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HMRC internal manual

Hydrocarbon Oils Strategy

HM Revenue & Customs
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Post detection audit and assessment: Annex: assessment case studies: case study 2 of 6


Case Study 2 - No records available

Case history

A haulier has two HGVs. Both have been detected with rebated gas oil in running tanks. The haulier has been interviewed and has told SI that his records are with the accountant and he will forward them to the local office in the next week. The SI case papers have been forwarded to you with this information.

The promised week has passed and no records have arrived. What is the next step?

You need to obtain the records as set out in this guidance and have sought to do so. However, the haulier has not produced his records and has been issued with a pre-assessment letter for non-production of records. You will need to raise an assessment on the information available to you.

It may appear that you have very little information to base an assessment on but you may have more than is at first apparent.

The case file should give you some indication of the business. SI should have checked the vehicle registration with the DVLA to confirm the identity of the registered keeper and also to check the vehicle excise license liability. This check produces a VQ5 which should be filed with the case papers.

The VQ5 shows that the trader is the registered keeper of both of the vehicles and has been so for 18 months for one vehicle and two years for the other. The closing mileage figure is available for both vehicles as they were both detected running on rebated fuel. SI have taken the tachograph used that day from both vehicles. In interview the trader has claimed that one vehicle was used locally whilst the other worked entirely for a local timber merchant delivering timber to the main distribution point in Nottingham.

The vehicles involved in the case are a Ford Cargo 3220 and a Ford Cargo 3224. Checking these vehicles on the RFTU database and on the Commercial Vehicle Fuel Consumption Table published on the HMRC Intranet pages which shows typical fuel consumption in miles per gallon for a number of vehicles for mpg shows that they have tested at 7.38 and 8.04 mpg respectively. The tachograph for the Cargo 3220 shows that it has travelled 182 km that day and the 3224 has travelled 264. A check on ‘autoroute’ shows that the distance between the place of business and Nottingham is 128 km. The fuel has been tested at the roadside by SI and showed an 80% contamination.

When calculating an assessment without records the steps that are taken to arrive at a final figure are the same as if you have all books and records available. They are:

  1. Decide on the period to be covered by the assessment.
  2. Calculate the mileage performed by all the vehicles.
  3. Calculate the amount of fuel needed to complete this mileage.
  4. Calculate the amount of legitimate fuel purchases.
  5. Calculate and schedule the assessment.

Firstly, you need to establish the period to be covered by the assessment. You only have records of two vehicles owned in the last two years and one has only been owned for 18 months. We have nothing to assume that the newer vehicle was a replacement or if other vehicles have been bought, sold or hired in that time. The assessment can therefore be for a maximum of the two years that we are aware of for one vehicle.

Secondly, calculate the mileage performed by each vehicle. The Ford Cargo 3224 had travelled 264 km on the day of detection and auto route calculates that the distance to Nottingham is 128 km which makes 256 km for a round trip. It seems likely, therefore, that it is this vehicle which works this route. The vehicle has been owned by the business for 18 months. The maximum number of days worked is deemed to be six days out of the week so over an 18 month period this equates to 469 days (547.5 days in period / 7 days x 6 days): mileage performed is 264 km x 469 days = 123,816 km.

The Ford Cargo 3220 travelled 182 km on the day of detection. From the facts obtained at the time of interview we can deduce that this is the vehicle that is used for local deliveries. We also know that the vehicle has been owned by the business for two years. This is all the information that we have available: mileage performed is 182 x (730 days / 7 days x 6 days) = 113,880 km.

Thirdly, you need to calculate the amount of fuel needed to complete this amount of mileage. You already have a mpg figure from central records so you can calculate the amount of fuel used to cover this mileage:

Ford Cargo 3224: 123,816 km = 76,889.73 miles @ 8.04 mpg = 9,563.39 gallons

Ford Cargo 3220: 113,880 km = 70,719.48 miles @ 7.38 mpg = 9,582.58 gallons

Now you need to calculate the amount of legitimate fuel purchased. We have no records available to show that any legitimate fuel has been purchased in the period. However, the roadside test carried out by detection shows that the fuel was contaminated by 80% gas oil. Should this be taken into consideration?

As stated in the main body of this section of this guidance, the roadside test is only an indication that fuel contains rebated oil. The only quantitative test that is admissible as evidence is carried out under laboratory conditions by the Laboratory of the Government Chemist (LGC).

The taking of Samples is governed by Schedule 5 of HODA, for further information on obtaining a formal sample please see the appropriate* Enforcement Handbook.

  • Due to changes to PACE and PACE (NI) introduced on 31 December 2007 by the Finance Act 2007 , the Enforcement Handbook now covers England, Wales and Northern Ireland, whilst Scotland is now covered by the Enforcement Scotland Handbook.

You will often see roadside test results which give a percentage contaminated reading of over 100%. Rebated fuel is marked by adding a concentrate of dyes and markers to unmarked fuel as part of the manufacturing process. This concentrate may not be made to an exact specification or added to white diesel in the exact proportions in the production warehouse/remote marking premises. The fuel detected in a vehicle could be over marked or under-marked. The percentage value shown on a roadside test note should therefore be disregarded in the majority of cases.

Before using the results of roadside tests in any assessment calculations advice must be sought from the Oils Policy Team.

Therefore, what should you use? We must assume that all the fuel being used is illegal and assess on that basis. Therefore, every litre needed to complete that mileage has been illegal. In cases like this you may want to consult the Oils Policy Team, ECSM.

Finally, you need to schedule and calculate the assessment and the calculation here is straightforward. You have 9,563.39 gallons over an eighteen month period and 9,582.58 gallons over a two year period.

You need to break down the period to coincide with the changes in duty rates and, in this case, each duty rate period will be broken down by days in the period. You then calculate the difference and issue the assessment.