Ford Fuels Commercial

Red Diesel Tax Changes – 1st April 2022

Did you know the rules on Red Diesel are changing this year?

From 1st April 2022 you must not put rebated fuel into the tank of a vehicle, vessel, machine or appliance that is not allowed to use it. If you are no longer able to use rebated fuel, and you cannot change to a cleaner alternative, you should plan to run down the fuel in your vehicles, machines or appliances to as close to nil as reasonably practicable before 1st April 2022.

Don’t worry, Ford Fuels is here to help you through the switch over to your new fuel. Below you will find useful information and a step by step guide that will guide you through the changes. You can also find a list of the industries that will be affected.

If you are unsure if the changes apply to you or if you would like some more information please do not hesitate to contact your Sales Representative directly.

Alternatively you can call Head Office on 01761 452222 or email admin@fordfuels.co.uk

Those affected by the Red Diesel Tax Changes will need to follow these 3 simple steps…

STEP 1

STEP 1

Use up or remove as much of the Red Diesel as possible, we can do a tank pump out if necessary.

STEP 2

STEP 2

Remove and replace your old filters, we can supply and fit replacements.

STEP 3

STEP 3

IF required you can buy a new tank from Ford Fuels.

From 1st April 2022What’s Changing?

Most machines, vehicles and appliances will no longer be allowed to use rebated (red) diesel and rebated biofuels. From this date, the current approach of allowing rebated diesel and biofuels to be used in any machine that is not a road vehicle (including certain types of vehicles used mainly off-road) will end. Instead, rebated fuel use will be limited to certain vehicles, vessels, machines and appliances when used for specific purposes.

Those no longer allowed to use rebated fuel in diesel-powered vehicles, machines and appliances will be required to use diesel or biofuels on which the full rate of fuel duty has been paid.

The rebated fuels affected by these changes are:
• Rebated Diesel
• Rebated Hydrotreated Vegetable Oil (HVO)
• Rebated Biodiesel and Bioblend
• Kerosene (taxed at the rebated diesel rate)
• Fuel Substitutes

HVO is a liquid hydrocarbon which is classified for excise purposes as heavy oil and treated the same as diesel.

Fully rebated kerosene is unaffected by these changes and can be used for all heating uses.

Biodiesel, bioblend and fuel substitutes are already subject to fuel duty when they are set aside to be used in an engine, motor or machine. From 1st April 2022, they will also be liable to fuel duty if they are used for heating purposes. The rebated rate of fuel duty will apply when they are used for non-commercial heating, and the full rate of fuel duty will apply when they are used for commercial heating.

They will also become liable for fuel duty if they’re used for heating purposes when used to heat premises used for:
• Non-Commercial Purposes — the rebated rate of fuel duty will apply
• Commercial Purposes — the full rate of fuel duty will apply

From 1st April 2022Who is Affected?

NOT AFFECTED
• Agriculture, Horticulture, Fish Farming & Forestry.
• Rail Transport.
• Non-Commercial Purposes - Electricity Generation & Heating.
• Community Amateur Sports Clubs & Golf Courses.
• Sailing, Boating & Marine Transport (excluding private pleasure craft in Northern Ireland).
• Travelling Fairs & Travelling Circuses.
• Contingency Back-Up (Government/NHS/Emergency Back-Up).

AFFECTED
• Construction & Road Maintenance.
• Quarries.
• Mining.
• Logistics & Haulage.
• Airport Operations.
• Ports.
• Oil & Gas Extraction.
• Waste Management.
• Manufacturing.
• Commercial Heating.
• Leisure, Festivals & Large Events.

From 1st April 2022 these industries will no longer be able to purchase Red Diesel, and should switch all vehicles and machinery to White Diesel or it's HVO equivalent.

The Green Alternative...Is HVO the Answer?

HVO (renewable fuel) has many great benefits, and Ford Fuels are proud to be working within the industry to help bring renewable alternative fuels to the market.

However if you do decide to switch to HVO, you need to be aware that HVO also comes in Red and White versions and their price points are both proportional to their non-green counterparts.

Switching from Red Diesel to White Diesel (instead of HVO) will be the cheaper option, but by switching to white HVO you can also reduce your emissions by up to 90%.

If these changes apply to you...What's the Solution?

