HMRC internal manual

Hydrocarbon Oils Strategy

HCOS2025 - Registered Dealers in Controlled Oils (RDCO): the RDCO Scheme: background

The RDCO scheme introduced in 2003 is a key component of the Oils Strategy, (the others being the Tied Oils scheme, and recovery of revenue from those businesses detected using illicit fuel).

Under the RDCO scheme, ALL dealers in controlled oils must be registered with HMRC but with the following exceptions:

  • Distributors who receive and sell controlled oil only in pre-packaged containers not exceeding 20 litres and
  • Plant hire companies who only ever hire out or sell plant containing an amount of controlled oil to be consumed as part of the hire or sale agreement, see Notice 192 Appendix B for further details

The controlled oils are ‘red diesel’ or Marked Gas Oil (MGO), rebated bioblend, kerosene, or Marked Kerosene Oil (MKO) and aviation turbine fuel (Avtur), which is jet fuel made from high-quality kerosene. Dealers have a responsibility to submit monthly returns detailing all sales of controlled oils. The only exceptions are dealers with a low throughput who are approved for annual returns, or dealers solely supplying Avtur or marine fuel. Dealers also have a duty of care to ensure that the oil sold is being put to legitimate use. Dealers registered as suppliers of red diesel for use in private pleasure craft also have a responsibility to charge and account for additional duty on such supplies and to submit quarterly or annual payment returns.

Those dealers who do not comply with these requirements face a number of sanctions that will ultimately result in the loss of the authorisation enabling them to sell controlled oils.

Customer Compliance and Large Business manage the Registered Dealers in Controlled Oil scheme, working in tandem with Fraud Investigation Service (FIS)to ensure that the requirements are being met.

Assurance is required to ensure that RDCOs are complying with their obligations under Notice 192 when they supply controlled (rebated) oil, and also Notice 554 if they supply red diesel to private pleasure craft or Avtur for private pleasure flying.

Assurance staff will also identify suspect customers from traders’ records and refer them to RIS for consideration of action by the Road Fuel Testing Units (RFTU), now renamed the Mobile Enforcement Team (MET).