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Budget Timeframe For Removal Of Red Diesel Derogation Welcomed

by Jason Gorringe, Tax-News.com, London

28 March 2007


The British Marine Federation (BMF) and the Royal Yachting Association (RYA) have welcomed the UK Government's proposals for the implementation of the new regime for duty payments on red diesel used by private recreational craft.

In last week's Budget statement, Chancellor Gordon Brown announced plans to implement the ending of the derogation on fuel duty, in line with the recent EU directive.

From 1 November 2008, fuel used for the purposes of private pleasure boating will no longer benefit from the current reduced and exempt rates of duty. In addition, a formal consultation on new regimes will be held later in the year.

However, the groups welcomed the Chancellor's decision, as it means that the current infrastructure for diesel fuel storage and sale can remain in place until 1 November 2008.

"We welcome the decision to consult on the new regime and to keep existing arrangements in place during the consultation period" announced the RYA's Government Affairs Advisor, Neil Northmore, who has led the Association's involvement in the campaign.

He added:

"While Brussels' original decision to end the derogation was disappointing, the UK Government has listened to our concerns."

BMF Executive Director Howard Pridding observed that:

"I am pleased that the Government has listened to our case for a lengthy transitional period in order for industry to manage the infrastructure changes that will be required. The implementation date of 1 November 2008 will give marine businesses the time to plan and budget for that change. We will continue to work with Government over the coming months as they develop the detail of the new legislation."

In October of last year, the UK submitted an application to the European Commission to retain the derogation allowing for the use of 'red diesel' in private pleasure craft.

Financial Secretary to the Treasury, John Healey announced at the time that:

"We have now submitted our application to the Commission to maintain the derogation allowing the use of 'red diesel' in private pleasure boats. We believe that removing this derogation would provide no significant revenue or environmental benefits to the UK, would undermine other EU objectives and could pose significant compliance costs for business and fuel users."

"In putting together our applications we have benefited from a great deal of helpful co-operation and advice from UK boating organisations, whom I would like to thank for helping us prepare the strongest possible application. The ball is now in the Commission's court."

"In the meantime, we will take every opportunity to restate our case to the Commission and to impress upon it the importance of this issue for the UK."


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