Guidance

Motor and heating fuels general information and accounting for excise duty and VAT (Excise Notice 179)

Find out about the requirements and obligations for warehousekeepers of motor and heating fuels in the UK.

• From: HM Revenue & Customs
• Published: 6 November 2014
• Last updated: 7 August 2024 — See all updates

1. Overview

1.1 Information in this notice

This notice provides guidance on the:

• requirements and obligations that apply to warehousekeepers of motor and heating fuels in the UK
• accounting for excise duty and VAT charged upon these fuels in the UK — there are separate notices devoted to other related subjects on GOV.UK

1.2 Who should read this notice

Producers and warehousekeepers of motor and heating fuels should read this notice.

Operators of motor and heating fuel warehouses should also read:

• Registration and approval of excise goods held in duty suspension (Excise Notice 196)
• Receive goods into and remove goods from an excise warehouse (Excise Notice 197)

1.3 What laws cover this notice

Primary legislation:

• Customs and Excise Management Act 1979 (referred to as CEMA)
• The Taxation (Cross Border Trade) Act 2018
• Hydrocarbon Oil Duties Act 1979 (referred to as HODA)
• Value Added Tax Act 1994 (referred to as VATA)
• The Commissioners for Revenue and Customs Act 2005 (CRCA)

Secondary legislation:

• Hydrocarbon Oil Regulations 1973 (Statutory Instrument 1973/1311) (referred to as HOR)
• Hydrocarbon Oil (Mixing of Oils) Regulations 1985 (Statutory Instrument 1985/1450)
• Excise Duties (Deferred Payment) Regulations (Statutory Instrument 1992/3152)
• Revenue Traders (Accounts and Records) Regulations (Statutory Instrument 1992/3150) (referred to as RTR)
• Excise Goods (Drawback) Regulations 1995 (Statutory Instrument 1995/1046)
• The Hydrocarbon Oil (Marking) Regulations 2002 (Statutory Instrument 2002/1773)
• The Excise Warehouse (Energy Product) Regulations 2004 (Statutory Instrument 2004/2064)
• Excise Warehousing Regulations 1988 (Statutory Instrument 1988/809)
• Warehousekeepers and Owners of Warehoused Goods Regulations 1999 (Statutory Instrument 1999/1278) (referred to as WOWGR)
• Hydrocarbon Oil (Marking) Regulations 2002 (referred to as HOMR) (Statutory Instrument 2002/1773)
• Biofuels and Other Fuel Substitutes (Payment of Excise etc) Regulations 2004 (Statutory Instrument 2004/2065)
• The Hydrocarbon Oil Duties (Reliefs for Electricity Generation) Regulations 2005 (Statutory Instrument 2005/3320)
• The Hydrocarbon Oil (Supply of Rebated Heavy Oil) (Payment of Rebate) Regulations 2008 (Statutory Instrument 2008/2600)
• The Hydrocarbon Oil and Bioblend (Private Pleasure-flying and Private Pleasure Craft) (Payment of Rebate etc) Regulations 2008 (Statutory Instrument 2008/2599)
• The Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (Statutory Instrument 2010/593)

All references to primary and secondary legislation are references to that legislation, as amended, at the date on which this notice was published.

Changes to primary legislation are normally made in the annual Finance Act.

This notice explains how we interpret the law, and is not a substitute for the law. Where appropriate, we will quote the law and we will use the titles and abbreviations used in the bulleted lists for primary and secondary legislation.

Parts of this notice may have the force of law. These are identified at the relevant places in the notice.

The legislation relating to VAT can be found in the VAT Act 1994 and orders and regulations made under that Act.

1.4 Find out about Customs Duty

Certain imported oil is also liable to Customs Duty at the rates shown in the Trade Tariff tool.

Extra procedures involved are covered in import goods into the UK: step by step and warehouse procedures in receiving, storing and moving excise goods.

2. General

2.1 Find out what is liable to excise duty

All motor and heating fuel, whether imported or home produced, whether of hydrocarbon origin or not, is liable to excise duty at either the full or rebated rates specified by HODA.

These rates are normally amended each year by the Finance Act. Read the current and historic rates of duty.

You’re responsible for making sure that you use current rates of duty when calculating your excise duty liability.

2.2 What the term ‘rebated’ means

HODA specifies full rates of excise duty on different types of oil. It also defines where rebates of duty are allowed in certain circumstances.

The effect of applying a rebate to a full rate of duty is to create a lower rate of duty. For example, HODA section 6(1A) specifies a full rate of duty for various types of oil, including heavy oil. Section 11 specifies the rebates available for heavy oil.

Eligibility for a rebate on some oils may depend on the addition of a marker (and in the case of gas oil, a dye) either:

• before importation
• delivery from duty-suspended warehouse
• delivery from remote marking premises

For more information on marking, read section 8.

The use of rebated oil as fuel, or taking rebated oil into a vehicle or machine as fuel is prohibited, unless it is an excepted machine as defined in Schedule 1a of the Hydrocarbon Oil Duties Act 1979. In exceptional circumstances we may allow the use of rebated fuel other than in an excepted machine but you must obtain our prior authority and pay an amount equal to the current rate of rebate.

Find out more in Using rebated fuels in vehicles and machines (Excise Notice 75).

