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HMRC internal manual

Hydrocarbon Oils Strategy

From
HM Revenue & Customs
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Tied Oils: routine assurance visits

Preparation

Take some time to read the trader’s folder and understand how the trader operates. Look on Departmental Trader Register (DTR) to check on the trader’s performance in other regimes including associated businesses if the applicant is part of a group (RIS may have already done these checks for you). Lack of compliance in one regime may indicate an inherent compliance problem with the trader.

Basic checks

The basic checks are essential to establish the normal business practice. It gives you the opportunity to question anything outside the norm uncovered during the visit.

Always ensure you interview a responsible person, preferably the person who has control of the business.

On a first assurance visit, the following checks should be undertaken:

General

  • Check that all approval details are correct.
  • If it is a limited company, check the certificate of incorporation.
  • Obtain details of all partners or company directors.
  • Establish the size and structure of the business including the Principal Place of Business (PPOB), other sites, branches, associated businesses and subsidiary business activities.
  • Establish the types and quantities of oil dealt in or used.
  • Establish who the principal customers and / or suppliers are.
  • Establish what the record keeping system is and records held.
  • Inspect the premises.
  • Are the premises consistent with the declared activities?
  • What happens where and who is responsible?
  • What are the storage arrangements are for fuel and the quantities normally held?
  • Ask the trader to demonstrate current levels of stock held of all types of fuel.

Distributors

  • How do they accept/process an order? By phone / in writing / personal ‘on spec’ callers?
  • Establish the pricing policy and mark up / margin.
  • Establish the delivery arrangements.
  • Obtain details of all delivery vehicles operated.
  • Establish the system for making checks on any customers and recording information as required under Notice 184A.
  • Agree an acceptable level of loss in storage and in transit (see Notice 184A section 14).

Users

  • Look at the production / use process. Understand the processes involved and you are in a better position to query anything out of the ordinary.
  • Establish the amounts of oil used in any products made.
  • Establish which finished products could still be used as oils.
  • Agree with the trader what is an acceptable level of loss both in storage and in production.
  • You should record all relevant information and include on or attach to the EXIT465A.

During subsequent assurance visits you should review this information. If there have been any changes which require amendments to the approval (eg changes to the legal entity, changes in the storage premises, changes in the type of oil dealt in or used, starting to import or export rebated oils), the trader must give formal notification in writing. Either uplift a letter on the visit, or advise the trader to write to the Mineral Oil Reliefs Centre (MORC) in Newcastle with details of the changes.

Examining records

Section 10 identifies:

  • the systems within the tied oil regimes
  • the risks within those systems, and
  • assurance checks to apply.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) In addition you should consider all available sources of information, eg financial accounts, references, and carry out further checks if you think they are necessary to check the compliance of a trader. The list is not exhaustive, and you are not expected to perform every check on every visit. You must prioritise your time.

Visit reports

Visit reports should be made on form EXIT 465B. An electronic copy should be sent to RIS and to the MORC.