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HMRC internal manual

Oils Technical Manual

HM Revenue & Customs
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Traders accounts, records and returns: Duty deferment traders: Netting of Tied Oils and Refinery Oil

Extra-statutory class concessions paragraphs 6.1 ‘Tied oils’ and 6.2 ‘Refinery fuel’ in Notice 48 cover:

* Tied oils - the law requires Tied oils to remain duty-free from first delivery to home use through the chain of supply to the ultimate approved user.

It is often more efficient not to approve a warehouse to cater for a trade in tied oils. 

Accordingly an Extra-statutory class concession (ESC) has been granted to allow oil intended for use as a Tied oil to be delivered duty-paid, and for the duty charged to be repaid to the suppliers through the netting system. All ESCs are under review and may be replaced by legislation over time.

The procedure to be followed is given in Notice 179 paragraph 12.3. 

The ESC is restricted to suppliers who are approved for deferred payment of excise duty. Where such traders have opted to take advantage of the ESC their Tied oil storage is not duty-suspended. Stocks are duty-paid but repayment may be claimed under the netting arrangements on the quantities delivered to approved Tied Oil customers. Traders operating the ESC need not take stock or render official returns but the other requirements of the Tied oil scheme continue to apply, including the delivery note procedure prescribed in Notice 184A.

Approved traders receiving tied oil from locations approved under the netting arrangements are not affected by this ESC. All such oil received by tied oil customers will be dealt with and accounted for as if it were delivered to them as bona fide tied oil. Any repayment claim from a tied oil customer should be refused.

The procedure for claiming repayment under the ESC will follow the general directions for netting described in Notice 179 Section 12. Form HO65C should be used.

* Refinery fuel - an ESC has also been granted which allows suppliers to reclaim duty on duty-paid oil delivered at duty-exclusive prices to eligible refineries for use as boiler fuel. The arrangements are described in Public Notice 179 paragraphs 7.9.