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HMRC internal manual

Hydrocarbon Oils Strategy

From
HM Revenue & Customs
Updated
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Post detection audit and assessment: calculation of arrears in cases of misuse

General

Most Post-Detection Audit cases result from Road Fuel Testing Units (RFTUs) detections of the misuse of rebated fuel in road vehicles contrary to s12(2) of Hydrocarbon Oils Duties Act 1979 (HODA). Therefore, this section concentrates on those types of cases.

Under the UK Oils Strategy, Special Investigations (SI) RFTU target commercial scale fraud, eg misuse of rebated oil by hauliers, taxis, bus and coach companies.

The objective of post-detection audits is to assess for the amount of the rebate allowed on the total quantity of rebated oil used as road fuel by the offender.

Method of calculation

The most reliable way to establish this is by calculating the distance travelled by all diesel vehicles operated by the trader and the amount of fuel required to do so. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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Please be aware that as these assessments are raised under S13 of the HODA, the ‘Best judgement’ provision in S12 of the Finance Act 1994 does not apply and the term should not be used to refer to HODA S13 assessments. This does not mean that assessments cannot be made using estimation in cases where sufficient records have not been produced by the offender to enable mileage and fuel usage figures to be accurately calculated. Assessments based on estimation of mileage and fuel usage have been upheld at Tribunal.

It is not, however, acceptable to use the principle of representative periods in making assessments for misuse of rebated fuel. Where records are available, they must be analysed for the whole period of the assessment to calculate the duty due.

(For further information where rebated heavy oil has been taken into a road vehicle as fuel or used as fuel for a road vehicle, please see HCOS5025).

Alternative method of calculation

An alternative method of calculation is to use the quantity of rebated oil purchased minus an allowance for any legitimate use, eg in plant, machinery, excepted vehicles (see HCOS4550), heating.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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