Red Diesel users affected by the change will need to start using White Diesel. You can also use White HVO (Renewable Fuel) but you should be aware that to avoid the tax you will not be allowed to use Red HVO (Renewable Fuel) as this is also affected by the tax changes.

Ford Fuels Commercial

Preparing for 1st April 2022

Are you ready?What Do I Do with My Stored Fuel?

You will be required to only use fuel on which the full rate of fuel duty has been paid. Therefore you should plan ahead to have no stored fuel remaining by the 31st March 2022.

If you have any surplus rebated fuel in your storage tanks after 31 March 2022, that you are not able to use for an accepted use, you will need to:
• Sell or give it to someone who is allowed to use it
• Sell or give it to any Registered Dealer in Controlled Oil (RDCO)
• Dispose of it using an approved waste oil recycling or disposal company
You will need to keep records to show how and when the fuel was disposed of or sold.
You can sell or dispose of the surplus fuel without needing to be approved by HMRC as an RDCO.

If you have a large volume of rebated diesel already in reserve and are concerned that you will not be able to use or dispose of it before 1 April 2022, you should contact oils.policymail@hmrc.gov.uk, as soon as possible.

Are you ready?Registered Dealers in Controlled Oil (RDCO)

From 1st April 2022, customers currently eligible to use rebated fuel must not put rebated fuel into a vehicle, vessel, machine or appliance for a use that is no longer allowed.

Although the use of rebated fuel will be significantly restricted from 1st April 2022, your responsibility as an RDCO is not changing. You will still need to take all necessary precautions to ensure that you supply rebated fuel only to people who will use it as permitted. You need to familiarise yourself with the changes and establish which customers will be affected. You also need to take care not to supply more rebated fuel than a customer no longer allowed to use it may realistically use before the rules change.

Affected users will need to run down their stocks of rebated fuel in the months leading up to the changes and not put any more into their vehicles, machines or appliances after the rules change. You will need to ensure your customers understand the changes to the rules and help them to prepare by discussing their needs between now and 1st April 2022. This will help your customers to manage down their supplies so that they are not left with surplus rebated fuel in their storage tanks on 1st April 2022.

As a Registered Dealers in Controlled Oil; if a customer;

  • Suggests stockpiling rebated fuel.
  • Begins purchasing above their normal amounts.
  • Places a larger than normal order before April 2022.

You should discuss this with them and direct them to Preparing for 1st April 2022 – Fuel users (above).

You will need to be able to demonstrate you have taken reasonable care to ensure that you have supplied rebated fuel only to customers still allowed to use it.

If you supply rebated fuel before 1st April 2022 knowing, or having sufficient reason to believe, it will be put to a use that is no longer permitted after these changes, you will not have met your obligations as an RDCO. This includes where, based on normal supply rates, a user is unlikely to use the volume of fuel they order in the remaining time before 1st April 2022.

As a result of the change in demand from rebated to fully duty-paid diesel or fully duty-paid biofuels, you may need to reassign your storage tanks. If you do, they will need to be flushed out to remove all traces of fuel markers. You should keep a record of this being done and keep receipts/invoices if you employ someone to do it. As there may be increased demand for these services in the run up to April 2022, you should consider organising this in advance of April.

If you will no longer be supplying rebated fuel as a result of these changes, you will need to deregister from the RDCO scheme. You will also need to tell us how you plan to dispose of any stocks of rebated fuel and keep the relevant records to demonstrate how you disposed of it. Find more information on how to deregister in Excise Notice 192 – Registered dealers in controlled oil.

Ford Fuels Commercial

HMRC’s Approach To Compliance

In vehicles, vessels, machines and appliances which are not allowed to use rebated fuel from 1 April 2022, it is likely there will be a period between the rules changing and the rebated fuel in the internal tank or engine being used up.

How long this will take will depend on the:

  • type of vehicle, vessel, machine or appliance
  • size of its fuel tank
  • rate of fuel consumption

HMRC acknowledge that due to the requirement to maintain minimum fuel stock levels for safety reasons and operational requirements, fuel which has had full duty paid may be put into and mixed with existing stocks of rebated fuel in the tank. This may mean there may be a red indicator in the tank beyond 1 April 2022.

