Culmination of infringement proceedings over the UK’s use of marked ‘red’ fuel

The European Commission has decided to refer the United Kingdom to the Court of Justice of the European Union for not properly applying the rules on fiscal marking on fuel.

Under EU rules, fuel that can benefit from a reduced tax rate has to be marked by coloured dye. Fishing vessels, for example, are allowed to benefit from a lower taxed fuel but private leisure boats must use fuel subject to a standard rate.

Currently, UK law does not require fuel distributors to have two separate fuel tanks to distinguish between the lower tax marked fuel and the fuel subject to the standard rate.

As a result private leisure boat owners are often in a situation where they can only purchase marked fuel.

As a consequence, private leisure boats may not pay the right amount of tax, as they purchase use fuel normally intended for fishing vessels.

Not only does this go against EU excise rules, but it also puts private boats at risk of heavy penalties if they are checked by local authorities when they travel to another Member State.

A spokesman for the EC said: ‘The Commission sent a Reasoned Opinion to the UK on this matter in May 2013.

‘Its failure to bring its legislation into compliance with EU law is the reason why the case is now being referred to the Court of Justice.’

RYA response

Royal Yachting Association (RYA) cruising manager Stuart Carruthers said: ‘What has happened now is that

the ongoing dispute on whether the use of duty-paid marked ‘red’ diesel

for propelling private pleasure craft amounts to ‘improper use’ for the

purposes of Article 3 of the Marking Directive is finally to be

referred by the EC to the ECJ.

‘This is the culmination of the ongoing infringement proceedings

between the UK Government and the Commission over the UK’s use of marked

‘red’ fuel.

‘These proceedings have been confidential and at this point we do not

know what Government’s reaction to the EC’s decision is.’

The RYA advises anyone going abroad to:  

  • Keep receipts for diesel purchased in the UK, to prove that it

    was bought in the UK, and request that your retailer marks them “duty

    paid”
  • You should also log the date of refuelling and engine hours to reinforce these records  
  •  Do not carry red diesel anywhere other than in their craft’s main fuel storage tanks; 
  • Do not purchase red diesel in a country where the purchasing of rebated fuel by leisure craft is prohibited by law