Notice

Excise Notice 192: registered dealers in controlled oil

Updated 29 January 2016

Foreword

This notice cancels and replaces Notice 192 (February 2014). Details of any changes to the previous version can be found in paragraph 1.2 of this notice.

Parts of section 5 of this notice have the force of law under the Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations 2002 and The Revenue Traders (Accounts and Records) Regulations 1992. Paragraphs with the force of law are indicated by being placed in a box. The sections of the notice that do not have the force of law are for guidance only and are (where applicable) HM Revenue and Custom’s (HMRC) current view of the law as at the date of the publication of this notice. These sections of the notice do not replace, nor do they amend, the law.

Other notices on this or related subjects:

179 Motor and Heating Fuels: General Information and Accounting for Excise Duty and VAT
Notice 179A Aviation turbine fuel (Avtur)
Notice 554 Fuel used in private pleasure craft and for private pleasure-flying

1. Introduction

1.1 What is this notice about?

This notice is about the Registered Dealers in Controlled Oil (RDCO) scheme which requires anyone intending to sell or deal in controlled oils (see paragraph 1.5) to be approved to do so.

This notice aims to help you understand:

  • whether you are eligible for exclusion from the scheme
  • whether you qualify for annual returns
  • how you should seek registration/approval
  • your obligations to take reasonable steps to make sure that the controlled oils are only supplied to entitled end-users
  • the returns that you will be required to make to us containing certain information about your supplies
  • what records you will need to keep
  • the sanctions and penalties that will be imposed for failing to comply

1.2 What’s changed?

This notice has been amended at Appendix A - Frequently Asked Questions and Appendix B - Plant Hire Businesses to update the registration requirements for plant and equipment hire companies. The changes to the registration requirements are effective from 1 February 2016.

1.3 Who should read this notice?

You should read this notice if you are handling, selling or dealing, or are intending to handle, sell, or deal in, controlled oils. The scheme would include, for example, oil producers (refiners’ warehouses) and main and secondary distributors supplying end-users, both commercially and to the public (including dry brokers who do not take physical possession of the oil).

Unless you qualify for exclusion from the scheme under section 3 of this notice, you will not be able to carry on this activity unless you are registered and approved by us. It is important, therefore, that you read this notice carefully.

1.4 What law covers this notice?

Primary legislation
The Hydrocarbon Oil Duties Act 1979 (HODA).
The Finance Act 1994.
The Finance Act 2002.
The Customs and Excise Management Act 1979 (CEMA).
The Finance Act 2008 Schedule 41.
Secondary legislation
The Revenue Traders (Accounts & Records) Regulations 1992.
The Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations 2002 (SI 2002 No 3057).
The Hydrocarbon Oil and Bioblend (Private Pleasure-flying and Private Pleasure Craft) (Payment of Rebate, etc.) Regulations 2008.

1.5 What are controlled oils?

Controlled oils are some of the products given a rebated rate of duty under section 11 of the Hydrocarbon Oil Duties Act 1979, namely:

  • marked rebated gas oil (red diesel) including ultra low sulphur gas oil
  • marked rebated kerosene (paraffin, burning oil, etc.), and
  • aviation turbine fuel (Avtur)

which have been:

  • marked in accordance with regulation 4 of the Hydrocarbon Oil (Marking) Regulations 2002 (as amended by SI 2007/1416 and SI 2008/753) (excluding Avtur)
  • the marker is present at the time of delivery (excluding Avtur), and
  • the oil is delivered to the UK market for either domestic or commercial use

2. Background and general information

2.1 Who is affected by this scheme?

This scheme is for anyone who sells or deals in controlled oils. It includes:

  • places of production – refiner’s warehouses, and
  • import warehouses who mark oil on import

It also includes the following main and secondary distributors:

(a) dry brokers, who sell or deal in controlled oil but who do not take physical possession of that oil

(b) owners of oil in warehouse

(c) distributors who supply commercial and domestic end-users

(d) operators of duty paid oils terminals which are Registered Remote Marking Premises marking their own oil

(e) waste oil dealers who obtain rebated oil (either because it is surplus to requirements or because it is waste) and:

  • clean it themselves for onward supply as rebated oil
  • deliver to another company for cleaning and onward supply
  • supply surplus oil for use as rebated oil

(f) intermediaries who deliver fuel to the tanks of commercial ships and other marine vessels excluding private pleasure craft.

2.2 Agents

The scheme does not apply to agents (including mutual co-operatives) who arrange a supply of controlled oil on behalf of someone else (a principal) where the:

  • supplier of the oil has accepted that the customer is the end-user
  • controlled oil is delivered direct by the RDCO to the person or end user on whose behalf you are acting, and
  • invoice issued by the RDCO is addressed to the person or end user on whose behalf you are acting

Unless you meet all these criteria, you will need to apply for approval as an RDCO. This is because the supplier of the oil will not be aware of who the customer is (that is, the agent or the end user) in order to undertake the relevant checks detailed in section 5. If you handle, sell or deal in controlled oils, you will need to be approved as an RDCO.

2.3 Are there any exclusions from the scheme?

Yes. Please see section 3 for further details of distributors of controlled oil who are excluded from the scheme. In certain circumstances suppliers of plant and equipment containing controlled oil are also excluded, please see Appendix B for further information.

2.4 What do I do if I think I should be included in the scheme?

Unless you qualify for exclusion from the scheme, you will need to seek approval from us in order to carry on a business as a distributor of controlled oils. Please see section 4 for further guidance.

2.5 Enquiries

If you have any general queries about how the scheme works, you should contact our Helpline on Telephone: 0300 200 3700. If you have already submitted an application form and you either wish to check its progress or have a specific query relating to your application then you should contact the Mineral Oil Reliefs Centre at morcexciseeast@hmrc.gsi.gov.uk.

If you wish to check someone else’s RDCO number before selling controlled oils to them, you can either ring the Helpline number given in the paragraph above, or you can use the Rebated Oils Enquiry Serviceon our website

2.6 What are the conditions of the scheme?

As an approved RDCO, you must comply with the following general conditions:

General Condition Detail Further information
Approval You must be approved before you sell or deal in controlled oil (unless you qualify for an exclusion). You must operate within the scope of your approval – for example, you should only receive and store the types of controlled oil we have approved you to deal in, at the premises notified to you in your approval certificate and covering letter. See sections 3 and 4.
Supplies Distributors must take reasonable steps to make sure that their customer is properly entitled to receive the oil that is being supplied. See section 5.
Returns Distributors must submit monthly returns (or annual returns if we have approved you to do so) detailing the supplies made in the period. The level of information will depend on the nature of the supply. See section 6.
Records As revenue traders, distributors must comply with the Revenue Traders (Accounts and Records) Regulations 1992 (see Notice 206 Revenue traders Records records, and any additional record-keeping requirements specified in section 7). See section 7.

2.7 What if I fail to comply with the conditions of the scheme?

If you fail to comply with any of the conditions shown in paragraph 2.6, we may apply sanctions against you. These may range from warning letters, to civil penalties and ultimately to withdrawal of your approval. In the event of the latter, the only controlled oils you may deal in are those that you receive and sell in pre-packaged containers not exceeding 20 litres.

2.8 What do I do if I have a complaint?

For further information about our complaints procedures go to our website and under ‘quick links’ select ‘Complaints’.

3. Exclusions

3.1 Who is excluded from the scheme?

The scheme does not apply to distributors who receive and sell controlled oil only in pre-packaged containers not exceeding 20 litres.

3.2 What if I supply and receive oil in pre-packed containers not exceeding 20 litres?

If you supply and receive oil in this way only, then you are excluded from the scheme and do not need to apply for approval.

3.3 What if I receive controlled oil in bulk and decant into pre-packaged containers not exceeding 20 litres for onward supply?

If you do this you will not be excluded from the scheme and will need to seek approval (as explained in section 4). However, if you only supply in pre-packaged containers not exceeding 20 litres you will not be required to make returns to us (see section 6).

3.4 Do I have to keep any records of these sales?

Yes, to demonstrate how you have disposed of the oil. However, we only require you to keep the normal commercial documentation required under the Revenue Traders (Accounts and Records) Regulations 1992. There are no additional records for the purposes of this scheme.

3.5 What if I make supplies of Avtur?

Any persons dealing in Avtur (including dry brokers) must register with us and be approved as an RDCO to be able to carry on this activity. The usual obligations of the scheme apply. Section 5 gives details on the RDCO’s obligations. We do not, however, require submission of returns in respect of supplies of Avtur.

You should also see Notice 179A: Aviation Turbine Fuel (Avtur), in particular section 3 which provides details on the delivery and storage requirements for Avtur, and section 4 which details your obligations when dealing in Avtur.

In addition, if you are supplying Avtur for private pleasure aircraft, you should also see Notice 554: Fuel used in private pleasure craft and for private pleasure-flying.

3.6 Multi-sites

If you are a single legal entity (that is a company, partnership or sole proprietor) it is your total operations that will be taken into account even if some of your sites qualify for exclusion from the scheme. Therefore, even if only one site fails to qualify for exclusion, you will need to seek approval. You will not, however, be required to make returns to us of any supplies you make in pre-packaged containers not exceeding 20 litres or of Avtur.

3.7 Changes in your circumstances

If your circumstances change and you no longer qualify for exclusion you should apply to us to be approved as an RDCO. This process will normally take 30 working days to complete, so it is important that you make your application in good time and provide the information detailed in section 4 of this notice that will allow us to process your application. Without this approval you will not be able to trade in controlled oils. If you do so without having been approved you will be liable to a civil penalty and/or forfeiture of the oil. The approvals system is explained in section 4.

4. Approval

4.1 Applying for approval

You will need to apply to us to be approved as an RDCO if you do not qualify for exclusion (see section 3). You will need to give us the information that we require to decide whether you should be approved. After we have considered that information, and carried out any checks we think necessary, we will let you know whether you are approved.

