsion (!).  As for cans, it has varied from refusing to fill the can which I keep as  spare, to insisting that the can be charged as 100% domestic. And what about garages who sell red?  One just noted my vehicle reg, another said he didn't have to record any sales under 100 litres.  The whole thing is a laughable chaos.

The most recent anomaly was at the Black Prince marina at Etruria, who charge 75p basic to their moorers, but 90p to all visiting boats! I walked out of there on principle, but unlike Nick, I've never, apart from the above "Go away, don't buy from us" episode, had any difficulty in getting diesel when I've asked for it - perhaps that is yet to come.

 

Edited August 30, 2017 by Mac of Cygnet

[Rose Narrowboats]

13 minutes ago, Wanderer Vagabond said:

Out of curiosity, have you been checked by HMRC since? The 'new' scheme came in on 1st April 2012 (5 years ago now) and all of the diesel vendors I have bought from over the past 4 years say that they have never been checked. This isn't casting any doubt on what you are saying since all of the points you have made are very valid, I just genuinely wonder how many actual checks are being made since the staffing at HMRC has been cut along with everything else.

No, we haven't. I have heard of only one or two others who have, and I've often wondered why we were.

Edit. Thinking about it, a boatyard not far way was done for supplying the local taxis with red not that long after, so perhaps they thought we were too.

Edited August 30, 2017 by Rose Narrowboats

[ditchcrawler]

5 minutes ago, Mac of Cygnet said:

Although the rules as outlined earlier seem perfectly clear, I have since the present system was introduced met every conceivable attitude to them imaginable, from serving me 100% domestic without me or them mentioning any split or paperwork (but sometimes asking how I was paying, or only accepting cash), through expressing amazement that I was declaring my usual 50/50, to (once) telling me that I didn't want to get it from them because they only did 100% propulsion (!).  As for cans, it has varied from refusing to fill the can which I keep as  spare, to insisting that the can be charged as 100% domestic. And what about garages who sell red?  One just noted my vehicle reg, another said he didn't have to record any sales under 100 litres.  The whole thing is a laughable chais.

The most recent anomaly was at the Black Prince marina at Etruria, who charge 75p basic to their moorers, but 90p to all visiting boats! I walked out of there on principle, but unlike Nick, I've never had any difficulty in getting diesel when I've asked for it - perhaps that is yet to come.

 

Lots of marinas discount to their moorers but that is a big discount  

[Mac of Cygnet]

4 minutes ago, ditchcrawler said:

Lots of marinas discount to their moorers but that is a big discount  

Less a discount to moorers than a large surcharge to visitors!

[Rose Narrowboats]

2 minutes ago, Mac of Cygnet said:

The whole thing is a laughable chaos.

Yep!

As for selling into can, then if you are not registered with HMRC for selling into boats, you do not have to record any sales under 100%, just exercise your duty of care.

When the split duty system came in we were advised to record a vehicle reg simply as a way to demonstrate that it had not gone into a boat

[Mac of Cygnet]

3 minutes ago, Rose Narrowboats said:

Yep!

As for selling into can, then if you are not registered with HMRC for selling into boats, you do not have to record any sales under 100%, just exercise your duty of care.

When the split duty system came in we were advised to record a vehicle reg simply as a way to demonstrate that it had not gone into a boat

I actually wrote that they said they didn't have to record any sales under 100 LITRES (not %)!

And in fact recording my vehicle reg didn't demonstrate that it hadn't gone into a boat, did it?

[Chewbacka]

3 minutes ago, Mac of Cygnet said:

I actually wrote that they said they didn't have to record any sales under 100 LITRES (not %)!

And in fact recording my vehicle reg didn't demonstrate that it hadn't gone into a boat, did it?

As far as the fuel supplier is concerned, he can state he was not supplying it for a boat, it was for 'take-away' by road vehicle.  What the purchaser does with it is between the purchaser and HMRC.

[Rose Narrowboats]

8 minutes ago, Mac of Cygnet said:

I actually wrote that they said they didn't have to record any sales under 100 LITRES (not %)!