2.3 When excised duty is payable

Oil becomes liable to excise duty either when it is:

• imported
• produced in the UK and delivered for home use from relevant premises (HODA section 6(1))

The duty is charged but not necessarily payable at this point.

Payment of duty may either be:

• deferred — read section 10
• relieved — read paragraph 2.5

2.4 Methods of testing motor and heating fuels

Hydrocarbon oil is defined in HODA section 1. In order to determine whether a product is a hydrocarbon oil, there are various tests which can be applied.

Appendix B sets out the methods of testing or determining:

• whether any substances are solid or semi-solid at a temperature of 15°C
• the distillation characteristics of oil

We may make particular directions in relation to hydrocarbon substances or oils for which the standard methods of testing are inappropriate (HODA section 2(1)).

Biodiesel and bioblend are defined in HODA sections 2AA and 2AB.

HODA section 6AC applies many provisions within HODA and regulations deriving from HODA to apply to biodiesel and bioblend.

2.5 Reliefs from duty payment

2.5.1 Use of motor and heating fuel in duty-suspended installations without payment of excise duty

Motor and heating fuel may be used without payment of excise duty in connection with the production and refining of oil, in premises entered and used for such production (read section 3).

2.5.2 Delivery of oil without payment of excise duty

Oil delivered for home use for certain industrial purposes is relieved of duty. These oils are known as ‘tied oils’.

Find out how to Get relief for mineral oil put to certain uses (Excise Notice 184A).

Warehousekeepers and producers may deliver motor and heating fuel without payment of excise duty to other premises that are approved to warehouse such products, under the conditions set out in section 7.

Other circumstances in which oil can be delivered without payment of duty are as follows:

• where the motor and heating fuel is an unfinished product or a finished product intended as a process product (including oil to produce a new product or special oil product, such as industrial oils, solvents, and so on) — fuel for approved use in boilers at producer’s premises may also be removed under duty suspension
• ‘excess’ production may be removed to another producer’s premises or approved warehouse for storage — it must then be returned to the despatching producer’s premises, delivered for export or removed under duty — suspension to other premises approved to receive such product in the particular circumstances — it must not be diverted direct to home use
• oil removed once or twice a year from one producer’s premises to another as a volume adjustment transfer under exchange partner arrangements may be removed under duty suspension (read paragraph 7.3)
• for exportation or shipment as foreign-going ships’ or aircraft stores
• for use by a general lighthouse authority
• for use by United States or other NATO forces (not including UK forces) for official purposes
• for use, if heavy oil, on board vessels, including a hovercraft but not pleasure craft, engaged on marine voyages
• sludge or waste oil, for destruction or dumping

2.5.3 Producers’ premises and warehouse samples

Samples of fuel may be delivered without payment of both customs and excise duties from producers’ premises or a warehouse, provided that the total quantity of any one type of oil does not exceed 25 litres in each delivery.

The maximum limit is increased to 30 litres for gas oil, and 60 litres for aviation fuel for samples delivered without payment of duty for testing required by the:

• Ministry of Defence
• Department for Energy Security and Net Zero (DESNZ) (formerly the Department for Business, Energy and Industrial Strategy (BEIS))
• United States Air Force

All samples delivered without payment of duty must be legitimate trade samples.

The warehousekeeper must maintain a record of such samples. Samples drawn for testing on the premises need not be included in this record.

Find out more about reliefs from Customs Duty when you Import goods from outside the EU.

2.6 General responsibilities of revenue traders

2.6.1 Your responsibilities

As a revenue trader you are responsible for ensuring that:

• motor and heating fuel is properly accounted for when received into, stored in or delivered from a duty-suspended installation
• you keep accounts of the motor and heating fuel stored there, and secure against illicit removal of product stored under duty suspension
• duty is either declared or paid on motor and heating fuel on delivery for home use, or is relieved (for example, tied oil)
• records are kept of all relevant operations
• approved plant is marked conspicuously before use with the distinguishing marks and numbers stated in the approval, and that containers of motor and heating fuel are marked in accordance with our directions

The approval of any process, plant, vessel or measuring equipment does not affect the responsibility of any person to comply with any other legal requirements relating to health and safety, accuracy of measurement or other matters.

Approved persons are responsible for accurately accounting for fuel received for marking at, or delivered under a marking waiver from, remote marking premises.

2.6.2 Deficiencies

The warehousekeeper, the owner of the fuel or any person who has given security for duty may have to pay the duty on any deficiency, which cannot be shown to be due to natural waste or other legitimate cause (read section 14).

In these circumstances VAT may also be due (read paragraph 15.11).

2.6.3 Provision of facilities

Warehousekeepers and motor and heating fuel producers, or the approved person at remote marking premises, must provide such measuring appliances, gauges, calibration and conversion tables and provide such facilities and assistance as we may require for examining, sampling or taking account of any product (HOR reg 46).

2.6.4 Production of records

Any person concerned with the supply or use of motor and heating fuel must, at all reasonable times, produce to HMRC on demand all relevant books and other documents (HOR reg 48).

Each importer, warehousekeeper, motor and heating fuel producer or person approved for remote marking of fuel under the duty deferment arrangements must keep the accounts, records and documents specified in this notice at the premises to which they relate, and produce them to HMRC on demand.

