Policy paper

Revenue and Customs Brief 1 (2013): programme of assurance visits

Published 17 January 2013

Purpose of this brief

This brief gives information about our intention to start a programme of assurance visits to business customers of Registered Dealers in Controlled Oils (RDCO), and business customers of distributors trading under the Tied Oils Class Approval Scheme who purchase closed containers of 210 litres or less.

Who needs to read this?

RDCOs and their commercial customers who purchase controlled oils (red diesel, rebated bio blend, kerosene, avtur) for business use, users and distributors trading under the Class Approval Scheme for tied oils.

Background

The RDCO scheme was introduced to support the UK Oils Strategy with the aim of identifying and tackling commercial oils fraud. Under the scheme all dealers in controlled oils register with HM Revenue and Customs (HMRC). Controlled oils are liable to a rebated rate of excise duty which is much lower than the full rate of road fuel duty, and it is not allowed to be used in vehicles using public roads other than in a limited number of excepted vehicles, where the use is incidental to the main use.

Under the Tied Oils Scheme, oils intended for use in an industrial process may be delivered relieved of duty to traders who are approved by HMRC to receive them. Products may also be released with no payment of duty to customers of distributors under the Tied Oils Class Approval Scheme who purchase closed containers of 210 litres or less.

RDCOs and Tied Oils traders are obliged to keep records of their sales, including details of who they are selling to. HMRC carries out regular assurance visits to RDCOs and to Tied Oils traders to ensure that the oils are put to an eligible end use and not diverted for misuse as road fuel. Failure to comply with the requirement of the scheme is subject to penalties.

HMRC is now planning a programme of assurance to ensure that the oils are used for their intended purpose.

What are the changes?

HMRC intends to start a programme of assurance visits to:

  • businesses purchasing rebated fuel from RDCOs
  • customers of distributors trading under the Tied Oils Class Approval Scheme who purchase closed containers of 210 litres or less

What is an assurance visit?

An assurance visit may include:

  • visiting your business premises to inspect goods, or documents relating to your business
  • visiting your business premises to check that you are complying with the terms of any excise approval, registration, authorisation or licence that you may hold
  • the visit being notified in advance but officers can visit unannounced

Why are these changes being made?

The changes are being made to improve HMRC’s control of the controlled oil supply chain, and oils supplied relieved of duty under the Tied Oils scheme, to ensure that the oils are put to a legitimate use. The illegal use of cheaper rebated or duty relieved oils places legitimate businesses at a disadvantage.

Who will be affected?

All commercial purchasers of rebated fuels for the purposes of their business; commercial customers of oils from Tied Oils traders in particular those purchasing oils in closed containers of less than 210 litres.

Customers purchasing rebated fuel for domestic purposes, for example heating fuel, are not affected by this change.

What records must I keep?

You will need to keep your normal business records and produce them to HMRC if asked to do so. These must include evidence of all your purchases, such as invoices, of oils purchased for your business.

You will be required to provide evidence that you have used the oils for your business purposes.

If HMRC establishes that the oils have not been used for a legitimate purpose penalties may be applied.

What legislation is being changed or introduced?

No changes to legislation are being made.

Timing

HMRC will start an assurance programme of business customers of RDCOs, and business customers of Class Approved traders in 2013.

Further guidance

Further information relating to:

  • records required to be kept by those involved in any way with goods or services liable to Excise Duty can be found in Notice 206 Revenue traders records
  • the RDCO scheme can be found in Notice 192 Registered dealers in controlled oils
  • the Tied Oils scheme can be found in notice 184A Mineral (Hydrocarbon) oil put to certain uses: Excise Duty relief
  • the legitimate uses of controlled oil can be found in Notice 75 Fuel for road vehicles
  • general information and accounting of motor and heating fuels for Excise Duty and VAT can be found in Notice 179 Motor and heating fuels: General information and accounting for Excise Duty and VAT

Issued 17 January 2013