As part of the transition to the new rules, we are committed to working with you and your business to make sure you understand the impact of the changes.

We will consider the steps you’ve taken to change to using diesel or biofuels fuel which have had full duty paid (where needed). We will target users who deliberately or knowingly use rebated fuel unlawfully by checking receipts and invoice records.

We may carry out checks to confirm the correct fuel is being used in:

  • vehicles
  • vessels
  • machines
  • appliances
  • storage tanks

You should be able to show that you have been refilling with the correct fuel since the rules changed by keeping invoices or receipts showing that you’ve purchased diesel or biofuels which have had full duty paid.

If after 1 April 2022, we find traces of fuel markers in the fuel supply of a vehicle, vessel, machine or appliance which is not allowed to use it, we will try to establish from our testing and your records whether the quantities are consistent with rebated fuel put into the tank before the rules changed. You may be asked to give evidence to show that any rebated fuel was put in before the rules changed and is still being used up. Where we find this to be the case we may arrange follow up checks to make sure that any quantities of rebated fuel are reducing.

If you put a vehicle, vessel, machine or appliance to both accepted and non-accepted uses after the rules change, you must keep records which demonstrate when you’ve flushed the tank and you have used full duty paid fuel for non-accepted uses.

For example, if you hire a vehicle, vessel, machine or appliance in which rebated fuel is acceptable for specific uses, you will need to keep evidence to confirm the correct fuel has been put into the fuel tank.

HMRC will consider what purpose the vehicle, vessel, machine or appliance was being used for at the time of inspection and whether this was an accepted use.

Vehicles, vessels, machines or appliances found running on rebated fuel that HMRC establishes was put into the tank after 1 April 2022, will be liable to be seized unless a licence has been granted and the duty paid.

HMRC will have the discretion not to seize if the user can demonstrate, using invoices and receipts, that they did not put rebated fuel into the fuel tanks after the rules changed.

If we have evidence or reason to believe you have put rebated fuel into your vehicle, vessel, machine or appliance intentionally or recklessly after the rules changed, you may be subject to the civil or criminal sanctions.

Ford Fuels Commercial

More About Where You Can Use Rebated Fuel…

Rebated fuel will only be able to be used in certain vehicles, vessels, machines or appliances for allowed uses (see below).

Agriculture, Horticulture, Fish Farming & Forestry

You will be able to use rebated fuel in vehicles, machines and appliances for accepted uses if you’re in any of the following sectors:

  • agriculture
  • horticulture
  • fish farming
  • forestry

Accepted uses for agriculture, horticulture, forestry, fish farming and forestry are explained in the Memorandum of Agreement in Fuels for use in vehicles (Excise Notice 75).

The accepted uses in agriculture that rebated fuel may be used include, the running or participating in off-road outdoor events, which include agricultural events and ploughing matches. These events demonstrate the skills and exhibit the equipment and animals associated with agriculture and animal husbandry.

Within these sectors, rebated fuel is allowed for accepted uses only in:

  • agricultural vehicles
  • special vehicles
  • unlicensed vehicles
  • mowing machines
  • certain other machines and appliances

You can use rebated fuel to travel to and from the place where the vehicle has an accepted use, except on public roads in unlicensed vehicles.

You can also use rebated fuel in agricultural vehicles for:

  • accepted uses relating to agriculture, horticulture, fish farming and forestry
  • cutting trees, verges and hedges that border public roads
  • clearing or dealing with frost, ice and snow (including gritting), or flooding

You’ll also be able to use them for any other purpose on private land where they are ordinarily kept.

If you use rebated fuel in agricultural vehicles, machines and appliances for purposes relating to agriculture (including horticulture, fish farming and forestry), you will also be able to use them for any other purpose on private land where they are ordinarily kept.

If a vehicle allowed to use rebated fuel is transported by another vehicle, you can only use rebated fuel in the vehicle carrying or towing it if that vehicle also qualifies in its own right.

Rail Transport

You can use rebated fuel to propel and stop a vehicle designed to run on a railway, but not on a tramway.

You cannot use rebated fuel to power other machines or equipment used on a railway, such as cooling or heating units in railway freight wagons, unless they are also powered by the engine that propels the vehicle.

Electricity generation and heating for non-commercial premises

You can use rebated fuel for electricity generation and heating for premises that are not used for commercial purposes.