Find out more in Revenue traders’ records (Excise Notice 206) (RTR reg 6).

For details of record-keeping requirements for biofuel producers, read:

• Biofuels and other fuel substitutes (Excise Notice 179e) before 1 April 2022
• Biofuels and other fuel substitutes (Excise Notice 179e) from 1 April 2022

2.7 Physical security at duty-suspended and remote marking premises

Duty-suspended oil installations and remote marking premises are controlled by their occupiers without our continuous supervision. Appropriate control must be exercised over product, persons and vehicles, for example entering and leaving such premises.

Warehousekeepers and motor and heating fuel producers must be able to demonstrate to HMRC that they have in place procedures that make sure:

• safe custody of duty-suspended motor and heating fuel in their charge
• all persons employed at, or using, duty-suspended installations are aware that the installation may contain motor and heating fuel on which duty has not been paid
• all persons understand that any unauthorised removal of duty-suspended product
• action which avoids the proper charge of duty, is a revenue offence

Details of appropriate warning notices are shown at Appendix C.

2.8 Officers’ powers

HMRC officers may:

• enter and inspect any entered or approved premises and any vehicle or machine on those premises
• examine, test, sample and take account of any fuel on the premises or in or on any vehicle or machine at the premises (HOR reg 47)
• require the production of all records relating to oil on a vehicle or relating to the sale, purchase or disposal of any oil handled or dealt with at the premises under duty suspension — they may take extracts from any accounts or books relating to oil at a warehouse, remote marking premises, fuel producer’s premises or a central accounting office (read Revenue traders’ records (Excise Notice 206) (HOR reg 48 and CEMA section 118B)
• require the production of records from any third party relating to the sale, purchase or disposal of any oil handled or dealt with by someone currently under investigation (CEMA section 118BA)

2.9 Health and safety

2.9.1 General health and safety provisions

Revenue traders responsible for the provision and maintenance of premises, plant and equipment must make sure that the working conditions are safe and free from risk to the health and safety of our staff on these premises.

You must comply with any requirement about health and safety laid down by any statute or competent authority, including display of proper warning notices and directions as to action to be taken by all persons to maintain safety. If safety standards are not adequate we may withhold or withdraw approval.

Where HMRC officers are likely to undertake activities, which would require the wearing of protective clothing and equipment if performed by your employees, you must provide similar items for their use.

If you hold staff training courses in safety matters, we would welcome arrangements for our staff to participate.

Also if you arrange regular health surveillance for your employees to guard against any possible harmful effects from hazardous products stored at installations you must inform us in writing as we would need to set up similar arrangements for our own staff.

2.9.2 Safe access to tanks, loading gantries, and other areas

You must provide safe access and safe working conditions for our staff to witness dips or make other checks for revenue purposes.

We expect you to comply with the recommendations of the Energy Institute (formerly the Institute of Petroleum) as to the construction of tanks and equipment, but draw your attention to the following particular requirements:

• access to the tops of tanks or to gantries should be by sloping or circular stairway, adequately strutted to prevent sway
• the steps or stairways, platforms or landings should be horizontal with non-slip surfaces
• hand-railing to tank roofs, stairways and gangways must be of solid steel sections and designed to protect personnel from falling — where the lowest rail is more than 0.25 metres above the walking level, the space below this rail must be protected by rigid wire netting or metal plates
• where access to dip a tank is provided by a gangway from the top of an adjacent tank, more than one external stairway to a group of tanks and more than one way to and from the top of each tank must be provided
• safe walking surfaces should be provided at all dipping and sampling point
• on floating roof tanks, the arrangements must be such that each tank can be dipped without descending on to the floating roof

Normally, it is sufficient if access complying with the standards in the previous bulleted list is provided to the main dipping point on each tank.

3. Approval and entry of duty-suspended installations

3.1 Why motor and heating Fuel Duty-suspended installations have to be approved or entered

These must be approved or entered to:

• provide for effective revenue control of the receipt, storage, and processing of motor and heating fuels
• facilitate the accounting for and collection of duty and tax due from motor and heating fuel producers, warehousekeepers and owners of that fuel
• provide for the proper movement of motor and heating fuel under duty suspension to and from producers and warehouses

3.2 Where to get advice about the approval of import and export facilities

Advice can be obtained from the HMRC excise and customs helpline on Telephone: 0300 200 3700.

Approvals of excise warehouses are administered by the National Registration Unit (NRU).

However, ‘entry’ for fuel producers’ premises are dealt with by the Mineral Oil Reliefs Centre and should be made on either:

• form EX103 — Record your premises for excise entry if you’re a private trader
• form EX103A — Record your premises for excise entry if you’re an incorporated company

The National Registration Unit (for excise warehousing approvals only) address is:

National Registration Unit
HM Revenue and Customs
Excise Processing Team
BX9 1GL

Approvals of wharves for landing excise goods are dealt with by the National Approval Unit in Birmingham. They are responsible for the processing and maintenance of all approvals.