You should apply using form HO4, which is available from our Helpline on Telephone: 0300 200 3700 and on our website at www.hmrc.gov.uk. You should return the completed form to the Mineral Oils Relief Centre at the address shown on the form.

The application form must be signed:

  • in the case of a sole proprietorship: by the sole proprietor
  • in the case of a partnership: by one of the partners
  • in the case of a company: by a director, company secretary or authorised signatory

In addition to your completed form HO4, you must also submit a business plan at the time of application which should:

  • describe the nature of the proposed business – this should explain what your intended trading activity is, what products you will deal in (with estimates of the volumes in litres of each) and whether and how your business will differ from your competitors
  • explain why the business is being set up and why you want to deal in controlled oils
  • explain what problems or issues you may encounter and what opportunities you have identified in the sector, giving details of key competitors and any available financial incentives, including government grants
  • describe the business’s sales and marketing strategy and give details of your intended pricing policy
  • give details of key personnel and their roles
  • list your important assets such as premises and equipment i.e. vehicles, tanks etc
  • give current financial figures; including details of any start-up investment
  • indicate whether or not fuel will be supplied to customers while the premises are unattended
  • give details of how you will meet the obligations described in paragraph 5.2
  • give details of the arrangements that you have in place to make sure the security of the stock (for example CCTV), and
  • give details of health and safety measures that you have in place for the protection of employees and customers

Until you are approved you cannot deal in controlled oils. It is therefore in your interest to make your application in good time and make sure that it is accurate and complete and provides all the required information detailed above.

4.2 What we will do with your application

When we receive your application we will check it has been completed correctly and in full. If it is incomplete, or is in any way unclear, we will ask you to supply the missing particulars and/or clarification. We will not progress your application until that has been done.

After that (assuming there is nothing in your application to justify refusing your approval outright) we will perform checks to satisfy ourselves that the information you have given is full and accurate and that you are suitable for approval. These will involve checks of our records and, in the case of a company, are likely to include checks with Companies House. They may include checks with other government departments and agencies, and with credit rating providers.

Our checks will usually include a visit to you, during which we will look at your premises and everything you do there. We will ask you for details about (but not limited to) your suppliers, customers, business plans, accounting and stock control systems, premises suitability and security and financial viability.

If we discover that the information you have given to us is untrue or incomplete in any important aspect, your approval may be denied.

Should these checks not provide sufficient assurance that the business is suitable for approval, further information may be requested. Until this information is received, your application will be put on hold until it is received and checked

4.3 Fit and proper test

We will only approve your application if we are satisfied that you are fit and proper to deal in controlled oils. This means we must be satisfied the business is genuine and that all persons with an important role or interest in it are law abiding, responsible, and qualified.

a) We will only approve you if you satisfy us that:

  • the business is genuine and commercially viable
  • the relevant premises are (or will be) secure and suitable
  • appropriate control will be exercised over the product, persons and vehicles entering and leaving the premises
  • all rebated fuel supplied at or from your premises will be accurately measured and recorded
  • your accounting and stock control systems will be adequate
  • you will provide safe and secure access for our officers to all parts of your premises, and
  • you will be able to meet the obligations described in paragraph 5.2

b) We are very unlikely to give approval if the business, or the applicant, or anyone with an important role or interest in the business has:

  • any unspent criminal convictions for any offence of dishonesty or for any offence linked to terrorism or organised crime (an ‘unspent’ conviction is one that has not expired under the terms of the Rehabilitation of Offenders Act 1974)
  • previously had their RDCO registration revoked
  • previously had their application for approval as an RDCO refused
  • been involved in fuel-laundering, and we will consider that to be the case where they are linked to:- seizures of laundering equipment- premises on which laundered fuel (or unlawfully mixed fuel) has been found- premises from which laundered fuel (or rebated/other blend of fuel) has been supplied- deliveries of rebated fuel to places where laundering or unlawful mixing has taken place
  • had oil or vehicles or any other revenue goods seized from them
  • a history of fraudulent behaviour, including misrepresentation or identity theft

c) In addition, we are unlikely to approve an applicant if they, or any person with an important role in the business:

  • is an undischarged bankrupt
  • is the subject of an undischarged sequestration order
  • has been subject to a confiscation order under the Proceeds of Crime Act 2002, or
  • we have evidence that the applicant, or any person with an important role in the business - is associated with known non-compliant persons or fraudulent businesses- has been involved in attacks against or abuse of tax repayment systems- has a reckless attitude to their tax responsibilities- has outstanding, unmanaged, HMRC debts or a history of poor payment- has a poor revenue compliance record (for example poor record-keeping in spite of warnings)

The lists above are not exhaustive, we may refuse to approve you for reasons other than those listed, if we have justifiable reservations about your suitability to deal in controlled oils.

4.4 Granting or refusing approval

If we accept your application, we will issue a certificate of approval. You should check the accuracy of the details on the certificate which should be kept in a safe place and made available to our officers on request. Any inaccuracies should be reported to the Mineral Oil Reliefs Centre immediately to the address below.

We will only grant an approval for oils for which you have a genuine business need. In addition we will only grant approval for premises which we consider suitable to receive and store rebated fuels.

All of the oils and premises for which you are approved will be listed on your approval certificate, plus details of any conditions that we have placed on your approval.

  • your rights
  • how to request a review of the decision
  • how to appeal

Information on HMRC review and appeal procedures is available on our website at www.hmrc.gov.uk:

Mineral Oil Reliefs Centre
Building 4, BP4002
Benton Park View
Longbenton
Newcastle upon Tyne
NE98 1ZZ

or by email at morcexciseeast@hmrc.gsi.gov.uk

4.5 Conditions and restrictions

Where we have concerns regarding certain areas of your business we may grant approval but impose specific conditions or restrictions in order to address these concerns. We will advise you of our decision and outline the condition(s) giving you sufficient time to put systems and processes in place to meet these conditions. Once these concerns have been addressed to our satisfaction, we will remove the conditions from the approval. If these concerns have not been addressed fully and to our satisfaction we may revoke your approval. You will be notified of our decision in writing and have the right of appeal.

Where we have imposed restrictions on your approval, these will remain in place until such time your circumstances change. At this point we will review the restrictions applied to your approval and advise you accordingly.

4.6 Changes affecting your approval

You must advise the Mineral Oil Reliefs Centre at morcexciseeast@hmrc.gsi.gov.uk if any information contained on your RDCO approval letter or in your application form changes. You must notify us of the following changes within 30 days of the change occurring:

a) if the status of your business or the company changes for example;

  • a sole proprietor becomes a partnership
  • the approved entity is transferred to a business which is not an approved RDCO
  • there is a change in VAT number for the business

you must notify the Mineral Oil Reliefs Centre and complete a new HO4 application form, or

b) if there is any change in the information provided in your application, for example a change in or addition of:

  • directors of the company
  • trading name
  • premises
  • controlled oils

you must notify the Mineral Oil Reliefs Centre and we will amend your approval.

However, we will not automatically approve the new applicant or amend your approval until we have carried out the checks set out in paragraph 4.2 and are satisfied that the changes do not affect your status under our fit and proper test as detailed in paragraph 4.3.

We will notify you of our decision in writing as per paragraph 4.4.

If you are uncertain whether the change requires a new approval or an amendment you should contact the Mineral Oil Reliefs Centre at morcexciseeast@hmrc.gsi.gov.uk

4.7 Is there a time limit on my approval?

The approval is open-ended until it is cancelled either by you, if for example you cease trading or cease dealing in controlled oil, or by us.

4.8 Can my approval be cancelled?

Yes, either at your request, because you cease dealing in or selling controlled oil, or because we think it necessary, see section 8 for further details.

If you cease to trade in controlled oil, you must inform us immediately and make arrangements to dispose of your stocks of controlled oil within 30 days, see paragraph 4.9 below.

We are likely to cancel your approval if:

  • it is considered necessary for the protection of the revenue because, for example, we have evidence that you have been involved in the misuse of controlled oil or excise fraud. In such cases, we may also prosecute you
  • in light of any new information that comes to our attention, or that you notify to us, we are no longer satisfied that you are fit and proper to hold an RDCO approval as per paragraph 4.3, and
  • you persistently fail to meet the requirements of the scheme, for example, fail to exercise your obligations or fail to submit HO5 returns on time. However, this is likely to be the final step following a series of warning letters and civil penalties - see paragraph 6.5 and section 8

We will notify you in writing of our intention to cancel your approval. Subject to the exclusion provisions, you will not be entitled to receive or distribute controlled oils after your approval has been cancelled.

4.9 How do I dispose of controlled oil stock if my approval is cancelled?

Where your approval has been cancelled at your request because you have ceased to deal in controlled oils, you should complete form HO83 ‘Request to deregister from the Registered Dealers in Controlled Oils Scheme’.

The HO83 form is available to download from the HMRC website, at www.hmrc.gov.uk, or can be obtained from the Mineral Oil Reliefs Centre at morcexciseeast@hmrc.gsi.gov.uk or by phoning our Helpline number on Telephone: 0300 2003700. You should return it to the Mineral Oil Reliefs Centre at the address below, without delay. You are required to provide details of how you intend to dispose of any controlled oils held in stock at the date you ceased to trade. The stock must be disposed of in a manner agreed with the Mineral Oil Reliefs Centre, within 30 days of cessation of your RDCO approval.

Where HMRC have cancelled your approval you should act in accordance with the instructions contained in your cancellation letter:

Mineral Oil Reliefs Centre
Building 4, BP4002
Benton Park View
Longbenton
Newcastle upon Tyne
NE98 1ZZ

5. Supplying or selling controlled oil

The RDCO scheme was introduced to support the UK Oils Strategy with the aim of identifying and tackling commercial oils fraud. Our aim under the scheme is to work in partnership with honest distributors to improve our control of the supply chain for controlled oils and to protect the legitimate trade.

