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HMRC internal manual

Oils Technical Manual

Operations in Warehouse: Relief from excise duty - use of oil as a fuel to produce energy for producers' premises


Oil may be used free of excise (but not EU customs) duty in power-generating plant at producers premises as fuel to provide energy for use in the treatment and production of oil. However, power plants produce energy used both for qualifying use and other non-qualifying uses. It is therefore necessary to distinguish between qualifying and non-qualifying uses within producers’ premises when considering the energy use reports.

If traders can demonstrate that more than one third of the total energy produced by a power plant will be applied to a qualifying use, then the use of oil as fuel in that power plant, without payment of duty, will be allowed. If between one sixth and one third of the total energy output is applied to qualifying use, then duty paid oil must be used as the fuel in the power generation plant, but repayment of one third of the excise duty paid on such oil is allowed. This is known as the partial repayment scheme (see below).

Qualifying use means effectively that only those uses in approved plant and vessels containing oil and involved in the treatment, processing and production of oils can be taken into account when calculating percentages.

Notice 179 paragraph 6.2.2 contains further details.

Local assessment and review

As far as possible, entitlement to full relief or partial repayment is to be assessed locally for consideration and review. Notice 179 should be used as the basis for your assessment/review. Difficult or contested matters should be referred to the Oils Policy Team.

Existing plant

You should review the power unit percentages whenever there is any doubt as to relief entitlement, repeating the review at 6 or 12 month intervals as is considered necessary.

If there are significant operational or other changes which may affect the trader’s eligibility for full relief or repayment, entitlement should be reviewed immediately.


Official forms in use under the partial repayment scheme are:

  • HO53 Application for approval;
  • HO54 Notice of approval;
  • HO55 Claim for repayment.


Notices such as 179 are now all online, as are Forms HO53 and HO55. The official address to which the forms are to be returned is on the forms, or on the envelope, if issued by MORC.

Repayment claims: verification and payment

Consider verifying:

  • The first claim prior to payment; and
  • Subsequent claims prior to payment if there is any doubt as to accuracy or reliability, or as to the trader’s continuing eligibility for relief within the legal provisions.

After necessary verification pages 1 and 2 of the form should be certified and forwarded to MORC for payment and the issue of Form HO55 for the trader’s next claim. You should retain pages 3 and 4 of the form for comparison with the trader’s subsequent claim.