All new applications and any changes to existing approvals should be sent to the National Approval Unit at:

National Approval Unit
1st Floor Admin Block
Cargo Centre
Birmingham International Airport
B26 3QN

Telephone: 0121 781 7853, 0121 781 7856, 0121 781 7861
Fax: 0121 781 7869
Email: nationalfrontierapprovalsunit@homeoffice.gov.uk

You should also note the following general points:

• fuel imported or exported by ship may only be discharged or loaded at an approved wharf (CEMA s20)
• fuel may not be imported (or moved before HMRC clearance) or exported by a pipeline, which has not been approved (CEMA s24)
• approved warehouse storage must be provided at the terminal of an import pipeline
• in the case of crude oil or gas imported by pipeline, approval (such as class A or B approval) is usually necessary for on-shore plant stabilising crude oil and plant separating condensate from gas

3.3 Categories of duty for suspended fuel installations

There are 2 categories, these are:

• fuel producers’ premises
• motor and heating fuel warehouses

3.3.1 Fuel producers’ premises

Both classes of activity may be conducted in the same premises, read paragraph 3.3.2 for more information.

Paragraph 3.7.3 outlines how to apply for warehouse approval, where it is required:

• class A activities — production (including refining) of descriptions of fuel for which a motor and heating fuel warehouse is not required
• class B activities — production (including refining) of descriptions of fuel for which a motor and heating fuel warehouse is required

The ‘oil producer’ (now ‘fuel producer’) category of trader existed before policy changes aimed at harmonising UK and EU terminology.

Traders whose activities fell under this category before the change were typically those who operated:

• on-shore oil wells (and whose ‘production’ activities consisted only of recovering crude oil from the ground)
• terminals where gas from offshore fields was brought ashore (and where ‘gas condensate’ was removed from the gas stream)
• premises where the production of fuel was incidental to the main business activity

The legal definition of ‘production of oil’ includes obtaining oil from any substance or natural source, obtaining one description of oil from another and subjecting oil to any process of purification or blending (HODA s2 (4)). Obtaining oil from any substance or natural source covers all activities concerned with the refining of oil.

All activities surrounding the refining and production of oil must be conducted at ‘entered’ fuel producer’s premises. For example, producers may obtain oil from any natural source (for example, from an oil well or shale) or from any non-oil source (for example, coal). They may refine, purify, blend and carry out any other process on oil.

We do not ‘approve’ producer’s premises. Instead all producers must register with HMRC and ‘make entry’ of their premises under the provisions of HOR 3(1) and CEMA 108. No production of fuel can take place before entry is made of the premises and all the buildings and plant that are to be used in the production.

More information is available about the procedures for:

• registering with HMRC (paragraph 3.6.2)
• making entry of your premises (paragraph 3.6.3)

Additionally, class B producers must provide approved warehouse storage under the provisions of HOR 3(3). This means that for particular categories of fuel part of the entered premises must be approved by HMRC as an excise warehouse. Following production the specified fuel should be warehoused there before it is delivered or removed.

The making ‘entry of premises’ provisions (section 108 CEMA, and regulation 3 of the HOR) support the status of producers’ premises as ‘premises used for the production of hydrocarbon oil’. This permits oil to be stored under duty suspension at these premises.

Since 1 October 1999 the warehousekeepers of such premises have also had to be approved and registered in accordance with the WOWGR.

3.3.2 Motor and heating fuel warehouses

Before you receive, store or deliver motor and heating fuel upon which the duty has not been paid, you must obtain approval of your premises as an excise warehouse in accordance with CEMA s92.

Any person wishing to operate such an excise warehouse must first apply for approval of the site and for registration as an authorised warehousekeeper (WOWGR).

This category of duty-suspended installation includes warehouses required at class B producer’s premises, plus import, export, liquid petroleum gas (LPG), and intermediate storage warehouses.

The law restricts the activities that can be conducted in an excise warehouse to the ‘deposit, keeping and securing’ of goods without payment of excise duty (CEMA 92(1)).

We refer to revenue traders who operate such warehouses as ‘authorised warehousekeepers’. More details can be found in paragraph 3.8.

Despite the fact that fuel can be legally stored under duty suspension at producers’ premises, we also require the provision of an approved warehouse for the storage of certain fuels to reflect the revenue risk associated with them.

We do not require a warehouse to be provided for the storage of low risk oils such as crude oils and gas condensate at premises used for the production of such oils. However, at producers’ premises, which are refineries (and which therefore may receive such products as feedstock) it will usually be convenient to incorporate tankage for the storage of such feedstocks into the same warehouse approval, which covers the finished product storage.

3.4 What a tax warehouse is

The term ‘tax warehouse’ is defined in the Excise Goods (Holding, Movement and Duty Points) Regulations 2010 and article 4(11) of Council Directive 2008/118/EC (which will now apply only to Northern Ireland) and are premises where excise goods are produced, processed, held, received or dispatched under duty-suspension arrangements by an authorised warehousekeeper.

Under article 16(1) of the Directive the opening and operation of a tax warehouse has to be authorised.

As a warehousekeeper or fuel producer your premises will be approved as a tax warehouse, and you or your company will be approved as an authorised warehousekeeper. This approval does not alter or extend the range of activities that you are permitted to undertake at your premises.

The general procedures applying to tax warehouses are contained in Registration and approval of excise goods held in duty suspension (Excise Notice 196).

3.5 Providing financial security for the duty

Financial security may be required for all premises. This requirement is waived by default, but will be applied where specific risks are identified. The approval process will determine the level of security required.