‘Commercial purposes’ means trading in goods or services with the intention of making a profit. It does not include the delivery of a service, where it is intended that any profit made will be used to cover the costs of delivering that service.

Some examples of premises which will not be used for commercial purposes, and for which the use of rebated fuel in electricity generation and heating will be allowed, includes:

  • domestic homes
  • premises used to deliver central and local government functions or acts of public administration, for example, NHS hospitals, state schools, town halls, public libraries
  • places of worship
  • premises used by registered charities for their primary purpose trading, for example, educational charities delivering education or training, museums and independent schools

The type of activities that take place on these premises can include those relating to the services you provide, and activities that indirectly relate to the carrying out of your service. For example, a café selling food and drink in a library is not part of the library service but it enhances the overall experience for the public, and encourages them to make use of it, which also helps to contribute to its running costs.

You can use rebated fuel for electricity generation and to heat premises even if commercial contractors work there, provided they contribute to the running of your service. For example, the provision of services such as school catering and cleaning by commercial contractors does not mean that the premises are used for commercial purposes.

If your premises have different areas used for commercial and non-commercial purposes, you can use rebated fuel for heating and electricity generation for the area of the premises not used for commercial purposes, if a separate heating system or generator is used.

Rebated fuel can also be used for electricity generation and heating including:

  • accepted uses relating to agriculture, horticulture, fish farming and forestry
  • on land maintained by a community amateur sports club that is registered with HMRC and on golf courses and driving ranges
  • travelling fairs and circuses
Registered community amateur sports clubs (CASCs), golf courses and driving ranges

You can use rebated fuel in agricultural vehicles and unlicensed vehicles kept and used on:

A CASC does not include community clubs that are not registered with HMRC. Find out if you are eligible to register and how to register as a CASC.

You can also use rebated fuel in any machines or appliances (other than vehicles) being used in these venues. This includes heating and lighting buildings, such as clubhouses and changing rooms.

When you’re working on these venues, you can use rebated fuel in special vehicles, such as:

  • diggers
  • cranes

You can also use rebated fuel in special vehicles when the vehicle is going to or from a golf course or land maintained by a CASC that is registered with HMRC, where the vehicle is used.

You can only use rebated fuel in mowing machines used on a golf course or driving range, and on land maintained by a CASC. Mowing machines cannot be used on public roads but can be transported by another vehicle to be used at these places.

Where the land, golf course or driving rage is either side of a public road, you can use rebated fuel in an agricultural or special vehicle while travelling between the 2 parts by the shortest possible route, providing the vehicle is licensed to use the road.

Sailing, boating and marine transport

You can use rebated fuel in all types of boat, except for private pleasure craft in Northern Ireland. This includes in their engines and in other machines and appliances permanently on the boat.

You cannot put rebated fuel into the fuel supply of the engine of a private pleasure craft in Northern Ireland.

If you buy rebated fuel for private pleasure craft in Great Britain, you will be required to pay the additional duty on the proportion of the fuel you will use to propel the craft.

Find more information about fuel used in private pleasure craft and the changes in Northern Ireland.

Travelling fairs and circuses

A travelling fair or travelling circus is one that can be dismantled at least once per year and can be transported from place to place.

You can use rebated fuel in machines and appliances to:

  • power rides
  • provide electricity and heating for caravan accommodation

You can use rebated fuel in a mowing machine or unlicensed vehicle used by a travelling fair or circus.

Contingency Back-Up Electricity Generation & Critical Safety or Environmental Protection Equipment

Rebated fuel can be used only for power generation in premises being used for non-commercial purposes. However, you can use up your stock of rebated fuel after the rules change, providing you obtained and stored it before 10th June 2021 (when the Finance Act 2021 introducing the legislative changes received Royal Assent) for the following:

  • Contingency back-up electricity generation in premises used for commercial purposes
  • Critical safety and environmental protection appliances or machines in premises used for commercial purposes.

If you have stocks of rebated fuel held for use as contingency back-up but which were obtained after 10th June 2021, or you need to continue to use rebated fuel for technical or safety reasons, you may be granted a licence by HMRC to continue using rebated fuel. You would need to apply to HMRC and, if they approve the use, pay the duty difference between that for rebated and non-rebated fuels on the fuel you expect to use. If you are concerned that you will not be able to use or dispose of fuel obtained after 10 June 2021 by 1 April 2022, you should contact oils.policymail@hmrc.gov.uk, ideally by 30 November 2021.