Missing or incorrect data inhibits our risk analysis of supplies and our ability to target potential fraudsters so it is essential that the detailed information required from RDCOs about the types and quantity of oil supplied is timely and accurate. We also encourage distributors to take sensible and reasonable steps to minimise the chance of controlled oil being obtained by those intent on commercial scale laundering or misuse. The key to the success of the scheme to date is good communication and co-operation between HMRC and business.

5.1 Important information

The boxed text in this section has the force of law under either the:

  • Revenue Traders (Accounts & Records) Regulations 1992, or
  • Regulation 8 (2) of the Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations 2002

5.2 The RDCO obligations when supplying controlled oil

The following rule has the force of law

As an RDCO, you must take every reasonable precaution to make sure that your supplies of controlled oil (as defined in paragraph 1.5) are only to persons who will use that oil as permitted by the law. This is a legal obligation, imposed under Regulation 8 (2) of the Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations 2002.

If HMRC considers that you have failed in that obligation, they can take enforcement action against you, ranging from a variation of the conditions of your approval to a warning letter and, in more serious cases, withdrawal of your approval, civil penalties and even prosecution.

The following is what HMRC regards as reasonable precautions:

Your processes and systems

Your management, marketing, business processes and systems (for example, ISO 9000), operating, training procedures and practices must be robust.

You must make it clear to your customers what kind of controlled oil they are buying and the restrictions which apply to the use of these fuels, ie.

  • partially rebated marked gas oil (red diesel) must not be used in a road vehicle
  • fully rebated marked kerosene must not be used in a road vehicle. If supplied other than for heating fuel, kerosene is liable to duty at the gas oil rate
  • aviation kerosene (Avtur) must only be delivered for use in aircraft engines

Your labelling and marketing of these products must be perfectly clear on these points. Kerosene-based products have been marketed as ‘gas oil’ which could lead to illegal motor fuel use. These products should be marked in accordance with the marking requirements for kerosene. For supplies of fully rebated marked kerosene, your delivery note should bear the statement:

‘Not to be used as road fuel or as fuel for any other engine, motor or machinery’.

If you deal in rebated marked gas oil, you should display the red diesel poster in a prominent place on your business premises. This poster is a reminder to anyone who is purchasing red diesel that it must not be used as a road fuel and is available to download from our website, at www.hmrc.gov.uk.

Checks on your customers

You must carry out appropriate checks on all of your customers and be accountable for all of your supplies to them. Your checks must be sufficient to satisfy you of a customer’s integrity and that they intend to use the oil supplied to them for a lawful purpose. In addition to the standard checks described in paragraph 5.14, you must consider the following particulars and assess whether they are lawful and consistent with each other:

  • the nature of the customer’s business
  • the nature of the controlled oil being supplied. For example, aviation kerosene (Avtur) may only be delivered for use as fuel in aircraft engines (see Notice 179A)
  • the duty status of the controlled oil being supplied. In the case of partially or fully rebated fuels, you must be satisfied that your customer’s intended use of the fuel is permitted. For example kerosene is liable to duty at the gas oil rate unless supplied for heating fuel
  • the volumes and frequency of your supply to them
  • the details of the movement, including the means of transport or collection, the route and the place of delivery, and
  • the payment arrangements and conditions

You must make sure your staff are sufficiently trained to recognise and report suspicious matters to us.

If you suspect fraud, you must report your suspicions to us on the Customs Confidential Hotline number Telephone: 0800 595000, or by email to customs.hotline@hmrc.gsi.gov.uk or in writing to:

HM Revenue and Customs
Freepost NAT22785
Cardiff
CF14 5GX

You can find advice on reporting your suspicions on our website at Customs, Excise and VAT Fraud reporting.

5.3 Delivery note statements

Your delivery notes must bear the following statements:

  • for all supplies of aviation kerosene (Avtur): ‘Delivered duty-free as fuel for aircraft engines only. Customs’ permission must be obtained before diversion to alternative use’.
  • for all supplies of marked gas oil: ‘This oil is not to be used as road fuel’.
  • for supplies of marked kerosene in a quantity exceeding 250 litres: ‘This oil is not to be used as road fuel’

See paragraph 5.2 for the statement you should put on your delivery notes for supplies of rebated, marked kerosene.

5.4 Legitimate use of controlled oil

For further information about the supply of marked rebated oils including eligible uses, please see Notice 75 Fuel for road vehicles and Notice 179 Motor & heating fuels: General information and accounting for Excise duty and VAT. You should make sure that you are aware of the requirements in these notices.

5.5 Retaining records of supplies of controlled oil

Regulation 6 of The Revenue Traders (Accounts and Records) Regulations 1992 requires information to be recorded.

The records you must retain will be determined by the nature of the supply.

This information, as specified below, should be retained in the normal business records, but you are not expected to keep it in a central or dedicated file.

Supply Information to be retained in your records
Supplies made in pre-packaged containers not exceeding 20 litres. No additional records beyond those held for the purpose of conducting the business.
Supplies made directly to commercial ships and other marine vessels, excluding private pleasure craft – see paragraphs 5.7 and 5.8. No additional records beyond those held for the purpose of conducting the business. Delivery notes complying with the requirements of HMRC Notice 263 Marine voyages - excise duty relief for mineral (hydrocarbon) oil
Supplies made to another approved RDCO. name of customer
delivery/invoice address
customer’s RDCO approval number, and
quantity by type of oil supplied.
Supplies made to domestic end-users, for example, for use in heating private dwellings – see paragraph 5.6. name of customer
delivery address
quantity of oil/kerosene supplied, and
whatever information is already retained to identify that the customer is domestic.
Marina supplies, forecourt supplies and RDCO/distributor yard supplies.  
(i) Supplies of any quantity made directly into the tank of a boat. No additional records beyond those held for the purpose of conducting the business, but see (iv) below.

Note: delivery notes must comply with Regulation 13 of the Hydrocarbon Oil (Marking) Regulations 2002.
(ii) Other supplies not exceeding 100 litres. No additional records beyond those held for the purpose of conducting the business.

Note: delivery notes must comply with Regulation 13 of the Hydrocarbon Oil (Marking) Regulations 2002.
(iii) Supplies exceeding 100 litres. The following information is mandatory:

name of customer
customer’s address
terms of payment
quantity by type of oil supplied
customer’s stated use
customer’s VAT number if VAT registered – see paragraph 5.10.
controlled oil is collected rather than delivered directly into the tank of a boat; you should record the customer’s vehicle registration number.
(iv) Supplies to private pleasure craft See Notice 554: Fuel used in private pleasure craft and private pleasure-flying.
All other (bulk) supplies. name of customer
customer’s address
invoice address
customer’s phone number – see paragraph 5.10
customer’s VAT number if VAT registered – see paragraph 5.10
terms of payment
if appropriate, delivery address – see paragraph 5.10
if collected, customer’s vehicle registration number; or bunkering/fuel card details
quantity by type of oil supplied; and customer’s stated use.

There are some additional record keeping requirements in respect of supplies of Avtur. See Notice 179A paragraph 4.6 for further information on these.

Where we identify areas of non-compliance such as poor record keeping, we may impose conditions on your approval. These conditions may require you to retain and provide additional information to us. Such conditions, and the date they will be reviewed, will be notified to you in writing. This information will form the basis for completion of your returns - see section 6. You should make your records available to our officers on request.

5.6 Definition of ‘domestic supplies’

Supplies are for domestic use only if they are for use in a dwelling or certain types of residential accommodation (excluding hospitals, prisons or similar institutions, hotels or inns or similar establishments). Examples are:

(a) armed forces residential accommodation

(b) caravans

(c) children’s homes

(d) homes providing care for:

  • the elderly or disabled
  • people with a past or present dependence on alcohol or drugs, and
  • people with a past or present mental disorder

(e) houseboats

(f) houses, flats or other dwellings

(g) hospices

(h) institutions that are the sole or main residence of at least 90% of their residents

(i) monasteries, nunneries and similar religious communities

(j) school and university residential accommodation for students or pupils, and

(k) self catering holiday accommodation

The following are treated as part of the same residential unit:

  • buildings such as garages used with houses
  • subsidiary buildings situated a short distance away, such as a garage in a block located away from a house, and
  • corridors, lifts, hallways and stairways in a residential unit

5.7 Definition of ‘commercial ships and other marine vessels’

Commercial ships and other marine vessels include:

  • foreign-going commercial vessels
  • coasting vessels
  • UK fishing boats
  • foreign-owned fishing boats refuelling in the UK
  • ferries, lighters, pilot boats, tugs, tenders and other similar vessels
  • certain safety/rescue vessels
  • vessels undergoing trials
  • hovercraft
  • passenger vessels used for pleasure trips

Further information about supplies made to ships other than private pleasure craft can be found in Notice 263: Marine voyages: excise duty for mineral (hydrocarbon) oil. See also the Glossary.

5.8 Definition of ‘private pleasure craft’

Private pleasure craft is defined in Council Directive 2003/96/EC Article 14 1 (c) as ‘… any craft used by its owner or the natural or legal person who enjoys its use, either through hire or through any other means, for other than commercial purposes’.

For information about supplies to private pleasure craft see Notice 554: Fuel used in private pleasure craft and for private pleasure-flying.

5.9 Definition of a ‘road vehicle’

A road vehicle is defined in section 27(1) of the Hydrocarbon Oil Duties Act 1979 as ’a vehicle constructed or adapted for use on roads, but does not include any vehicle which is an excepted vehicle’. Section 27(1) defines an excepted vehicle as ‘an excepted vehicle within the meaning of Schedule 1 of the Hydrocarbon Oil Duties Act’. Schedule 1 contains the categories of excepted vehicles and how they qualify to use marked rebated gas oil (red diesel). A list of these categories can be found in section 8 of Notice 75: Fuel for road vehicles.

