Red Diesel

Monday 19th December 2011 Written Statements

[The Economic Secretary to the Treasury (Miss Chloe Smith)]

I am today announcing that, following an internal review of the use of rebated fuel or “red diesel” for community and charitable activities in rural areas, HMRC is launching a formal consultation exercise on extending the use of red diesel to allow tractors to grit roads in rural communities.

HMRC’s review examined the scope for extending the use of red diesel by farmers to allow them to undertake a range of community-based activities, including allowing farmers to use their tractors to undertake gritting in rural communities. Following an informal consultation exercise, HMRC will now consult formally on permanent changes to the Hydrocarbon Oil Duties Act 1979 to allow farmers to use their tractors to grit roads in rural areas.

This change builds on HMRC’s temporary relaxation of its enforcement procedures during the last two severe winters, and will provide much-needed support to rural communities that are often too remote to benefit from municipal gritting activities and may find themselves cut off during periods of extreme weather. While the consultation is carried out, HMRC will continue to stand ready to temporarily relax enforcement procedures in the event of severe weather this winter.

For other community activities, the review concluded that it would not be possible to extend the use of red diesel to accommodate other community activities in a way that would be consistent with EU legislation (Directive 2003/96—the energy products directive).

However, the Government are clear that HMRC should take a pragmatic approach when farmers undertake community activities. To reinforce this approach further, HMRC intends to issue revised guidance to remind its officers that a degree of common sense should be used when dealing with these types of cases. If there is sufficient evidence to suggest someone has mistakenly breached the rules governing the use of red diesel, a warning should normally be given. The Government also recognise that the best way to minimise instances of mistaken use of red diesel is to increase awareness. To assist farming communities to comply with the law, HMRC will also refresh its internet guidance on the use of red diesel for grass cutting, to remove any confusion that may exist.

HMRC will launch the formal consultation exercise on its website early in the new year.