You will not be expected to flush out all traces of rebated fuel from the fuel tanks of back-up generators or critical safety and environmental appliances, or from storage tanks used to supply them.

Contingency back-up electricity generation means:

  • Using contingency back-up generators when necessary to ensure continuity of power. This does not include generators used as the main source of everyday electricity.
  • Commercial electricity generators such as those activated to manage pressures to the national grid.
  • Where a volume of back-up fuel is required to be held in reserve for security and regulatory purposes to maintain essential electricity supply.

The term critical safety and environmental appliances includes fire protection systems, medical and life support equipment, and auxiliary boilers which are designed to provide safety and environmental protection.

Transitional arrangements for stand-by electricity generation and critical equipment

From 1 April 2022 you can only use rebated fuel in a machine used for generating power where the premises are not used for commercial purposes. You can also use rebated fuel for power generation for the accepted uses for:

  • agriculture, horticulture, fish farming and forestry
  • community amateur sports clubs that are registered with HMRC
  • golf courses and driving ranges
  • travelling fairs and circuses

After the rules change, you can use up any rebated fuel you obtained before 11 June 2021, for either of the following uses:

  • stand-by electricity generation in premises used for commercial purposes
  • critical equipment used for commercial purposes

If on 1 April 2022, you are likely to have any rebated fuel which was obtained for either of these uses on or after 11 June 2021, you should contact us as soon as possible by sending an email to: oils.policymail@hmrc.gov.uk.

We will consider whether a licence may be granted which would let you:

  • pay the difference in duty between the rebated and non-rebated rates
  • use up rebated fuel on hand at 1 April 2022 for a non-accepted use

A licence will not allow you to continue buying rebated diesel to use. You will only be able to use rebated fuel that you have until 1 April 2022 and then it will be withdrawn. After 1 April 2022 you should only order, and take supply of diesel where full duty has been paid.

You will not be expected to flush out rebated fuel from the storage or running tanks used for:

  • stand-by generators
  • critical equipment

Stand-by electricity generation means using generators when necessary to make sure there is continuity of power. This does not include generators used as the main source of everyday electricity.

Stand-by electricity generation can also be used for commercial electricity generators. The generators can be used to manage pressures to the national grid and where a volume of back-up fuel needs to be held in reserve for security and regulatory purposes to maintain essential electricity supply.

Equipment is critical if it is needed to make sure continuous use or availability of an essential or critical service including:

  • protecting national security
  • emergency services and law enforcement
  • health services, for example, medical and life support equipment
  • the supply of water, fuel and power
  • protecting the welfare of livestock and other animals
What vehicles, vessels, machines or appliances can use rebated fuel for accepted uses

You will only be able to use rebated fuel in certain vehicles or machines for specific accepted uses. Find more information about these accepted uses in ‘when can rebated fuel be used from 1 April 2022’.

Agricultural vehicles

Agricultural vehicles can use rebated fuel for the following accepted uses:

  • agriculture, horticulture, fish farming and forestry
  • cutting trees, verges and hedges that border public roads
  • clearing or otherwise dealing with frost, ice, snow (this includes gritting), or flooding
  • by a club registered as a community amateur sports club
  • on golf courses and driving ranges

An agricultural vehicle is a:

  • tractor
  • single seat, light vehicle (less than 1,000 kilograms), designed and constructed mainly for off-road use
  • vehicle licensed only for use between different parts of land for purposes relating to:
    • agriculture
    • horticulture
    • forestry
  • vehicle constructed and adapted, with built-in or permanently attached handling and processing equipment, to be used for purposes relating to agriculture, horticulture, fish farming or forestry

 

 

Special vehicles

Special vehicles can use rebated fuel for the following accepted uses:

  • agriculture, horticulture, fish farming and forestry
  • by community amateur sports clubs that are registered with HMRC and on golf courses and driving ranges

A special vehicle is a vehicle designed, constructed and used as set out in Part 4 of Schedule 1 to the Vehicle Excise and Registration Act 1994, but without any weight restriction.