5.10 Information to be obtained from your customers

We recognise that some information will not be relevant to certain customers and, therefore, you will not be able to provide it. There may also be instances where your customer is unable to readily provide certain information.

Information Action taken
VAT registration number If your customer is not VAT registered, simply note the fact.

If you are dealing with a new customer who does not have their VAT number readily available, we will not require you to insist upon the customer producing it at that time. You should ask the customer to supply it as soon as possible.

For new customers, we expect you to hold this information by the time of the third delivery. But where deliveries are few and far between we would expect the information to be held earlier than this. Failure to capture this detail within a reasonable period may result in a penalty for failure to exercise your duty of care, particularly if you continue to supply.
Phone number If you do not hold a customer’s phone number as part of your normal business practice, we will not insist that you obtain it for our purposes. If a phone number is obtained and this is just a mobile phone number, this should be considered with other indicators under section 10 in deciding whether to make a supply.
Postcode of delivery If your customer does not have a postcode, for example, because the address is a building site, you should note your records accordingly.

If you are dealing with a new customer who does not have their postcode readily available, you do not have to insist upon the customer producing it at that time. You should ask the customer to supply it as soon as possible.

For new customers, we expect you to hold this information by the time of the third delivery. But where deliveries are few and far between we would expect the information to be held earlier than this. Failure to capture this detail within a reasonable period may result in a penalty for failure to exercise your duty of care, particularly if you continue to supply.

Special provisions apply to supplies to private pleasure craft; see Notice 554 Fuel used in private pleasure craft and for private pleasure-flying.

5.11 Incorrect or false VAT numbers

We will check the validity of VAT numbers. You will have no responsibility for ensuring that VAT numbers are correct. However, if it is incorrect or false we will need to contact you to obtain other details about the customer from your records.

5.12 Customers who refuse to supply information

As an RDCO, you have an obligation when selling or delivering controlled oil and must therefore take all reasonable precautions and exercise reasonable care to make sure that you only make supplies to customers who have a legitimate use for that oil. The RDCOs obligations are covered in more detail in paragraph 5.2.

The failure of customers to give requested information could be an indication that the customer intends to misuse the oil. Although it is your decision whether you make the supply, you should bear in mind that without this information you will not be able to comply with your obligations to us, nor will you be able to undertake checks to satisfy yourself that the customer will not misuse the oil. You may, therefore, leave yourself open to penalties. We have produced a leaflet for the benefit of end-users explaining that they will need to provide you with certain information in order to obtain controlled oils. A copy of this leaflet is reproduced at section 9.

5.13 Discharging your obligations

Merely recording this information does not discharge your obligations.

Although gathering the information will provide some of the material necessary upon which to make a judgement about the integrity of the supply, you will still need to make that judgement.

This means that under Regulation 8 (2) of the RDCO Regulations 2002 you must carry out the checks in paragraph 5.14 appropriate to your supply to satisfy yourself that the customer, and stated use of the oil, is legitimate.

5.14 Standard checks to be made on your customers

There are a number of checks that you probably already undertake in line with good commercial practice, such as credit checks and checks on whether the customer is a business or domestic user.

However, you must perform the following minimum checks in order to satisfy us that you have taken reasonable steps to make sure the legitimacy of the supply. You should read this in conjunction with paragraph 5.15, which gives identifiers of suspicious end use.

The standard checks

Nature of supply Standard checks Frequency
Supplies made in pre-packaged containers not exceeding 20 litres. None. Not applicable.
Supplies made directly to commercial ships and other marine vessels, excluding private pleasure craft. Delivery driver’s written confirmation on delivery note that fuel supplied direct to the vessel(s).

NB: this check does not apply where oil is delivered into a storage tank for later transfer to vessels. These supplies are to be treated in accordance with the instructions in ‘All other bulk supplies’ below.
Not applicable.
Supplies made to another approved RDCO. Interrogate our secure internet site to confirm customer details at Understanding and using HMRC’s Online Services or call our Helpline on Telephone: 0300 200 3700. You may also wish to record details of the call.

If supplies are picked up: mark the vehicle registration number on the copy load ticket.
If new customer, check before making supply.
If a confirmed RDCO and supplies continue, check quarterly to confirm approval has not been withdrawn.
Where the period between orders is over three months, treat as if a new customer.
Every time a delivery is made.
Every time delivery is made.
Supplies made to domestic end-users for supplies not exceeding 3,500 litres individually or 10,000 litres over a 12 month period. Report to manager if driver suspects property is not domestic. See paragraph 5.20 for further information about checks to be carried out by your staff. Every time delivery is made to a site that appears to be misdescribing itself as a domestic location.
Supplies to domestic end-users exceeding 3,500 litres individually or 10,000 litres over a 12 month rolling period. Report to manager if driver suspects property is not domestic. Every time a delivery is made to a site that appears to be misdescribing itself as a domestic location.
Marina supplies, of any quantity made directly into the tank of a boat. Check and provide written confirmation in records that the oil is delivered directly into the tank of a vessel. Every time delivery is made.
Forecourt, distributor yard or other supplies made via pump or similar dispenser not exceeding 100 litres. Make sure the customer does not put the oil directly into a road vehicle. Every time delivery/supply is made.
Forecourt, distributor yard or other supplies made via pump or similar dispenser exceeding 100 litres. Make sure the customer does not put the oil directly into a road vehicle.
Vehicle registration number.
For record keeping requirements, see below this box.
Every time delivery/supply is made.
Bulk supplies to local authorities and public bodies. No checks required. Not applicable.
All other supplies exceeding 100 litres. Check the oil is not put directly into a road vehicle. Notify us of any suspicions immediately.
See also record keeping requirements below this box.
Every time delivery is made.

Special provisions apply to supplies to private pleasure craft; see Notice 554 Fuel used in private pleasure craft and for private pleasure-flying.

The following rule has the force of law

For forecourt or distributor yard supplies made by pump or similar dispenser in excess of 100 litres, under Regulation 6 of the Revenue Traders (Accounts and Records) Regulations 1992, you must record the customer’s name, name of person entering the details (if different), contact details, transaction date, vehicle registration number, usage of the oil and date the last usage was checked. For all other supplies exceeding 100 litres you must record the customer name, contact details, transaction date and usage of the oil.

5.14.1 Unmanned sites

If you operate unmanned sites or a fuel card system from unmanned sites, you must be able to discharge your obligations as detailed in paragraph 5.2.

In the case of unmanned sites - the RDCO who is making the final supply of controlled oil and receiving payment from the end user, is responsible for undertaking or making arrangements to make sure that the required checks are carried out.

In the case of fuel card operated sites - the fuel card operator is responsible for issuing the fuel cards only to persons with a legitimate need and is responsible for undertaking or making arrangements to make sure the necessary checks are carried out.

These checks include but are not restricted to the standard checks at paragraph 5.14, you must satisfy yourself that the customer and stated use of oil is legitimate.

If you are unable to discharge your obligations to our satisfaction, we may apply conditions to your approval, or revoke your approval but only where our guidance and sanctions have failed to resolve the situation. We will advise you of our decision and notify you in writing.

5.15 Indicators to identify suspicious end use

The following rule has the force of law

There are circumstances, especially in combination, which could give rise to suspicion that a customer for rebated fuel may be misusing the product. These circumstances, which have been identified by the industry, are detailed below. If any of these indicators are present at the point of ordering or delivery, you should report the facts to HMRC in accordance with Regulation 9 (2) of the RDCO Regulations 2002 – see paragraph 5.22.

Checklist of suspicious supplies

The following indicators of suspicious supplies have been identified by the Federation of Petroleum Suppliers and endorsed by the United Kingdom Petroleum Industry Association, the Downstream Fuel Association and the United Kingdom Oil Industry Taxation Committee.

If you are an RDCO, to meet your obligations under the scheme you should make your staff aware of these indicators before they take orders or make deliveries.

Concerns at the point of ordering

  • mobile phone number given as the only point for contact
  • new customer with an apparent lack of concern with product price
  • full payment offered in advance of delivery as an incentive to supply
  • payment to be made in cash, by bankers draft, by fuel card or with a cheque from someone else
  • request for an unusually large volume of rebated fuel to a domestic address or other non-industrial site
  • request for gas oil and kerosene to be delivered into the same tank. Customer cannot confirm that this will not be used to power an off-road (or on-road) engine
  • sudden large increase in volumes purchased by an established customer or increased frequency of repeat orders
  • delivery required into a road tanker, or other temporary storage, or to a number of seemingly unconnected delivery points
  • large quantities of rebated fuel ordered by a transport company, and
  • aggressive/evasive responses to requests for details

Suspicions should be passed on to delivery staff, via management, for possible corroboration during delivery (but only with caution).

Concerns at the point of delivery

(a) chemical and/or filtration plant evident, possibly with traces of solid or liquid residues noticeable at, or around, the site

(b) inappropriate product for the apparent site requirements, such as, but not restricted to:

(i) controlled oils -

  • gas oil to domestic premises without an appropriate heating system
  • kerosene to a haulage company or garage apparently not requiring it for heating purposes

(ii) other -

  • fuel oil to a farm without glasshouses, animal sheds, etc., and
  • a large volume of hydraulic oil to a site without much plant in evidence

(c) site occupied by the operator of a fleet of diesel-powered road vehicles, such as taxis, coaches, etc, or subject to frequent visits by such vehicles

(d) delivery site is a plant or scrap yard, possibly with adjacent ‘empty’ premises

(e) delivery required into a tank not normally used or into a mobile/temporary tank, including a static road tanker, an unmarked tanker or a tanker with poor quality or out-of date livery

(f) nervous or unusual behaviour by persons on site, possibly with excessive site security for the type of business

(g) location known to several drivers (especially those of other companies) or other indications of frequent/multiple deliveries

(h) delivery of rebated and non-rebated fuels required into adjacent and/or interconnected tanks

(i) yard sale into one or more large drums or Intermediate Bulk Containers (IBCs), and

(j) delivery required into a tank with a draw-off point at the bottom.

