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HMRC internal manual

Oils Technical Manual

Gains and losses shown in trade records: Explanations and payment of duties and VAT

You should ask the trader for an explanation however, if for any account:

  • there is any doubt that the oil has been properly accounted for; or
  • the monthly LOSS exceeds 0.2% for heavy oils and 0.3% for light oils

If there is no reason to suspect an irregularity and you are satisfied that legitimate causes reduce the loss to less than 0.2% for heavy oils and 0.3% for light oils, you may allow the loss.

No action need be taken under (1) and (2) unless the duty involved exceeds £100 or where there is suspicion of fraud.

Unless a different method is authorised under a relief regime, customs duty on chargeable losses is to be assessed at the highest ‘ad-valorem’ rate which might have applied on the value shown in the stock account.

If the explanation is a simple one, and is acceptable, it may be given orally. In other cases, a written explanation should be called for.

If there are doubts about the loss, consider whether action is necessary by the trader (e.g. to improve security, procedures or supervision) or by HMRC (e.g. possible drive activity or investigation of possible offences).

If after investigation, the trader is not able to explain an excessive loss satisfactorily, you should call for payment of the duty on the excess.

For information on ‘Payment of Duty on a deficiency’ see Notice 179 paragraph 14.3.4

VAT chargeable on deficiencies must not normally be included in the duty deferment account, it will be assessed separately.

For further information see Notice 179, paragraph 15.11