Special vehicles include:

  • digging machines
  • mobile cranes
  • mobile pumping vehicles
  • work trucks
  • road rollers

 

Unlicensed vehicles

Unlicensed vehicles can use rebated fuel for the following accepted uses:

  • agriculture, horticulture, fish farming and forestry
  • by community amateur sports clubs that are registered with HMRC and on golf courses and driving ranges
  • by travelling fairs and circuses
  • any other circumstances providing the vehicle is using fuel gas for fuel

Unlicensed vehicles include those that are not kept or used on public roads and where you have made a Statutory Off Road Notification (SORN), if required, to the Driver and Vehicle Licensing Agency.

Mowing machines

Mowing machines can use rebated fuel for the following accepted uses:

  • land maintained for purposes related to agriculture, horticulture, fish farming and forestry
  • by community amateur sports clubs that are registered with HMRC and on golf courses and driving ranges
  • travelling fairs and circuses

Mowing machines include vehicles or machines designed only for mowing grass.

Other machines, appliances and unlicensed vehicles

Other machines and appliances can use rebated fuel for the following accepted uses:

  • agriculture, horticulture, fish farming and forestry
  • by community amateur sports clubs that are registered with HMRC and on golf courses and driving ranges
  • by travelling fairs and circuses

Other machines and appliances can use rebated fuel for electricity generation and heating for premises that are not used for commercial purposes.

Other machines and appliances include:

  • machines or appliances that are not a vehicle, vessel or mowing grass machine
  • non-road mobile machinery

Vessels

Rebated fuel can be put into any vessel apart from the fuel supply of the engine of a private pleasure craft in Northern Ireland.

If you buy rebated fuel for private pleasure craft in Great Britain, you’ll need to pay the additional duty on the proportion of the fuel you’ll use to propel the craft.

Vessels include all types of boat.

Use of rebated fuel in exceptional circumstances from 1 April 2022

You may be granted a licence to continue using rebated fuel after 1 April 2022, if you can show that there are exceptional circumstances why you cannot use full duty paid diesel.

Examples of exceptional circumstances may include the need to use rebated fuel for technical or safety reasons because using full duty paid diesel fuel is not compatible with your vehicles, vessels, machines or appliances.

You must apply to HMRC, and if we approve the licence, you will need to pay the difference in duty between the rebated and non-rebated fuels before using the rebated fuel.

A licence will not allow you to use rebated fuel indefinitely and will be reviewed. If you want to apply to HMRC for a licence, you will need to email: oils.policymail@hmrc.gov.uk.

If you need to start using full duty paid fuel because your use is not approved, but you believe you cannot do so for technical or safety reasons, you should email HMRC with details of why you cannot change from using rebated to full duty paid diesel.

If it is for a technical reason, you need to explain why your vehicle, vessel, machine or appliance cannot use non-rebated fuel. If there is a safety reason, you should outline why full duty paid fuel is a greater risk than rebated fuel.

Can I refill the tank of a vehicle, machine or appliance with marked fuel outside of the UK?

In some jurisdictions or countries, such as the Channel Islands, Isle of Man or EU Member States, use of marked fuel will still be legal in some of the vehicles, machines and appliances that will no longer be allowed to use rebated fuel in the UK from 1st April 2022. If you refuel your vehicle, machine or appliance in a jurisdiction or country where using marked fuel in that vehicle, machine or appliance is allowed, you can use the fuel up in the UK. You will need to retain receipts or other documents to satisfy HMRC that you have not refilled your vehicle, machine or appliance unlawfully in the UK. You will not be required to flush the tank or your vehicle, machine or appliance on your return to the UK.

Vehicles, Machines or Appliances Used For Both Allowed & Non-Allowed Purposes:

  • You must not put rebated fuel in a vehicle, machine or appliance for a use no longer allowed after the rules change.
  • If you use a vehicle, machine or appliance which is used for both allowed and non-allowed purposes after the rules change, you will need to make a decision on how you manage the fuel in these vehicles, machines and appliances after 1st April 2022.
  • You must either flush out the tank to remove all traces of rebated fuel when switching uses or use fully duty-paid diesel/biofuels for everything. This approach is required to ensure compliance and avoid the misuse of rebated fuel.

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