Suspicions, or confirmed suspicions, must be reported back to management for action; under no circumstances should they be made apparent to the customer.

5.16 What do I do if I have suspicions about a customer?

The standard checks necessary to discharge your obligations in the supply of controlled oil are set out in paragraph 5.14 of this notice. However, despite the precaution of standard checks being followed, there will be some occasions where circumstances arise (especially in combination) which could give rise to suspicion that a customer may be misusing the product. These circumstances, which have been identified by the industry, are detailed in paragraph 5.15 above.

If you have any suspicions about a customer to whom you have supplied oil you should notify us as soon as possible. You can do this by:

  • phoning our dedicated 24 hour Customs Hotline on Telephone: 0800 59 5000
  • faxing the information using the form below to the Customs Hotline on Telephone: 0800 528 0506
  • sending the information to:

    Customs Hotline
    Freepost
    SEA 939
    PO Box 100
    Gravesend
    Kent
    DA12 2BR
  • emailing: customs.hotline@hmrc.gsi.gov.uk
  • filling in an online information report form

Fax Reporting form (PDF 11K)

5.17 Recording checks

If any of the indicators in paragraph 5.15 are identified after making a supply, report the facts to HMRC (see paragraphs 5.16 and 5.22) and make records of the suspicious circumstances and the action you have taken.

The following rule has the force of law

Under Regulation 6 of the Revenue Traders (Accounts and Records) Regulations 1992, you must record details of all your checks in order to satisfy us that you have carried them out.

Based on the checks you have made and the existence of any indicators as detailed in paragraph 5.15, you should notify HMRC of the information that you have gathered and the reason for your decision if you decide not to supply.

5.18 Customers not entitled to receive controlled oil or using it for an improper purpose

The following rule has the force of law

If you have either a suspicion based on the standard checks (see paragraph 5.14) or you have evidence that the customer is making improper use of the controlled oil by using it as road fuel, you have a duty as an RDCO to notify us immediately under Regulation 9 (2) of the RDCO Regulations 2002.

You are advised not to supply a customer if you suspect that he does not have a legitimate use for the oil, under conditions imposed under Regulation 8 (2) of the RDCO Regulations 2002.

5.19 Cause for concern after supply

When considering whether you have contravened the RDCO Regulations 2002 or failed to comply with conditions, restrictions or requirements (including any obligations imposed on you in paragraph 5.2 above), HMRC will take into account the extent to which you have followed the guidance set out in paragraph 5.14.

Provided that this is not a regular occurrence and you:

  • notify us immediately
  • obtained the information set out in paragraph 5.5
  • undertook the checks set out in paragraph 5.14, and
  • made the supply in good faith

you will not be liable for any penalties, or other sanctions. We may, however, ask you to review your procedures.

5.20 What should I do if I am concerned that the controlled oil I have supplied will be misused?

The following rule has the force of law

If you have either a suspicion based on the standard checks (see paragraph 5.14) or you have evidence that the customer is making improper use of the controlled oil by using it as road fuel, you have a duty as an RDCO to notify us immediately under Regulation 9 (2) of the RDCO Regulations 2002.

You should cease to make any further supplies to that customer until you have carried out the additional checks and have sufficient information to show that your cause for concern was groundless.

5.21 Checks carried out by your staff

You are responsible for your staff and you will need to make sure that they are aware of the checks that they should be carrying out before making the supply. As an added precaution you should consider introducing your own management checks to make sure that your staff are making these checks and are exercising proper judgement in making the supply.

Similarly, in cases where employees are found to have been in collusion with a fraudulent customer, you are ultimately responsible for your employees. However, providing you notify us immediately you become aware of the situation we will take due regard of the action that you take against the employee, which may include dismissing the employee, reporting the matter to the police, etc.

5.22 Notifying HMRC

The following rule has the force of law

Under Regulation 9 (2) of the RDCO Regulations 2002 you should notify us immediately of the customer’s name, address, VAT number and postcode and of the quantity and type of oil ordered when making the decision not to supply, or receiving information after supply, which casts doubt on the customer’s legitimacy.

Please see paragraph 5.16 for ways of notifying us of this information.

For urgent notification phone the Customs Hotline on Telephone: 0800 59 5000.

We will confirm receipt of the information and provide you with a unique reference number, which you should note in your records.

5.23 Decisions on liability

It is not the intention of the scheme to penalise you for genuine mistakes. In considering whether any action against you is appropriate we will take into account your overall compliance with the scheme, the nature of the failing which led to you making the supply and any other mitigating circumstances.

Where your failings resulted from non-compliance with the scheme, for example, failure to obtain any of the information at paragraph 5.5 and/or failure to undertake any of the checks set out in paragraph 5.14, we will investigate the cause to establish any reasonable excuse. If, however, there are no mitigating circumstances or your failings persist it is likely that we will take escalating action such as the issue of warning letters followed by civil penalties. In the most serious cases we may also consider revocation of your RDCO authorisation.

Paragraph 8 sets out the penalties, sanctions and guarantees.

We may, in exceptional cases, take legal proceedings against you. For example, if you were knowingly involved in the supply and misuse of controlled oil we will take action against you. Such action is necessarily dependent on us having obtained sufficient evidence against you to support a prosecution.

5.25 Customer violence

Although it is a matter for your judgement whether or not to supply, we would not want you to put yourself or your staff at risk. Therefore, if you do decide to supply to a customer who has threatened violence we will not hold you liable providing you notify us immediately.

Phone the Customs Hotline on Telephone: 0800 59 5000.

5.26 Supplying a suspicious or fraudulent customer

The (exceptional) circumstances under which we may ask you to make a supply to a suspicious or fraudulent customer to assist HMRC in enforcement action are governed by strict rules. We will not routinely ask you to continue making such supplies, nor should you act upon any request from our staff to do so unless you are in possession of a written agreement.

6. Returns

6.1 Do I need to submit returns?

Yes. However, you do not need to make returns detailing:

  • supplies in pre-packaged containers of not more than 20 litres
  • supplies that you have made directly to ships unless you supply rebated gas oil (red diesel) to private pleasure craft in which case special provisions apply - see Notice 554: Fuel used in private pleasure craft and for private pleasure-flying, or
  • supplies of Avtur

If you have stated in your application form that you only supply in any of these ways we will not send you return forms. Returns are required for all other supplies, including nil returns where appropriate.

6.2 Return periods and submission dates

The return period will be a calendar month or, if you have received approval, 12 months. In each case the return must be submitted by the 21st day of the following month.

6.2.1 How do I qualify to submit annual returns?

Once you have been registered as an RDCO for 12 months (having submitted twelve consecutive returns) and your total throughput of controlled oils has remained at less than 10,000 litres, then you may wish to apply for approval to submit returns annually rather than monthly.

You must make an application for approval using form HO4 Supplement which is available either from our website at www.hmrc.gov.uk or from our Helpline on Telephone: 0300200 3700. If you wish to start your annual return in a specific month then you should make sure that your application is with us by the 15th day of the previous month. For example, if you want your annual return to start in March, then your application needs to be with us by 15 February in order for us to process it in time.

6.3 What information must I supply?

You will need to supply certain information about your supplies, the level of which will depend upon their nature, as follows:

(a) domestic supplies - for supplies not exceeding 3,500 litres individually or 10,000 litres in a year, we will require an aggregated entry as follows:

  Total quantity supplied in the period (litres) Number of customers supplied
Gas oil    
Kerosene    

Supplies exceeding 3,500 litres individually or 10,000 litres in a year should be reported at item (d).

(b) supplies made via pump or similar dispenser (includes forecourts, marinas, yard sales, fuel card supplies, etc.) - an aggregated entry:

  Total quantity supplied in the period (litres) Number of individual supplies made
Gas oil    
Kerosene    

(c) supplies to other RDCOs - a one line aggregated entry per customer:

RDCO No Total quantity supplied in the period (litres)
Gas oil Kerosene

(d) bulk commercial supplies and domestic supplies exceeding the de minima – an aggregated total for each customer but, different delivery addresses, per delivery address:

6.3 Table (PDF 10K)

6.3.1 Annual returns

If you have been approved to submit annual returns, then you will have to supply cumulative figures for the full twelve month period covered by your return.

You will need to supply certain information about your supplies, the level of which will depend upon their nature, as follows:

(a) domestic supplies - for supplies not exceeding 3,500 litres individually or 10,000 litres in a year, we will require an aggregated entry as follows:

  Total quantity supplied in the period (litres) Number of customers supplied
Gas oil    
Kerosene    

Supplies exceeding 3,500 litres individually or 10,000 litres in a year should be reported at item (d).

(b) supplies made via pump or similar dispenser (including forecourts, marinas, yard sales, fuel card supplies, etc.) - an aggregated entry:

  Total quantity supplied in the period (litres) Number of individual supplies made
Gas Oil    
Kerosene    

(c) supplies to other RDCOs - a one line aggregated entry per customer:

RDCO No Total quantity supplied in the period (litres)
Gas oil Kerosene

(d) bulk commercial supplies and domestic supplies exceeding the de minima - an aggregated total for each customer or, where same customer but different delivery addresses, per delivery address:

6.3.1 Table (PDF 10K)

6.4 How do I make the returns?

6.4.1 Information returns

You may make information returns either manually or electronically. If you submit the return electronically, we will still send you a manual return which will serve as a reminder that the return is due.

