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HMRC internal manual

Oils Technical Manual

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HM Revenue & Customs
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Tables: table Q: payment of rebate - action to be taken by Cumbernauld Accounting Team (CAT)

Action by CAT on receipt of a copy licence from MORC

On receipt of a copy licence from MORC, CAT will set up a database record of the licensee and note the start/end times of the initial accounting period and the following accounting periods.

CAT should send the licensee 2 sets of Forms HO72 and HO73 to allow them to make their estimate of the volume of rebated heavy oil likely to be used in the initial accounting period and the following accounting period (either quarterly or annual).

Remind the licensee to complete the initial form and return this to CAT with their remittance before any rebated oil is used as fuel, and set up the records required by the regulations.

Should the volume of oil declared on Form HO72 (and paid for) prove insufficient in any accounting period, the licensee is required to cease using rebated heavy oil as fuel until they have completed Form HO73 and paid the amount of rebate declared on that form to CAT.

CAT should retain a small stock of Forms HO72 and HO73 for issue at any time.

If CAT does not receive Form HO72 within 10 days of their issue of the form, they should speak to either LB or Local Compliance.

If staff in either LB or Local Compliance decide to withdraw the licence, CAT should not cancel the database entry until MORC advises them of the cancellation of the licence and the end date of the final accounting period. A declaration must be made by the licensee on Form HO75 for all accounting periods for which the licence is valid.

Standard accounting routine

Account for Form HO72 (and any Form HO73 for that accounting period) and the remittance in accordance with A5-1 ‘CECAS transaction processing’. CAT are to retain the original forms for audit purposes. They will send a copy to the RFCO whose area covers the site at which the rebated oil is stored.

After placing the remittance accompanying Form HO72 (and any Form HO73 subsequently furnished in an accounting period) on miscellaneous cash deposit (MCD), no further action need be taken by CAT until shortly before the end of the accounting period shown in the licence. Then CAT is to despatch Form HO75 to the licensee at the address at which the rebated oil is stored. That Form HO75 has to be completed and returned to CAT within 10 days of the end of the period. Form HO72 (and remittance), for the next period, may accompany it if the licensee anticipates continued need to use rebated heavy oil as fuel.

Additional action required at Budget time

You can expect that on Budget Day either the rate of duty on oil or the rate of rebate allowed on heavy oil will be varied. The changes make the sums paid against Forms HO72 and HO73 insufficient (called ‘Event B’ in the Regulations) the trader must make a further payment to ensure that rebated heavy oil used after the charge takes effect (usually 6 pm on Budget day) has been paid for at current rates.

On the eve of Budget Day CAT will examine the MCD record and despatch Form HO74 to each licensee who has presented Form HO72 or Form HO73 in their accounting period. Form HO74 allows the licensee to declare the volume of heavy oil actually used before the Budget change, and to declare the expected volume to be used in the remainder of the accounting period at post-Budget rate(s). The trader must return the completed form (and remittance) to CAT within 3 days of the Budget.

On receipt of Form HO74 (and remittance) CAT should follow the procedure above. We have no objection to all the outstanding sums paid by each licensee in the accounting period being consolidated, and the total sum being re-deposited to one MCD per licensee.

Action at end of accounting periods

For new licensees there will be an initial accounting period of less than 3 months, to end on the 31 March, 30 June, 30 September, 31 December, followed by a standard accounting period (either quarterly or annual). The copy Licence for each licensee will show the period length.

Shortly before the end of an accounting period CAT is to despatch Form HO75 to those licensees who have made a payment. (That form provides for the licensee to declare he actual volume of heavy oil used in the period as fuel, and to claim refund of the sum overpaid.) At the same time Form HO72 is to be sent (unless a licence has been withdrawn) so that the licensee can estimate their likely usage in the next period, and make any payment due. When received at CAT, the completed Form HO72 is to be dealt with in accordance with the accounting instructions above.

CAT will use the completed Form HO75 (which will not be accompanied by any remittance) to adjust the MCD raised in the name of that licensee, bring to account the rebate due for the accounting period and refund the balance overpaid. The Form HO75 provides for the rebate amount payable for the period to be analysed against tax type codes.

Any sum overpaid in an earlier accounting period can be re-deposited to the credit of that licensee for he next period provided that the licensee has submitted Form HO72 for that next period ( and the amount payable shown on that Form HO72equated to the sum refundable shown on the Form HO75 for the earlier period). Otherwise it is intended that each accounting period will end with the HO75 leading to a small refund to the licensee.

  • CAT is to make a copy of all Forms HO72 to 75 which are received from licensees, retain the original forms for audit until they are ready for destruction See IM-2C - Retention and Disposal: Operational records relating to Excise and Inland Customs ‘Hydrocarbon Oils’ . Copy forms are to be sent to the RFCO for the address at which the oil is stored.