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HMRC internal manual

Oils Technical Manual

Law - background: What are the duty points and tax rates in law?

Hydrocarbon Oil Duties Act 1979 (HODA) Sections 6 and 8:

  • Section 6(1) and (2) - Hydrocarbon Oil
  • Section 6A - Fuel Substitutes
  • Section 6AA - Biodiesel 
  • Section 6AB - Bioblends
  • Section 6AD - Bioethanol
  • Section 6AE - Bioethanol blends 
  • Section 8 - Road Fuel Gas 

Section 6(1) makes a distinction between 1) hydrocarbon oil imported into the UK, and 2) hydrocarbon oil produced in the UK and delivered for home use.

UK produced hydrocarbon oil, is not charged with, nor is it subject to, duty unless it is delivered to home use. So, for example, oil produced in the UK that is used within the refinery (i.e. it never leaves the refinery to be delivered for home use) will not be charged with duty.

Although it is commonly understood that the excise duty is payable when the oil is delivered for home use, Section 6 of HODA, the section that creates the charge, has no actual requirement to pay the charged duty. Accordingly, Regulation 4 of the Hydrocarbon Oil Regulations (HOR) 1979 is used to make an obligation to pay. Regulation 4 of HOR also applies to regulations 15, 16 and 17 of the Excise Warehousing etc Regulations (EWER) to entered premises and refineries as though they were warehouses.

Third country imports - the requirement to pay the charged excise duty is governed by Section 43 of the Customs and Excise Management Act 1979 (CEMA), as well as Sections 46 to 48 depending on the use or destination of that oil.

Intra-EU imports - the requirement to pay the charged duty will be subject to the excise duty points provided by the Excise Goods (Holding, Movement and Duty Point) Regulations 2010.

Road fuel gas Section 8 of HODA - Section 8(1) and (2) HODA charge duty on the sending out/setting aside for use of road fuel gas with a duty of excise. The obligation or requirement to pay duty is imposed by regulation 5 of the Gas (Road Fuel) Regulations 1972/846.