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HMRC internal manual

Compliance Handbook

Penalties for VAT and Excise Wrongdoing: In what circumstances is a penalty payable: Putting a product to use that attracts higher duty

The rate of excise duty payable on the goods listed in CH91500 depends upon how the goods are to be used. If a person misuses the goods we can charge a penalty.

Misuse means the person uses the product for a purpose that attracts a higher rate of duty. Payment of duty determines what a product can be used for. If a product is subsequently used for a purpose that attracts a higher rate of duty the person using the product cannot just volunteer to pay the extra duty due.


Red diesel (rebated gas oil) is a duty-rebated product but it can be used as a fuel for road vehicles. Road fuel diesel carries a higher duty than red diesel. Using red diesel in a road vehicle is misuse because the diesel is being used for a purpose that attracts a higher duty.

A person will not be liable to a penalty if they have a reasonable excuse, see CH92000, for misusing the product non-deliberately.

FA08/SCH41/PARA3 (1)