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HMRC internal manual

Oils Technical Manual

HM Revenue & Customs
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Introduction and overview of oils activity: excise duty on oils (Duty Liability): mixing

Mixing of oils outside of oil producers’ premises or warehouses, where oils may be used as feed-stocks to produce other oil products, is prohibited without prior approval.

This is because oils may attract additional duty when two oils of different liabilities are mixed to produce a ‘new’ oil, which is of a different description.

As mixing of oils of different liabilities may occur at the interfaces between packages of oil consigned via a pipeline, pipeline operators and users need to be ‘approved mixers’ and must also account for any duty due by making duty adjustments to account for any mixing which has occurred.

Where fully rebated oil is mixed with any heavy oil, which is un-rebated and is supplied for use as a fuel for any engine, motor or machinery, the mixture will be liable to excise duty. Duty is also due on any mixture produced by mixing fully or partially rebated heavy oil, with biodiesel.

The supply or production of the mixtures must be notified to HMRC either in advance or within 7 days.

The rate of duty to be charged on the mixture is the rate for heavy oil.

Further information may be found in HODA 1979, Sections 20A, 20AAA and 20AAB, and in the section on ‘Pipelines’ in this guidance at HCOTEG110000.