New penalties for illegally selling fuel came into effect from 1 April.
The penalties are particularly important for those breaking the rules by not paying the correct duty in the retail, farming, fishing and construction industries.
Mike Eland, director of enforcement and compliance at HM Revenue and Customs, said: “We aim to support people who take care to pay the right amount of tax. Part of that support is to come down hard on those who deliberately evade paying. These new penalties are tougher and more consistent. Defrauding excise is not worth the risk.”
The new penalties apply to excise duties on oil products such as petrol and diesel.
When will the penalties apply?
The penalties will apply where someone:
• Handles goods on which excise duty has not been paid or deferred;
• Uses a product in a way that means more excise duty should have been paid; or
• Supplies a product at a lower rate of excise duty knowing that it will be used in a way that means a higher rate of duty should be paid.
• Anyone who uses red diesel in a family car that they have in fact bought for farm machinery – and perhaps conceals the fact using false invoices – can be penalised.
• In addition, someone who uses in their own car red diesel bought for, say, a construction company will also face a new penalty.
• A penalty will be levelled too on a retailer who sells red diesel to someone for a vehicle running on roads – a car or lorry – when this fuel is for off-road use in industries like agriculture and fishing.
• And if a supplier sells fuel that has been taxed at the rebated gas oil rate, knowing that the purchaser will use it to fuel a boat used for private purposes, the supplier will be liable to a penalty.
What are the penalties?
If someone is caught, the new penalty is a percentage of the potential lost revenue to the Exchequer. Penalties range from 10% of the possible lost revenue to 100%, depending on intent.
Penalties are significantly higher for those who deliberately try to avoid paying the right amount of tax so that they can get an unfair advantage.
Wrongdoing by employees or advisers
One new aspect of the penalties is that anyone running a business selling goods that have excise duty on them can be penalised if an employee or adviser commits what is referred to as a “wrongdoing” – if they, for example, use red diesel bought for use at a construction company in their own car. The penalty can be avoided if the business can show that it has taken reasonable care to avoid this by, for example, setting up systems and procedures to prevent the wrongdoing.
Under the new penalties, company directors and secretaries can also become liable for a penalty if, for example, they gain personally from a deliberate wrongdoing by an employee.
The new legislation is in Schedule 41 of the 2008 Finance Act.
Where to find the details
• More information about the new penalties
• Details on the misuse of red diesel.• code123