Introduction - oils fraud: general
At present, revenue fraud in oils on the UK mainland is principally in the diesel sector. It involves off-road fuels like red diesel (MGO) and kerosene (MKO) which carry rebated (reduced) rates of duty and ‘tied’ oils which are relieved of duty for industrial uses. These fuels are sometimes illegally used as fuel for road vehicles.
The key types of fraud are:
- Misuse - illegally using red diesel (MGO), kerosene (MKO) or tied oils in road vehicles when they are only allowed to be used in off-road vehicles, as heating fuel or for industrial uses respectively.
- Mixing - combining kerosene or tied oils with non-dutied lubricating oils to make an illegal road fuel or to dilute duty paid road diesel.
- Laundering - treating red diesel (MGO) and kerosene (MKO) with chemicals to remove their markers and dyes and make identification of their use as road fuel more difficult.
- Smuggling - importing quantities of oil without payment of UK excise duty. Smuggling of oil (both MGO and laundered fuel) from the Republic of Ireland (RoI), where duty rates on road fuel are lower, across the border to Northern Ireland is a significant problem. There is also some smuggling from the RoI to the UK mainland by ferry.
- Decanting - involves bringing fuel into the UK in the running tank of a commercial vehicle (which is legal) but then decanting it for use by other vehicles (which is not legal).
- Biofuel/vegetable oils - Used to mask laundered fuel and produced and sold commercially without payment of excise duty.