Securities should be provided in the form of guarantees by:

• banks
• insurance companies
• other financial institutions

More information about premises guarantees can be found in Registration and approval of excise goods held in duty suspension (Excise Notice 196).

3.6 Motor and heating fuel producers’ premises

3.6.1 General

Some processes which are considered to be fuel production can only be performed at premises approved by HMRC. We call these premises ‘relevant premises’. The definition for excise duty purposes of the terms ‘refining’ and ‘production’ are shown at Appendix D.

Before any production of fuel can begin, you must register your business and the premises, plant and places to be used for that production must be ‘entered’ with HMRC.

3.6.2 How to register

You must register online within 30 days of producing motor and heating fuel.

After you register we’ll send you a registration number. You’ll need to use this in all returns and correspondence about your production of motor and heating fuel.

If any of your registration details change, you should tell us by emailing the Mineral Oil Reliefs Centre at morcapprovalsteam@hmrc.gov.uk within 30 days of the change.

3.6.3 Tell HMRC about your site or premises (‘making entry’)

To complete your registration you must also provide information about each of your sites or premises to HMRC using either:

• form EX103 Record your premises for excise entry if you’re a private trader — if you’re a sole trader or partnership
• form EX103A Record your premises for excise entry if you’re an incorporated company — if you’re an incorporated company

You can email the Mineral Oil Reliefs Centre at morc.exciseenquiries@hmrc.gov.uk to get advice on how to complete these forms.

You should also email the Mineral Oil Reliefs Centre at morc.exciseenquiries@hmrc.gov.uk if you receive an exploration licence, appraisal licence, or development licence from the Department for Energy Security and Net Zero in order to discuss the need for an excise entry.

You’ll need to make entry of your production premises if you process waste heavy oil.

You will not need to make entry if you:

• are already approved as a tied oil user, repayment user, or a furnace operator, and production is in the course of using fuel under the terms of your authorisation
• carry out basic filtration or gravity separation (without heat, vibration, or application of any other form of energy, or addition of chemicals) as we do not regard this as fuel production

You’ll still need to pay excise duty if any waste-derived heavy oil is put to a fuel use (read paragraph 11.8).

3.6.4 Excise warehousing of fuel at a fuel producer’s premises

In addition to making entry of premises, you may need to provide a warehouse for certain descriptions of fuel (HOR regulation 3(3)). These include:

• light oil
• unmarked gas oil
• unmarked kerosene
• other heavy oil for use other than in an excepted machine
• any description of oil received without payment of duty, or under duty suspension, direct from import ship
• any other oil, which does not need further refining before being put to dutiable use
• biofuels, including biodiesel and bioethanol
• aqua methanol

Further advice on the situations in which we will require a warehouse can be obtained from HMRC.

3.6.5 Premises used to treat fuel previously delivered to home use

You do not need to make entry of premises used for:

• operations which do not go beyond the recovery of the original duty-paid fuel, and do not change its duty or rebate category
• re-processing fuel, which remains the property of a tied oil user or a repayment user, to whom all of the fuel produced is returned

You may need to make entry of premises used for the following purposes:

• re-processing, re-refining or other treatment of fuel which has previously been delivered to home use without relief from excise duty
• recovering fuels from articles in whose manufacture or preparation fuel was used with relief from duty (for example, electrical apparatus or compound solvents)
• fractionating or cracking of excise duty-paid fuel which results either in an increase in its volume or in a change in its entitlement to rebate
• where kerosene, gas fuel or other heavy oil for use other than in an excepted machine, or any light oil, is produced from rebated fuel
• where dutiable fuel, which was previously delivered without payment of excise duty, is recovered from any goods, vessels or place, except where fuel is recovered on behalf of an individual or class user to whom the fuel is delivered for re-use — such re-processing remains on the account of the approved user

We will also consider applications from existing producers to extend their activities to include the recovery of waste fuel.

For advice contact the HMRC Excise and gambling duties helpline.

3.6.6 Excise entry — details required

Class A — the entry may be limited to a general description of the plant and vessels to be used for the production, processing, and storage of the fuel.

Class B — the entry should contain a description of the plant and vessels used in the production and processing of the fuel. The entry should identify all buildings and places (including a laboratory) in which duty-suspended fuel is handled.

If, however, production is a by-product of a manufacturing process (that is, it is not the primary purpose of the plant), the entry may be limited to such plant as contains fuel liable to excise duty.

The entry should not contain details of the marks or numbers of storage vessels forming the warehouse, as these will be included in a separate warehouse approval document.

3.6.7 Amendment to excise entries

You should tell us of minor changes to an entry (for example, an alteration to plant, addition of new plant, or withdrawal of some plant from use) by emailing the Mineral Oil Reliefs Centre at morcapprovalsteam@hmrc.gov.uk.

You must submit a fresh entry where a significant change in the plant or the operation takes place (for example, a major extension, a major change in the plant or the addition of a new process), or where there is a change in ownership of the business.

3.6.8 Action when production ceases permanently

You should notify the National Registration Unit. We will not withdraw an entry while any fuel liable to excise duty remains on any part of the entered premises. If you stop operations as a producer, you must continue to keep revenue accounts until the duty-suspended stocks are exhausted or until the duty has been paid.

