Update on the use of "marked" red diesel in private pleasure craft

The Royal Yachting Association (RYA) has written to Belgian marinas and clubs with visitor moorings to encourage them to lobby for the current Belgian Minister for Finance to reinstate permission for visiting British yachts to use red diesel.

In Belgium the use of marked “red” diesel in a private pleasure craft is unlawful regardless of the country in which the diesel was purchased and an infringement of Belgian law carries the risk of a fine.

In January 2014, in response to falling numbers of visiting British yachts, the then Belgian Minister for Finance Koen Geens acknowledged that the Belgian Government “must adopt a pragmatic approach” to the issue of “red” diesel.

Permission for British leisure craft to have red diesel in their fuel tanks when visiting Belgian waters was therefore granted up until 31st October 2014, subject to the proviso that the skipper can “present documents to demonstrate that excise duties have already been paid in the United Kingdom.”

This permission was subsequently extended until 31st December 2014, but was not renewed thereafter.

Fuel Bay, red diesel article

Risk of fines

The Belgian Government’s decision not to extend this permission into 2015 has caused renewed consternation amongst British skippers.  The RYA says although the risk of being fined by Belgian Customs may remain low, the uncertainty is likely to prompt many of those British skippers who had intended to visit Belgium this summer to go elsewhere.

The RYA understands from the Maritieme Brigade Douane that part of the reason why the Belgian Government decided not to extend this permission into 2015 was because local interest groups (including local boating organisations and marina/mooring operators) did not ask the Belgian Government to extend it.

The RYA has therefore written to Belgian marinas and clubs with visitor moorings to point out that a reduction in the number of visiting British yachts will inevitably result in a loss of income and to encourage them to lobby for the current Minister for Finance to reinstate the express permission for visiting UK yachts to have marked “red” diesel in their main fuel tanks.

Elsewhere in Europe

The UK Government has so far taken the view that, under EU legislation, the use of marked “red” diesel for the propulsion of private pleasure craft is legal provided it is duty-paid.

Although most EU member states now supply only white diesel to recreational craft, marked “red” diesel is usually the only diesel that is available to private pleasure craft at the waterside in the UK – so the vast majority of UK-based yachts have marked “red” diesel in their main fuel tanks.

The presence of marked “red” diesel in a yacht’s main fuel tank does not cause any difficulty for British skippers visiting any country in Europe apart from Belgium, although it is recommended that you carry evidence that your diesel was purchased duty paid in the UK when visiting France and the Netherlands.

Why should UK boaters benefit from low rates of duty?

They don’t. Recreational boaters in the UK have been required to pay the full rate of duty on fuel used for propelling private pleasure craft since November 2008.

Under EU law, boaters are entitled to benefit from a rebated rate of duty on diesel used for heating and electricity generation, as is the case for fuel oil used for heating a private home. Even if only 60% of marked “red” diesel purchased is declared as being used for propulsion (the 60:40 split), UK boaters still pay roughly 10% more duty than their counterparts in France and Belgium.

Why should private pleasure craft use marked “red” diesel in the UK?

In short, to secure the continued availability of diesel fuel at the waterside for all UK boaters.  Many waterside suppliers of diesel fuel only have a single tank and pump which in the vast majority of cases means marked “red” diesel is the only available fuel.

Should those suppliers be obliged to supply unmarked “white” diesel to private pleasure craft they will be faced with the cost of either installing a second fuel tank and pumping equipment or choosing which fuel to supply – marked “red” or unmarked “white” diesel.

RYA research indicates that roughly one third of them would limit their operation to supplying marked “red” diesel to commercial vessels and they would simply stop supplying private pleasure craft altogether.

This would have a significant impact on the availability of diesel for private pleasure craft along the coast, particularly in more remote parts of the country where harbours cater predominantly for commercial (fishing) craft.

Such areas include Northern Ireland, Scotland, Wales, the north of England and the West Country.

What about inland?

Many inland waterways vessels are people’s homes and the owners rely on diesel fuel for heating and electricity generation, which under EU law can legally be purchased at the rebated rate of duty. However, under EU law, unmarked diesel cannot be supplied at a rebated rate of duty.

RYA research suggests that, should they be obliged to supply unmarked “white” diesel for propulsion, nearly half of those supplying diesel to private pleasure craft would stop supplying “red” diesel.

The owners of inland waterways vessels would therefore be denied access to diesel at the rebated rate of duty diesel for domestic use.

What’s in a colour?

The EU Marking Directive prescribes the chemical marker that must be applied to diesel to be supplied at the rebated rate of duty but member states are allowed to add their own national marker or colour.

The Directive would therefore permit the UK to change the colour dye it uses in order to distinguish marked diesel supplied in the UK from, say, marked diesel supplied in Belgium.

This might address some of the practical issues surrounding the continued use of marked “red” diesel in UK private pleasure craft voyaging elsewhere in Europe although, whatever the colour, the fuel would still need to be marked with the prescribed EU fiscal marker so it would still be detectable as marked diesel, if tested.

In addition, marked “red” diesel is supplied for use in the UK in a wide range of applications other than maritime, such as agriculture and forestry, so the implications of changing the colour dye would need to be considered in this wider context.

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Ongoing uncertainty

The RYA’s understanding is that the European Commission believes that the continued use of marked “red” diesel for propulsion makes it difficult for the tax authorities to tackle improper use.

The Commission takes the view that private pleasure craft should only use unmarked “white” diesel for propulsion.

Following the press release issued by the European Commission in July 2014, the UK Government is still awaiting official notification from the Commission that it intends to take the UK to the European Court of Justice for, according to the European Commission, not properly applying the rules on fiscal marking of diesel fuel.

In the meantime there is no indication that the UK Government intends to modify its long-standing supportive stance and the RYA will continue to lobby for the continued supply of marked “red” diesel in the UK.