And in fact recording my vehicle reg didn't demonstrate that it hadn't gone into a boat, did it?

Sorry, typo on my part, I meant 100ltrs (see section 5.5 of notice 192 if you are really bored!)

If they are not registered to supply to boats and you make them aware that you are going to use it in one then they shouldn't supply as they have not got an account set up with HMRC to pay the duty - and you've broken the law by making a false declaration if you don't tell them when they ask you what it's for.

However if you stand there and look innocent and say it's for a generator and they have no reason to disbelieve you then they can just serve you and away you go. As I commented in my post earlier the rules regarding supply into cans brought in by road are an anomaly to put it mildly.

Edited August 30, 2017 by Rose Narrowboats

[Athy]

7 hours ago, Mac of Cygnet said:

Less a discount to moorers than a large surcharge to visitors!

....said a visitor.

If you were a moorer there, you might view the price reduction differently!

[magpie patrick]

My two penneth

I've bought diesel from Heyford and Aynho without any trouble - other stuff too. Heyford sold me exhaust lagging out of their own stock, they sell so little (it's for their hire fleet) they didn't know what to charge, but waving a note in their direction was enough.

Aynho got me a Pela Oil extractor on account - pay on collection. Other than a brief chat about engine problems they didn't know me from Adam, although they got to know me rather better. That one action possibly salvaged the trip to Dundas which is now almost complete: it wasn't so much that I couldn't get the oil out (although I couldn't) but that until I got the oil out I didn't know that it was the cause of the problem.

Aynho also have cheaper engine oil than many, from a local supplier

And to add, College Cruisers sold me engine oil from their own stock - again it's for their hire fleet and they didn't actually know what to charge.

I seldom seem to get negative experiences, perhaps because I'm not in a rush and recognise that I need their service as much as they need my money, indeed judging by some of my encounters where the boatyards have been reluctant to take my money, perhaps I need them more than they need me...

[Alan de Enfield]

18 minutes ago, magpie patrick said:

I seldom seem to get negative experiences, perhaps because I'm not in a rush and recognise that I need their service as much as they need my money, indeed judging by some of my encounters where the boatyards have been reluctant to take my money, perhaps I need them more than they need me...

Pretty much what I was implying a 'couple of pages ago'.

I tend to find, in much of life, that whatever 'attitude' you present is the 'attitude' you receive.

Edited August 31, 2017 by Alan de Enfield

[nicknorman]

I get the point about "attitude" and I certainly don't come across all "I'm the customer, serve me immediately because I have money" etc. I know that small boatyards are often run as fiefdoms and the occasional customer wanting services can be taken or left. I am always polite and patient. But I tend to come unstuck when totally unexpected and unreasonable things happen, such as in this case, mid-way through the process. If she had just said  "sorry but you'll have to turn your boat round at the adjacent turning point (the boatyard)" at the beginning, that would have been fine. It was because having embarked on the process, she suddenly said she wouldn't serve me at all with my boat facing that way, for several sentences and exchanges, despite my obvious amazement and shock. By the time she finally suggested I turn the boat round in the space I didn't know existed, it was all too late. And so unnecessary.

[Alan de Enfield]

28 minutes ago, nicknorman said:

.......unexpected and unreasonable things happen, such as in this case, mid-way through the process. If she had just said  "sorry but you'll have to turn your boat round at the adjacent turning point (the boatyard)" at the beginning, that would have been fine.

Without knowing your boat, how would you expect her to be able to tell "you will need to turn around" until she had 'started the process' and noticed your cap was on the 'wrong side'.

Did you think to say "my filler is on the off-side, will your hose be long enough ?"

[Mac of Cygnet]

9 hours ago, Rose Narrowboats said:

 

If they are not registered to supply to boats and you make them aware that you are going to use it in one then they shouldn't supply as they have not got an account set up with HMRC to pay the duty - and you've broken the law by making a false declaration if you don't tell them when they ask you what it's for

In neither case was I asked what it was for, but in one case I volunteered that it was for my boat.