3.7 Motor and heating fuels warehouses

3.7.1 General

We approve as ‘excise warehouses’ installations which receive and store motor and heating fuel products on which the charge to excise duty has been suspended (CEMA s92).

Any person wishing to operate such an excise warehouse must first apply for approval of the site and registration as an authorised warehousekeeper.

3.7.2 Policy on the approval of motor and heating fuels warehouses

We do not grant approval for distribution warehouses.

Except where the warehouse is adjoining a producer’s premises, we do not usually approve installations with less than 1 million litres storage capacity.

Also we do not usually approve installations intended to be for the exclusive use of the applicant or an associated company. We may refuse an application for registration as an authorised warehousekeeper.

If your application is refused we will offer you a review and tell you about your rights of appeal.

If you disagree with the decision, you may either accept the review offer or appeal to the independent tribunal. If you accept the review offer, but do not agree with the review conclusion you will still be able to appeal to the independent tribunal.

Find more information on HMRC’s review and appeal procedures.

3.7.3 How to apply for approval

You should apply to the National Registration Unit in time to allow us to consider your application before the warehouse is required for use.

We provide official forms EX70 and EX71 for your use when making application for approval of the warehouse, but we will accept initial applications by letter provided that all the required details are given.

You should seek approval early in the planning stages so that our requirements can be taken into account. You should also note the following:

• you cannot legally use new plant for revenue purposes without our approval
• you should make early application for approval of new plant or major alterations requiring amendment or extension of an existing approval
• we will take into account security provisions, especially for meters and marking of fuel, when we consider applications for approval (HOR reg 9)

Application for registration as an authorised warehousekeeper under WOWGR should be made on form EX61 Excise warehousing: application to be an excise warehousekeeper (before any duty-suspended fuel is deposited in the warehouse) and be returned to:

National Registration Unit
HM Revenue and Customs
Excise Processing Team
BX9 1GL

If you need help contact the HMRC excise and gambling duties helpline .

Fuel deposited in a warehouse which is not approved by HMRC, or which is occupied by a person not registered as an authorised warehousekeeper, is immediately liable to duty (WOWGR reg 20(1)).

3.7.4 Terms and conditions of warehouse approval

Any approval will contain specific limitations. It will cover the warehousing of specified descriptions of fuel, the purpose for which approval is granted and permitted activities.

The approval may specify any special features where it is necessary to fix a physical duty point, for example:

• a boundary valve which fixes the limits of the approval if there is a connection to other premises
• if a line is not approved for the whole of its length
• whether the flange is to be included
• any special restrictions or directions to which the approval and operations are subject

You must provide our staff with facilities for full examination of all connections within the limits of the approval.

All warehouse approvals will be subject to the conditions at Appendix E.

The approval letter will refer to these conditions, and will contain details of any variations to the conditions (including any additional conditions) agreed by HMRC and the installation operator to cater for local circumstances.

The letter will also contain details of any restrictions.

We may impose additional conditions where we consider it necessary (CEMA s92). We may also revoke or vary the terms of approval of any excise warehouse if we believe there to be reasonable cause (CEMA s92(7)).

Where convenient, approval to mark fuel or any other facility referred to in this notice, may be included in the warehouse approval together with any relevant conditions.

We will grant approval separately if it is required under other legal provisions (for example, of wharf facilities for general customs requirements, or the warehousing of goods other than fuel).

In addition the grant of an approval may be restricted to the warehousing of:

• specified descriptions of fuel
• fuel received from specified traders, specified premises or specified categories of traders or premises
• fuel for particular purposes
• heavy oil for use in excepted machines

Special situations

Unmarked kerosene

This fuel should be stored in approved tankage before their delivery into home use. This will be at the fully rebated rate for deliveries as aviation turbine fuel (Avtur) for aircraft engines.

Deliveries to approved furnace operators

Delivery may be made from a duty-suspended tank to a furnace by a closed line under a marking waiver so long as a satisfactory account of the fuel delivered is maintained.

Tied oil users, tied oil distributors and repayment users

If approval under one of these categories is granted, the vessels and stocks of fuel covered by the approval must be entirely separate from the vessels and stocks of a warehouse or producer’s premises.

However, permanent line connections between vessels of the different categories can be allowed. The approval must clearly identify in writing both the boundary point (for example, a valve) on any connecting line.

Shore tanks used to store marine fuel

If a shore tank is to receive marine fuel under duty suspension, it must be approved in its own right as an excise warehouse under the terms of paragraph 3.8.3.

Shore tanks unable to meet this criteria should only receive duty-paid stock. If the intention is for the tank to be used in the supply of fuel for marine voyages, then it may be eligible as a location for ‘netting’ arrangements. Details can be found in section 12.

Emergency concessions

If you are a fuel producer or distributor and you expect, or are experiencing, a serious fuel shortage. We will only grant requests for a duty concession where the shortage is the result of an accident or unforeseen event, we will not grant concessions during the stopping or slowing-down of production as a result of the maintenance or upgrading of your facilities, or during industrial disputes.

There should be emergency plans in place by your business to allow supplies to continue in those situations.