6.4.2 Payment returns

If you supply controlled oil to private pleasure craft, payment returns should be submitted manually. We will send you a return in good time for you to file it by your accounting date.

6.5 What happens if I fail to render my returns on time?

There are civil penalties for failure to render returns on time and also for making false or incorrect declarations. If your return has not been received by the due date, we will remind you by letter. We may allow further time for submission of the return if we are satisfied there is a good reason for the delay. Persistent lateness or non-submission of returns may, however, result in the withdrawal of your RDCO approval.

We recommend that you obtain and retain proof of postage when submitting your return.

The above sanctions are subject to the appeal provisions contained in the Finance Act 1994. If we impose any of these sanctions we will offer you a review and tell you about your right of appeal.

If you disagree with the decision, you may either accept the review offer or appeal to the independent tribunal. If you accept the review offer, but do not agree with the review conclusion you will still be able to appeal to the independent tribunal. More information on HMRC’s review and appeal procedures are available on our website at Complaints and Appeals (Indirect taxes).

You should also read Notice 209 Civil Penalties - fixed, geared and daily, and section 8 of this notice which provides details on the sanctions we may impose.

6.6 Problems sending returns electronically

If you attempt to send your return electronically but our systems are down you will not be in breach of the 21 day time limit for submitting the return. We will notify you when the system comes back on line so that you can submit the return.

7. Revenue accounts and records

7.1 General

RDCOs must keep revenue records and accounts of controlled oil that they have received and supplied. Notice 206 Revenue Traders’ Records contains the law and records that you must keep.

7.2 What units of quantity must I use?

You should declare the quantities in ordinary (ambient) litres to the whole number.

7.3 What records must I keep?

You will need to keep the information referred to in section 5, in particular the details of the customers you have supplied (paragraph 5.5) and the checks that you have carried out (paragraph 5.14).

7.4 How long must I keep my records?

You must normally keep your relevant business records for 6 years. If, however, this causes problems please contact our Helpline on Telephone: 0300 200 3700. You must get our agreement before destroying any of your relevant business records that are less than 6 years old.

8. What action will be taken if I fail to meet any of my obligations as an RDCO?

8.1 General

Our priority is that you understand your obligations and are able to comply with them and wherever appropriate we will assist you to do so. However, we will take all circumstances into account in determining the appropriate response to non-compliance and have the power to take action against you as explained in paragraph 8.3, 8.4 and 8.5. The actions described have the force of law. The sanctions and penalties in paragraphs 8.3, 8.4, and 8.5, will normally be applied in an escalating scale of action against you, depending on the nature of the contravention. In the majority of cases we would expect that the lesser sanctions will have the effect of improving compliance, and that withdrawal of approval would be the exception rather than the rule. The scale of action we will take is as follows:

Stage Action
1. Warning letters.
2. Civil penalties (if appropriate).
3. Withdrawal of approval.

All of these stages will be well documented and you will be given written notification at each stage. If you feel that you have a ‘reasonable excuse’ for any particular failing you should make your case in writing and we will take it into account in deciding whether the sanction should be maintained.

See paragraph 6.5 on submission of HO5 returns and the sanctions applicable.

8.2 Advice and guidance

For minor irregularities, we usually offer advice to help you get things right before we consider taking any further action over a failure to comply with our requirements.

8.3 Warning letters

These will be issued where our guidance has failed to resolve non-compliance. If warning letters have also failed to resolve the non-compliance, we may proceed to civil penalties and, ultimately, withdrawal of approval.

8.4 Civil penalties

The penalties available to us are civil penalties of £250 for each contravention including, where appropriate, daily penalties of £20. Daily penalties will be applied from the 46th day after the original penalty was imposed if it remains unpaid.

Situations where such penalties may be imposed include failure to:

  • render returns by the due date, and
  • make complete and accurate returns

We recommend that you obtain and retain proof of postage when submitting your return.

There is also a penalty for wrongdoing - such as knowingly supplying rebated fuel for road use, or putting controlled oil into a road vehicle.

This can be up to 100% of the duty due.

8.5 Withdrawal of approval

This situation is likely to arise where we are not satisfied, or are no longer satisfied, that you are a suitable person to be approved - see paragraph 4.3. Any decision to revoke an approval will not be taken lightly and will be fully supported by written evidence. In such cases, we will set out our reasons for refusing or revoking your approval in a letter.

8.6 Financial guarantees

We have the power to require financial security for amounts that may become due from the RDCO (by way of repayment of rebate). However, it will not be a routine requirement and will only be imposed in exceptional cases, as an additional condition, that is, where we have justified concerns about the conduct of the RDCO to the extent that we consider the revenue to be at risk.

8.7 Appeals

The above sanctions are subject to the appeal provisions contained in the Finance Act 1994. If we impose any of these sanctions we will offer you a review and tell you about your right of appeal.

If you disagree with the decision, you may either accept the review offer or appeal to the independent tribunal. If you accept the review offer, but do not agree with the review conclusion you will still be able to appeal to the independent tribunal. More information on HMRC’s review and appeal procedures are available on our website Complaints and Appeals

8.8 Assessments to the repayment of rebate

We have the power to issue a revenue assessment to any person who:

  • uses controlled oil in a road vehicle
  • is the person liable for the oil being taken into a road vehicle

Providing you, as a distributor, are not involved in the fraudulent misuse of the controlled oil, you will not be liable for the duty involved. Consequently, we would not seek recovery of duty from you. This applies even where you may have failed to carry out any checks, although in cases of such negligence you may render yourself liable to other sanctions such as a civil penalty or ultimately withdrawal of approval. This will be established by reference to your compliance with section 5.

8.9 Criminal proceedings

If you are involved in fraudulent activity in contravention of any of the relevant legislation, we will seek to prosecute. The extent of the evidence available will determine such action. Such proceedings may also seek to recover from you repayment of rebate. There are severe penalties for fraud including unlimited fines and up to seven years’ imprisonment.

9. Leaflet for customers

Copies of the leaflet referred to at paragraph 5.12 - Are you buying red diesel or rebated kerosene/paraffin for your own use? - can be obtained from our Helpline on Telephone: 0300 200 3700 or printed from our website at www.hmrc.gov.uk.

Buying red diesel or rebated kerosene/paraffin for your own use?

10 Glossary

Approval: HMRC need to examine your application to become an RDCO, to check that you are a fit and proper person. Occasionally, if we consider that there is a risk to the revenue, we may still grant approval, but with conditions.

Avtur: also known as aviation turbine fuel, aviation kerosene, Jet A1, ATK. Not to be confused with aviation gasoline (Avgas) which is a light oil and has a separate rate of excise duty.

Bulk supplies: supplies delivered other than in portable containers, an example being a tanker-load.

Dry broker: A distributor who does not take physical possession of the oil.

Duty deferment: allows an oil company to defer any excise duty liable on product removed from duty suspension during an accounting period, until the last business day of the following month.

Excise duty: United Kingdom revenue duty chargeable on both imported and home produced motor and heating fuels. It is charged at a specific rate on the quantity and description of oil delivered to home use.

Gas oil: also known as marked gas oil or red diesel. Heavy oil of which not more than 50% by volume distils at a temperature not exceeding 240ºC and of which more than 50% by volume distils at a temperature not exceeding 340ºC.

Helpline: This is the HMRC contact centre for excise and customs duty queries, not for reporting excise fraud. The number is Telephone: 0300 200 3700. If you have hearing difficulties, please phone the Textphone service on Telephone: 0845 000 0200. They can be contacted Monday to Friday, 8am to 6pm.

Hotline: our dedicated 24 hour Customs Hotline on Telephone: 0800 59 5000 is for reporting suspected fraud.

Kerosene: a heavy oil of which more than 50% by volume distils at a temperature not exceeding 240ºC. Commonly known as burning oil or paraffin. Not to be used as road fuel.

Marked / rebated / controlled oil: rebated or partially rebated oil that has been marked according to the Hydrocarbon Oil Marking Regulations 2002. Avtur is subject to a marking waiver if used as fuel for aircraft.

MORC: the Mineral Oil Reliefs Centre in Newcastle. This notifies RDCOs of their approval and RDCO number, and is also the address to which RDCOs (except for Avtur dealers) send their completed returns.

Obligations: previously known as an RDCO’s duty of care, the obligations are the things that all RDCOs must do to satisfy HMRC that they are fully complying with the law as it applies to RDCOs.

Registered Dealer in Controlled Oil: a person approved by HMRC to buy, sell or deal in controlled oil under the conditions as set out in the Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations 2002 and in the relevant notices (especially Notices 192 and this Notice 179A).

Registered Remote Marker (RRM): these are officially authorised to mark controlled oil on behalf of the owner of that oil. They and their premises are subject to strict controls.

Return: A return (Form HO5) is required from all those who deal in controlled oils, except those who only deal in Avtur.

Revenue trader: A person carrying on a trade or business subject to any of the revenue trade provisions of Customs and Excise (now HMRC) Acts, including importing, exporting, producing, handling, processing, packaging, transporting or dealing in goods chargeable with excise duty.

Ship or vessel: ship and vessel includes any type of boat or vessel.

Warehouse: an excise warehouse is a place of security approved by the Commissioners under the Customs and Excise Management Act 1979, Section 92. A duty-suspended (or bonded) warehouse is a place that has been approved for the storage of oil without payment of duty before delivery to home use. These are normally attached to the producer’s premises, or are import warehouses.

Your rights and obligations

Your Charter explains what you can expect from us and what we expect from you. For more information, go to Your Charter.

Do you have any comments or suggestions?

If you have any comments or suggestions to make about this notice, please write to:

HM Revenue and Customs
Excise Oils Policy
3rd Floor West
Ralli Quays 3 Stanley Street
Salford
M60 9LA

Please note this address is not for general enquiries.

