BUSINESS BRIEF NO. 12/2002

17 Apr 2002 05:31 PM

Contents: (1) Mineral (Hydrocarbon) Oils: Introduction of the Euromarker. (2) Mineral (Hydrocarbon) Oils: Introduction of Revised Rules for Obtaining Duty Relief on Oils put to Industrial Use.
(3) Mineral (Hydrocarbon) Oils: Approving the Distributors of Rebated Fuels.

(1) MINERAL (HYDROCARBON) OILS: INTRODUCTION OF THE EUROMARKER.

Customs are introducing the addition of Euromarker (CI Solvent Yellow 124) to rebated gas oil and kerosene, following a decision made in conjunction with the UK's EC partners.

Background
Currently rebated gas oil and kerosene in the UK are marked with chemical markers and dyes, which allow Customs to detect the fraudulent misuse of these products as road fuel. This misuse creates unfair competition between businesses that purchase road fuel at the full duty rate and those that fraudulently use marked gas oil and rebated kerosene as road fuel.

Euromarker
Following EC Decision 2001/574/EC, Euromarker (CI Solvent Yellow 124) will be added to rebated gas oil and kerosene in all EU member states.

Euromarker must be added to rebated gas oil and kerosene in a concentration of not less then 6 kg per million litres of oil. In the UK it will be introduced alongside the existing markers:

- in gas oil: quinizarin and red dye

- in kerosene: coumarin, although Customs will be working with the trade to consider a suitable replacement for coumarin.

Customs have already consulted on the proposed changes. A summary of this exercise, combined with those of related changes (Approval of distributors of rebated fuels/ Revised rules for obtaining duty relief on oils put to industrial use), and a combined Regulatory Impact Assessment will be published on 24 April and will be available on the Customs website at the address shown below.

Reasons for change
This measure will help tackle the fraudulent misuse of these products as road fuel across the EU and reduce the unfair competition suffered by businesses that legitimately purchase road fuel at the full duty rate.

It will also assist businesses and end-users by reducing the levels of fraudulently laundered fuel available, thus lowering the incidence of engine damage caused by the residual acids and other substances found in laundered fuels.

Implementation date
Euromarker must be in use at the duty point by 1 August 2002.

Further Details
If you have any further queries in relation to the introduction of the Euromarker, please contact the National Advice Service on 0845 010 9000.

(2) MINERAL (HYDROCARBON) OILS: INTRODUCTION OF REVISED RULES FOR OBTAINING DUTY RELIEF ON OILS PUT TO INDUSTRIAL USE.

Following today's Budget announcement, Customs will be revising the rules for traders who obtain duty relief on mineral oils used for industrial purposes (these rules are generally referred to as the Tied Oils Scheme).

Current Rules
Mineral oil used other than as motor fuel, additive or extender to motor fuel or heating fuel may be relieved of excise duty. Customs interpretation of the rules regarding this relief is contained within Notice 184A: Mineral (Hydrocarbon) Oil put to certain uses: Excise duty relief.

Customs have already consulted on the proposed changes. A summary of this exercise, combined with those of related changes (Approval of distributors of rebated fuels/Introduction of the Euromarker), and a combined Regulatory Impact Assessment will be published on 24 April and will be available on the Customs website at the address shown below.

Details of the revised scheme
All users and distributors of tied oils will have to be individually approved by Customs unless they receive and/or supply tied oil in closed containers of 210 litres or less. The limit originally proposed was 25 litres or a maximum of a 1000 litres per annum.

Traders who import or export tied oils will still have to be individually approved even if they deal in containers of less than 210 litres.

Traders dealing in oils that Customs have identified as having a low risk of misuse as road fuel will have to be approved, but will now not have to comply with the requirements that include obtaining and checking their customer's approval number or submitting returns.

Customs original proposal was that all distributors of tied oils, irrespective of the risk involved, had to be approved and comply with all the requirements of the scheme if they exceeded the de-minimis levels for approval.