Directions

In addition to the conditions that are laid down in the approval letter, HMRC may from time to time give directions under CEMA 92(5) as to the goods which may or may not be deposited in any particular warehouse or class of warehouse, and as to the part of any warehouse in which any class or description of goods may be kept or secured. Such directions might include:

• specified descriptions of fuel are to be stored only in specified places or vessels
• fuel returned to warehouse after delivery, if off-loaded, is to be deposited in specified vessels and retained until HMRC authorises its removal
• blending of fuel of different descriptions or blending of additive substances with fuel is to be performed only in specified plant

3.7.5 Issue of approval

We will grant approval by letter and we will provide a schedule of the vessels and places that are approved. The National Registration Unit will issue a certificate of registration to each authorised warehousekeeper at their principal place of business.

3.7.6 Temporary conversion of duty-suspended tankage to duty-paid status (temporary debonding)

If a warehousekeeper wishes to use storage capacity designated for holding duty-suspended fuel temporarily to hold duty-paid fuel, they must apply in writing giving full reasons for the request, and specifying how tanks will be isolated.

HMRC must be satisfied that the request arises from a genuine trade need and is not Budget forestalling, read paragraph 3.11.

If we agree to the request, permission will be granted in writing specifying that the terms of this notice are adhered to, and that duty is paid on any fuel contained in the tanks and pipework to be debonded before any duty-paid fuel is introduced.

Where temporary debonding takes place the approval schedule need not be altered, but the warehousekeeper will be required to keep a record showing any tanks which have been temporarily converted to duty-paid status listing the dates of change.

3.7.7 Withdrawal of warehouse approvals

If you no longer require warehouse approval, for example, if the warehouse no longer stores motor or heating fuels, or if you cease trading, you should advise the National Registration Unit.

Where appropriate, you should give details of your proposals for disposing of any remaining duty-suspended oils, including any residual stock such as tank bottoms.

You should also advise the National Registration Unit if changes to your business affect the approval conditions of the warehouse (for example, less than 1 million litres storage capacity in regular duty-suspended use).

In such cases, the National Registration Unit will advise you whether the approval is to continue, and will give you 3-months notice in writing of the effective date of the withdrawal of the approval (CEMA s98).

3.7.8 Revocation of registration as an authorised warehousekeeper

We may revoke your registration with reasonable cause (read Receive goods into and remove goods from an excise warehouse (Excise Notice 197) for details) as an authorised warehousekeeper at any time, by writing to you.

If we revoke your registration we will offer you a review and tell you about your right of appeal.

If you disagree with the decision, you may either accept the review offer or appeal to the independent tribunal. If you accept the review offer, but do not agree with the review conclusion you will still be able to appeal to the independent tribunal.

Find out more information on HMRC review and appeal procedures.

Duty-suspended fuel which remains in any warehouse listed in a registration which is revoked becomes liable to duty immediately, but we may give permission for the fuel to remain duty suspended in that site for up to one month.

After that time, any duty-suspended fuel would become liable to forfeiture (WOWGR reg 22) whether or not any action had been taken by you in accordance with our guidance.

From 1 April 2009 the review and appeals procedures changed.

Find out more information in Disagree with a tax decision.

3.8 Warehousing of motor and heating fuel

Motor and heating fuel may only be placed in an excise warehouse as required by HMRC, or in order to facilitate a trade need. Warehouse approvals are granted to permit specified fuels to be held in duty suspension for a specific purpose.

The purpose and nature of a motor and heating fuel warehouse will be defined in the approval letter issued by the National Registration Unit. The following paragraphs describe the recognised revenue and trade need for which an approval may be allowed.

3.8.1 Motor and heating fuel production

This facility is always, physically, associated with production premises and, as required by HMRC, is an area set aside within producers’ premises to store oil produced by them. We do not require a minimum storage capacity for this type of warehouse.

Fuel may be delivered to home use on payment of duty. It may also be delivered without payment of duty for exportation, shipment as stores or for removal to the Isle of Man.

Certain fuels may also be delivered under duty suspension to a warehouse approved to receive them under terms and conditions stated in that warehouse’s approval.

3.8.2 Import

A warehouse may be approved to receive imported motor and heating fuel. It must be able to provide a minimum of 1 million litres storage capacity dedicated to imported fuel. It may also be approved to provide long term strategic stock.

It will not be allowed to receive fuel under duty suspension from a UK producer’s premises or another UK duty-suspended warehouse.

Fuel may be delivered to home use on payment of duty. It may also be delivered without payment of duty for exportation, for shipment as stores, or for removal to the Isle of Man.

Certain fuels may also be delivered under duty suspension to a warehouse approved to receive them under terms and conditions stated in that warehouse’s approval.

3.8.3 Export

The purpose of this facility is to store oil for exportation (including the bunkering of ships), for shipment as stores, or for removal to the Isle of Man. Fuel may be imported direct, or received from UK duty-suspended locations.

Fuel may not be removed on payment of duty for home use except in limited circumstances.

The warehouse approval will state those products which may be received under duty suspension and held before export. Only those products stated on the approval may be consigned to the warehouse under duty suspension.

Duty-paid deliveries from export warehouses

The purpose of an export warehouse is to provide for the storage of fuel without payment of duty before removal from the UK. Therefore, we only allow a limited provision for removal of fuel to home use on payment of duty.

In any 12-month period, duty-paid removals to home use must not exceed 5% of the warehouse’s total deliveries for the same period.