For your general enquiries please phone our Helpline on Telephone: 0300 200 3700.

Putting things right

If you are unhappy with our service, please contact the person or office you have been dealing with. They will try to put things right. If you are still unhappy, they will tell you how to complain.

If you want to know more about making a complaint go to www.hmrc.gov.uk and under quick links, select Complaints and Appeals.

How we use your information

HMRC is a Data Controller under the Data Protection Act 1998. We hold information for the purposes specified in our notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them.

We may get information about you from others, or we may give information to them. If we do, it will only be as the law permits to:

  • check the accuracy of information
  • prevent or detect crime
  • protect public funds

We may check information we receive about you with what is already in our records. This can include information provided by you, as well as by others, such as other government departments or agencies and overseas tax and customs authorities. We will not give information to anyone outside HMRC unless the law permits us to do so.

For more information go to www.hmrc.gov.uk and look for Data Protection Act within the Search facility.

Appendix A - Frequently asked questions about the RDCO scheme

1. Do plant-hire firms who supply controlled oil in the tanks of their hire vehicles need to be approved?

Please read in conjunction with Appendix B.

This will depend on how the fuel is supplied by the hire firm.

If fuel is supplied in the vehicle or machinery as part of the hire contract, this fuel is considered to have been put to a legitimate use by the hire firm. In this case, the supply is of the machinery, not the fuel. The invoice or hire contract should confirm that the vehicle or machinery is supplied with fuel for its use. However the important point is how the fuel is supplied as opposed to the way the way the fuel is invoiced.

If the hire firm offers a service of supplying fuel separately ie not within the machinery, whether or not with a hired vehicle or machinery, the firm will need to obtain approval. This includes subsequent supplies of fuel in addition to fuel supplied in the vehicle or machinery, or supplies that exceed the capacity of the vehicle or machinery’s fuel tank. In these cases, the supply is of the fuel, and the hire firm is not the end-user of the oil.

However, if the hire includes the services of a driver or operator of the vehicle or machinery who will be in attendance for the duration of its use, the hire firm will not need to obtain approval. This is because the hire firm is the ‘end-user’ and the supply to the customer is a service, not a supply of oil. Any surplus fuel not used in the operation of the vehicle or machinery must not be supplied to the customer or any other persons, even if they have a legitimate use for rebated fuel.

2. If the person hiring the plant returns it to the plant-hire company with a full tank of oil sourced from their own stocks, will he need to be approved?

No. The final fill of the tank in hire vehicles or machinery for return to the hire company is considered to be part of their use of the oil and not a supply.

3. How does the plant-hire company deal with oil returned in the tanks of hired-out plant?

We would not expect the plant-hire company to account for the receipt of the oil in their records. When the plant is hired out again, even if to the same person, they would account for the oil supplied in the vehicle or machinery on the invoice.

4. Do farmers who allow contractors working on their land to fill up their vehicles from the farmer’s own stocks have to be approved?

No. If the farmer is purchasing the oil for his own use and occasionally allows contractors to fill up their vehicles whilst working on his land he does not need to be approved, but he should only allow the fuel to be put into vehicles that are eligible to use it. Please see Appendix C for further guidance.

5. Do farmers who occasionally hire out their tractors to other farmers including a tank of controlled oil have to be approved?

No. If the oil in the tank was supplied to the farmer for his own use then the onward supply of that oil in the tank of a tractor when it is occasionally hired or loaned out can be disregarded as an onward supply for the purposes of the RDCO scheme. The farmer should ensure that the tractor will be used only for purposes for which rebated fuel may be used.

However, this does not apply if the farmer is actually running a tractor hire business, in which case the requirement to be approved would follow the same rules as those for plant-hire companies.

6. Do individual petrol stations who supply controlled oil via a dispensing pump have to be separately approved?

If they are owned by the same legal entity, then the approval will cover all their sites. It is important that all the sites are listed in the application form.

If they are separately owned by individuals for example Mr [X] trading as [X] Service Station, they will require an individual approval.

7. Does the scheme apply to Registered Remote Markers (RRMs) and their premises?

The scheme only applies to RRMs who mark their own oil and supply on to others. If they mark on behalf of the owner of the oil they do not need to be approved as all they are providing is a service. The owner of the oil will be the person who needs to obtain approval. In his application he will need to include the marking premises as a site at which oil is stored.

8. Do buying groups/machinery rings who arrange a supply of oil on behalf of their members need to be approved?

No, providing they fulfil the conditions set out in paragraph 2.2. They have an obligation to make checks on their customers before making a supply and it is for their protection that they should know who their customer is. We suggest that buying groups discuss with their suppliers the nature of the transactions to make sure that both parties are in agreement on who the end-user is. (Please see Appendix D for further information).

9. I am an agent arranging a supply of controlled oil from another RDCO who delivers directly to commercial ships. How is this treated on the return form?

The RDCO supplying the oil accounts for the transaction as a supply to another RDCO. The receiving RDCO (ie agent) does not need to include these transactions on his return, see paragraph 6.1.

10. I make supplies to domestic premises but store controlled oil in a central storage tank situated near to the premises I supply. Do I have to include these tanks in my list of premises?

Yes. We need to know of any sites where controlled oil is stored.

11. Do I have to be approved if my supplies of controlled oil are below a certain level in a 12 month period?

Yes. The only de minimis level for approval is for suppliers who buy and sell controlled oil in pre-packaged containers not exceeding 20 litres.

12. I am already approved to deal in Tied Oils. Does this approval cover me for controlled oils as well?

No. The RDCO scheme is separate from the Tied Oils scheme and, as such, you will have to obtain a separate approval number. This is because these schemes are dealing with two different types of oil: marked rebated gas oil and kerosene (including Avtur) under the RDCO scheme and duty relieved oils used in industrial processes under the Tied Oils scheme.

13. How do I treat supplies made via a fuel card?

These are supplies where the fuel card allows the purchaser access to a pump on sites owned by the oil company. The supply is then logged similar to a credit card sale.

There are 2 possible scenarios:

a) The oil company owns the card and supplies the oil. The card company merely handles the administration: The oil company records these sales as an aggregated total (providing they are all made by pump) in Box 2 of the return.

b) If the oil is supplied to the card company who then supply the end-user, the card company will have to be approved and report these supplies to us as at a) above.

In both cases, the card company records/print-outs showing individual supplies are sufficient records for the purposes of the scheme.

See paragraph 5.15.1 regarding arrangements for and unmanned sites.

14. Do main contractors who supply controlled oil to their sub-contractors for use on the main contractor’s site have to be approved?

We would view the supply between the main contractor and sub-contractor as part of the main contractor’s use of the oil providing it remains on the site where it was originally delivered. If it is subsequently delivered ‘off site’ then we will regard the main contractor as being a distributor and he will, therefore, have to seek approval as a RDCO and declare these supplies accordingly.

15. How do I treat supplies of controlled oil to train companies?

If the oil is delivered directly into the tanks of the train, this is a pump supply and would be included in Box 2 of the return. Other bulk supplies would be included in Box 4.

16. How do I treat supplies of controlled oil from a tank on a barge?

This is no different to a forecourt supply and should be included in Box 2 of the return.

17. Supplies of oil below 2300 litres are treated as domestic supplies for VAT purposes even if they are for commercial use. Is this the same for the RDCO scheme?

No. Under the RDCO scheme you will have to split all supplies between domestic and commercial irrespective of the quantity delivered.

18. How are hardware stores selling small quantities of paraffin affected by the scheme?

Owners of hardware stores may have to be approved as RDCOs depending on the nature of their supplies:

They are excluded from the scheme if they only buy and sell controlled oil in pre-packaged containers not exceeding 20 litres.

If they buy controlled oil in bulk and decant it into pre-packaged containers not exceeding 20 litres prior to sale, providing they only supply in this way they will have to be approved but do not need to make returns.

If they fill up a container with controlled oil at their customer’s request, this is treated as a pump supply and should be recorded in Box 2 of the HO5 return.

If they decant the contents of sealed containers into a customer’s storage tank, this is treated as a bulk delivery and should be recorded in Box 4 of the HO5 return.

19. Do hauliers contracted to transport controlled oil from an RDCO to their customers have to be approved?

No, providing they are contracted only to transport the fuel which is invoiced from the RDCO to the customer. If the contract is with the supplying RDCO, it is the responsibility of the supplier to ensure that the controlled oil is delivered to another RDCO or a legitimate user.

20. Do air ambulance operators have to be approved to supply fuel to other air ambulance operators?

Yes. If fuel purchased for the company’s own use may be occasionally supplied to other air ambulance services, the supplying operator has to be approved as a dealer in controlled oil.

If any supplies would be limited only to other air ambulance services on an ad hoc basis, this should be explained in a covering letter with your application for approval on form H04. In these circumstances, you do not need to submit a business plan.

However, if the supply of fuel will be offered as an additional commercial activity of the business, or will include supplies to other aircraft or helicopter operators, the supplying operator will have to follow fully the process in paragraph 4.1 to obtain approval as an RDCO before making these supplies.

Appendix B - Plant-hire businesses

1. Plant-hire businesses

This information note sets out the position of plant-hire businesses in relation to the RDCO scheme, as agreed with the Construction Plant-hire Association, the Hire Association Europe, the Construction Confederation and the Forklift Truck Association.

2. Background

The RDCO scheme requires that with the exception of those businesses receiving and selling controlled oil in closed pre-packaged containers not exceeding 20 litres, and certain sales made by end-users, anyone dealing in controlled oil must be approved and registered to do so by HMRC. These rules apply equally to secondary distributors, which may include those whose main business activity is not necessarily that of oil distribution, such as plant-hirers. The RDCO scheme came into operation on 1 April 2003. Approval and registration for the scheme does not apply to end-users of controlled oil.

