Farming estate wins red diesel battle with HMRC

HMRC has been told that it must clarify its policy on rebated fuel usage after a Cumbrian farming estate won a court battle over its use of red diesel for transporting land drainage pipes from a builder’s merchant back to the farm.

The driver of the tractor and trailer, employed by Corby Castle Estate, near Carlisle, was stopped by HMRC officials on 4 May 2012 at Warwick Bridge. They advised the driver that he was not allowed to run an agricultural tractor on red diesel on the public highway for this purpose and said that they would seize the tractor unless a payment of £250 was made. The driver paid under protest.

Corby Castle Estate appealed against the decision and penalty, but Carlisle Magistrates’ Court upheld the decision of the HMRC officer. The estate then made an appeal to the Crown Court in Carlisle.

According to the estate, several days before the case was due to be heard, HMRC’s legal representatives conceded the appeal in correspondence but would not agree to pay the costs incurred by the estate in advancing the appeal.

However at the Crown Court hearing on 5 April 2013 the judge found in favour of the estate and said HMRC should pay the costs (estimated to be about £85,000) as well as repaying the original £250 penalty.

The judge also said that HMRC should make its position on red diesel clear so that all farmers had a clear understanding that an agricultural tractor is allowed to travel on the public highway using red diesel when transporting goods that are being used for agricultural purposes.

Upkeep and improvement of land by drainage is considered to be a normal and proper part of agricultural activity, as is activity related to environmental management schemes.

Ironically, drainage work to benefit agricultural land is specifically mentioned as being a perfectly legal reason for using red diesel on the road, according to the HMRC’s own website.

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