The threshold for submitting stock returns has been reduced from 25,000 litres per annum to 10,000 litres per annum. This will apply to users, distributors, warehouse keepers and owners of these oils stored in warehouses.

Warehouse keepers who either store their own oil or store it on behalf of a third party will be required to submit stock returns if the estimated throughput of all tied oils released from the warehouse exceeds 10,000 litres per annum.

Distributors will be expected to check, prior to delivery, certain details about their customer to ensure they are eligible to receive the oil duty relieved.

Implementation of the revised rules
The revised rules will come into effect from 1 June 2002. However, there will be a three-month transition period to allow new applicants to obtain approval numbers and traders already approved to make any necessary changes to computer systems etc. The scheme will come into full operation with effect from 1 September 2002.

Notice 184A
An updated notice will be published shortly and will be available either in hard copy or on the Customs website at the address shown below.

What Next?
Traders who will require individual approval, and do not already have an existing approval, should contact the address below as soon as possible before 1 September 2002:

Newcastle Mineral Oil Reliefs Centre
Dobson House
Regent Centre
Newcastle
NE3 3PF
Tel: 0191 201 1740/1741/1745

Any queries regarding changes to the rules should be directed to the National Advice Service - telephone 0845 010 9000

(3) MINERAL (HYDROCARBON) OILS: APPROVING THE DISTRIBUTORS OF REBATED FUELS.

New legislation is to be introduced that requires distributors of marked rebated fuels to be approved by Customs.

Background
Distributors will need approval from Customs before they can trade in rebated fuels such as kerosene for domestic heating and red diesel. Customers of these distributors may also notice that they have to provide more information when buying rebated fuels.

Customs have already consulted on the proposed changes. A summary of this exercise, combined with those of related changes (Revised rules for obtaining duty relief on oils put to industrial use / Introduction of the Euromarker), and a combined Regulatory Impact Assessment will be published on 24 April and will be available on the Customs website at the address shown below.

Reasons for change
Immediate steps need to be taken to combat rising levels of oils fraud. This measure will increase Customs control over the distribution of rebated fuels and provide a regular flow of information that will enable trend analysis and the identification of unusual or suspicious patterns of trading.

Scheme Requirements
All new and existing distributors of rebated fuels will need to be approved and will be required to make monthly returns of information. These returns will detail the customers to whom they have supplied fuel and the quantities and types of fuel supplied. There will be flexibility to submit quarterly returns in respect of supplies to domestic customers.

Distributors will be required to keep normal commercial records in relation to their transactions, however, they will also be expected to record their customer's VAT registration number, where appropriate, and to ask for and record information about the use to which their customers put the rebated fuel.

Distributors will need to satisfy themselves that their customers are genuine, and to exercise judgment in deciding whether a request is suspicious. Customs recognise that distributors can do no more than make a reasonable judgment based on the information received from their customers.

Distributors would also be expected to alert Customs to any suspicious or unusual changes in their trading patterns.

Customs will ensure that distributors are able to report suspicions quickly and easily. A trade forum for exchanging knowledge and best practice will be established shortly and will also consult further on developing the detail of the scheme.

Implementation Date
Customs will begin to approve distributors from 1 January 2003. The full scheme will come into effect from 1 April 2003.

What Next?
Customs will continue to consult with industry whilst developing the details for the scheme and will also clarify their requirements before 1 January 2003.

Further Details
If you have any queries regarding the scheme please contact the National Advice Service on 0845 010 9000.

MEDIA ENQUIRIES ONLY TO THE HM CUSTOMS & EXCISE COMMUNICATIONS DIVISION, NEW KINGS BEAM HOUSE, 22 UPPER GROUND, LONDON SE1 9PJ. TEL: 020 7865 4775/5472. TO CONTACT THE DUTY PRESS OFFICER OUT OF HOURS PLEASE CALL 020 7620 1313.

Customs & Excise National Advice Service - telephone 0845 010 9000 - is open from 8am to 8pm Monday to Friday.

This release and other information about HM Customs & Excise can be found at our website: www.hmce.gov.uk.