3. Do I need to apply for approval?

Hire or sale of plant containing controlled oil necessary for its operation – if you only ever hire out or sell plant containing an amount of controlled oil to be consumed as part of the hire or sale agreement, you will not need to apply for approval to be an RDCO. This is because, as owner of the plant, you are considered to be the end-user of the oil. The supply you are making to your customer is a service, not the supply of oil. This includes subsequent supplies of fuel made by you directly into the vehicle or machinery for its continued use. When you order oil from your supplier you should make clear that you are the end-user. The supplier will ask you for certain information such as your name, address, VAT number and your intended use of the oil. For “use of oil”, you should identify the relevant use from the following:

  • other commercial use – for example fork lift trucks, and other plant
  • agricultural use (i.e. tractors etc.) including forestry
  • transport (railways, maritime including naval establishments, docks, ports and ferry terminals, and inland waterways)
  • local authority including council depots
  • auxiliary engines (refrigerated transport, cleansing lorries, fairground showmen’s generators etc.)

If the hire firm supplies fuel separately i.e. not within the machinery, whether or not at the same time as a hired vehicle or machinery, the firm will need to obtain approval. In these cases, the supply is of the oil, and the hire firm is not considered to be the end-user of the oil. The exception to this is where the hire includes the services of a driver or operator of the equipment, who will be present for the duration of the hire. In this case, the hire firm will not need to obtain approval to supply oil that will be used in the vehicle or machinery, even where the fuel is supplied separately, providing the fuel will be put to use only by the hire firm’s operator. This is because the hire firm remains the ‘end-user’ and the supply to the customer is part of a service, not a supply of oil.

In the above circumstances, any surplus fuel not used in the operation of the equipment must not be supplied to the customer or any other persons, even if they have a legitimate use for rebated fuel.

4. Supplying oil

There are several ways in which you may supply oil. The table below shows the approval requirements for each:

Type of supply RDCO approval needed Conditions
1. Plant supplied with an operator for duration of the hire No Fuel may be provided in the plant and additional supplies may also be made for it’s continued use by the operator.
Surplus fuel must not be supplied to any persons.
2. Plant supplied without an operator, with sufficient fuel in tank for it’s operation. No Invoice/hire contract should show that the machinery has been supplied with fuel, whether or not the price of the fuel is included in the hire charge.
3. Oil supplied to fill/top up the plant’s running tank during the hire No The fuel must be directly supplied into the plant by the hire firm.
4. Oil supplied to your customer in an ancillary tank attached to the plant. No If you supply oil to an ancillary tank, ie, to fuel a generator, we will regard it as being the same as supplying oil in the main tank. The approval, reporting and checking requirements will be the same as those for supplies in the running tank of the plant.
5. Oil supplied in addition to fuel supplied in the plant’s running tank, but not supplied directly into plant. Yes This is considered to be a supply of the oil, not of the plant.
This includes an additional supply where plant is supplied with a full tank of fuel and any supply where the fuel is collected by the hirer.
6. Other supplies of controlled oil (outside of a plant hire agreement.) Yes This is a supply of controlled oil.

If your company hires in plant from another hire company for use by one of your customers, the rules relating to the supply of fuel equally apply ie. if the plant will be supplied with fuel contained in the running tank.

5. Requirements

5.1 For supplies of oil made

a) with a piece of plant including a full time operator, or
b) directly in the running tank of the plant

the minimum requirements are as follows:

Records to be kept - we do not require you to keep any additional records beyond those that you currently keep for the purpose of running your business. As a user of controlled oil, we may ask you to account for the use of volumes you have purchased from an RDCO.

Checks to be carried out on your customers - we do not require you to undertake any checks, although if you do have suspicions that your customer may be decanting and misusing or onward-supplying the oil we would expect you to inform HMRC.

Oil contained in the running tank when the plant is returned – we do not require you to carry out any accounting arrangements or to record the return of any oil contained in running tanks. Oil returned to you in running tanks will simply become your oil in the same way as if you obtained it from a RDCO. When you next hire out the plant, and even though it may contain oil that was “supplied” by the person to whom you previously hired it, you should still treat the oil as an onward supply by yourself and declare it in exactly the same way as set out above without the need to make any allowance for the returned oil.

5.2 For supplies of oil made

a) in addition to the oil contained within the running tank of the plant or
b) outside of a plant hire agreement

These supplies should be included in box 2 of the RDCO return. These are aggregated totals of quantities supplied and the number of supplies made in the month. Unless these supplies are either by pump or to another RDCO, then they are bulk supplies and, as such, you will need to comply with the rules set down in section 5, and 6.3 of this notice.

If your system has already been set up to complete boxes 3 and 4, you may do so providing you are consistent when completing subsequent returns. Nevertheless, you may wish to consider changing your system so that you are only providing the minimum information required.

If your customer is picking up oil from your depot – just the oil without the plant, then you must treat this as above, i.e. as a supply outside of the plant-hire contract/agreement

Appendix C - RDCO Information Note - Farmers

1. Farmers

This information note sets out the position of farmers in relation to the RDCO scheme as agreed with the National Farmers Union.

2. Background

The RDCO scheme, which was introduced on 1 April 2003, requires anyone supplying or dealing in marked rebated gas oil (red diesel) and kerosene (paraffin) to be approved by HMRC. However, the scheme does not apply to those who obtain these oils for their own use but occasionally supply on quantities to others outside of their primary business activities. Exclusion of these transactions from the scheme is specifically provided for in the legislation. However, to assist farmers to determine whether such transactions are indeed of an occasional, non-primary business nature and, therefore, outside the scheme, we have come up with the following guidelines.

3. Occasional hire

If a farmer obtains controlled oil as an end-user for his farming activities but occasionally hires out, or loans, plant (for example, a tractor) containing oil in the running tank either to other members of a machinery ring/buying group or to their farming neighbours, then they do not need to be approved if:

  • the majority use of controlled oil is for their own farming activities and NOT for use within the hired machinery
  • they are NOT clearly running a machinery-hire business
  • their main income is NOT from hiring out vehicles
  • they do not actively strive to increase this side of their business activities i.e. by advertising outside the machinery ring/buying group or current hirees, and
  • their hiring activities have no recognisable continuity i.e. they should not occur with such frequency that they become a recognisable and identifiable activity of the farmer. Basically, if a farmer is known outside his current circle of hirees as someone who has plant for hire, then they will have to be approved

If a farmer can fulfil these conditions then HMRC will regard them as the end-user of all the oil they obtain and they will not, therefore, need to seek approval. If they do not fulfil these conditions, then they will be regarded in the same way as any other plant-hire business and will have to seek approval. If a farmer does not seek approval and their circumstances should change in any way, they must seek further clarification as to how this affects their position.

4. Returns of controlled oil in hired vehicles

If a farmer needs to be approved as a RDCO, we would not require them to carry out any accounting arrangements or to record the return of any oil contained in running tanks. Oil returned in running tanks will simply become the farmer’s oil again in the same way as if they had obtained it from their normal supplier. When they next hire out the machinery, and even though it may contain oil that was “supplied” by the person to whom they previously hired it, it should still be treated as an onward supply without any allowance made for the returned oil.

Appendix D - Buying groups and machinery rings

Not all buying groups or machinery rings operate in exactly the same way. How they carry out their business will determine whether or not they are required to be registered for the RDCO scheme. A buying group or machinery ring that deals as a principal in controlled oil is required to register for the scheme. However, it need not register if it acts as an agent in the transactions. Establishing who takes title to (i.e. ownership of) the oil will resolve any doubts that may exist. If the person taking title is the buying group or machinery ring, they will need to register for the scheme. This is because they are not the end-user of the oil and without an RDCO approval they will not be able to obtain oil from their supplier. The end-user of the oil is the buying group/machinery ring member (for example a farmer). It will be the responsibility of the buying group or machinery ring to comply with the requirements of the scheme – obtaining and keeping information about the member, making checks and including the member’s details on their return.

However, if the buying group or machinery ring is not taking title to the oil at any stage in the transaction then they do not need to register for the scheme. In such cases, the RDCO supplying the oil (albeit at the request of the buying group/machinery ring) will be doing so directly to the member. It will be the responsibility of the supplying RDCO to comply with all the requirements of the scheme – obtaining and keeping information about the member (not the buying group/machinery ring), making checks and including the member’s details on their return.

Arrangements between distributors and buying groups/machinery rings: we are aware that a number of buying groups/machinery rings have entered into arrangements with their supplying RDCOs which override the above guidance. Some of these arrangements allow for the scheme obligations (obtaining information, carrying out checks on end-user members etc) to be undertaken by the supplying RDCO even though the buying group or machinery ring is acting as a principal in the transaction and should be registered and be responsible for the scheme obligations.

Other arrangements allow for the scheme obligations to be undertaken by the buying group or machinery ring even though they are acting as an agent in the transactions and there would be no need for them to register etc. Provided both the supplying RDCO and the buying group or machinery ring are content with and adhere to these arrangements, HMRC will not insist on the need to follow the guidance in the previous paragraphs.

However, all parties should be aware, that whoever agrees to be responsible for the scheme obligations will require the other party to provide information about the endusers of the oil in order to allow them to discharge those obligations fully under the scheme. In particular:a) unapproved buying groups/machinery rings should provide the supplier of the oil with all the relevant information necessary to allow the supplying RDCO to discharge their “duty of care” obligations, for example, their member’s name and address, VAT number and stated use of the oil etc;b) RDCOs supplying oil via an approved buying group/machinery ring should pass on any concerns they may have at the delivery point to the buying group. Any party refusing to provide this information will affect any previous arrangement entered into with the result that HMRC will insist that the guidance regarding approval in the previous paragraphs will have to be followed.