A decision from the Court of Justice of the European Union could end the use of red diesel for private pleasure craft in the UK.
At the moment almost all diesel sold in British marinas is red diesel, taxed either at a lower rate if some of the fuel is used for heating the boat, or at 100% for the fuel that is used only for propulsion by the engine. In a case launched last year, the EU has argued that the UK should not allow red diesel to be used in this way.
Under EU rules, Member States must apply a “fiscal marker” (red dye in the UK) to diesel which is not taxed at the full rate. The Court of Justice of the European Union has now concluded that Member States may not apply that marker also to diesel which is taxed at the full rate for propulsion, without undermining the purpose of the marker.
Its judgement declares: “-that by allowing the use of marked fuel for the purposes of propelling private pleasure craft, even where that fuel is not subject to any exemption from or reduction in excise duty, the United Kingdom has failed to fulfil its obligations… on fiscal marking of gas oils and kerosene.” The Court dismissed the evidence from HMRC that ending the use of red diesel would be impracticable, some of which was provided by the Cruising Association.
Judith Grimwade, CA President, says: “We are delighted that the Court has finally delivered a judgement in this case, but given the uncertainties of Brexit, it remains to be seen what the impact will actually be. Whatever the outcome, we will continue to campaign for cruising yachtsmen to be able to travel between countries without being penalised for buying a fuel which is very often the only option available.”
No deadline is specified in the judgement and member states are usually given a reasonable period to make the adjustments necessary – which in this case could mean white diesel going on sale in UK marinas – bearing in mind many craft may continue to use red diesel for heating.
However, no-one knows what may happen as a result of Brexit. HMRC is examining this judgement and will announce how and when the UK will adjust its practices in due course.