Duty-paid deliveries from export warehouses exceeding 5% but not 20%

Where deliveries to home use exceed 5%, no deliveries to home use from duty-suspended stocks are permitted. However, a facility may be given partial duty-suspended approval if it is established that at least 80% of the deliveries are for export.

Fuel for export may continue to be received on a duty-suspended basis.

Fuel to be used for meeting the home use demand must be duty paid before delivery to the facility.

We may allow common storage of duty-suspended and duty-paid stocks (read paragraphs 3.10 and 3.11).

Where deliveries to home use in any 12-month period exceed 20% of the warehouse’s total deliveries for the same period, approval as an export warehouse would no longer be appropriate.

If fuel is exported from duty-paid stock the duty may be reclaimed subject to compliance with the drawback procedures, find out more in Excise Notice 207: Excise Duty drawback.

Alternatively, duty-deferred payers may choose to reclaim duty using the netting procedures detailed at section 12.

3.8.4 Floating storage for bunkering ships

To facilitate the delivery of fuel to eligible vessels, without payment of duty, the tanks of floating craft may form part of an existing export facility (referred to as a ‘base’ warehouse).

The approved craft must have either:

• a permanent mooring, from which it may move only to bunker vessels in the immediate facility of that mooring
• freedom to move within a port or estuary or to undertake coastal voyages

In either case the craft must be operated by the proprietor of the base warehouse or by an associated or subsidiary company of the proprietor, and must be adjacent to and controlled directly from the base warehouse.

The capacities of the approved craft tanks will be included in the capacity of the base warehouse.

Fuel supplied to such craft from other excise warehouses is in all cases to be accounted for as a duty-suspended removal to the base warehouse. Fuel supplied from such craft on behalf of another duty-suspended installation at which the shipment is accounted for must be treated as a constructive removal to the other installation.

Further advice on constructive removals can be found at paragraph 7.3.3.

If you wish to apply for the approval of floating storage, you should write to the National Registration Unit, giving the information listed at Appendix F. The conditions we attach to such approvals are also listed at that section.

Any floating craft which is not approved as part of the base warehouse is not allowed to receive duty-suspended product.

3.8.5 Special energy products

Special energy products (SEPs) are defined as:

a. petroleum gas

b. animal fat set aside for use as a motor fuel or heating fuel

c. vegetable fat set aside for use as a motor fuel or heating fuel

d. non-synthetic methanol set aside for use as motor fuel or heating fuel

e. biodiesel

f. a mixture of 2 or more substances specified in paragraphs a. to e.

g. aqua methanol

In the UK, SEPs, unlike hydrocarbon oil, are not liable to excise duty unless set aside as fuel for:

• any engine, motor or other machinery
• use in heating
• as an additive or extender in any substance used as fuel

For this reason, separate legislation has been introduced to provide a mechanism for warehousing such products and facilitate movements to and from the EU, but intra-EU movements will now only apply to Northern Ireland and not Great Britain (England, Scotland and Wales).

This is contained in the:

• Excise Warehousing (Energy Products) Regulations 2004 (EWEPR)
• Biofuels and Other Fuel Substitutes (Payment of Excise Duties etc) Regulations 2004 (BOFSR)

SEPs which are subject to the intra-EU movement provisions (Northern Ireland only) must be deposited in an excise warehouse when received in Northern Ireland under these provisions. Similarly, intra-EU movements from Northern Ireland under duty suspension must originate from a tax warehouse.

More details of the UK and EU movement provisions can be found in Receive goods into and remove goods from an excise warehouse (Excise Notice 197).

The regulations provide for placing SEPs in an excise warehouse on a voluntary basis, to extend the same facility to SEPs from the following sources:

• EU receipts which are not subject to the movement provisions (Northern Ireland only)
• imports from third countries
• home production

Motor and heating fuel warehouses (excise warehouses) may be approved for either compulsory warehousing or for voluntary warehousing, or both.

In instances where an excise warehouse holds SEPs that are warehoused (compulsory or voluntary) and not warehoused (for example, ‘innocent goods’ such as imported or UK produced LPG which has not been voluntarily warehoused), the warehouse approval must include provision for common storage which requires that the stock accounting system is capable of distinguishing between warehoused (duty-suspended) and innocent goods.

More details on common storage can be found at paragraph 4.7 of Registration and approval of excise goods held in duty suspension (Excise Notice 196).

Once warehoused, SEPs are treated as products subject to excise duty under HODA until they are delivered from the warehouse. At this point the actual duty liability will be determined according to the use for which they are delivered.

Unless the use is a chargeable one there will be no liability to excise duty on delivery, VAT must however be accounted for as appropriate (read section 15).

The record keeping requirements of SEPs can be found at paragraph 13.4.

SEPs may only be delivered in the UK under duty-suspension arrangements as follows:

• where they are to be used as feedstock in the production premises of suitably approved recipients
• to an export warehouse for removal from the UK

Any losses of SEPs, storage or transit, within the duty-suspended environment are subject to excise duty in the same way as hydrocarbon oil.

3.8.6 Other trade needs

We may grant full or partial duty-suspended facilities in the following circumstances:

a. Warehouses used to store excess refinery production

Fuel must not be diverted direct to home use from such installations

b. Ministry Of Defence (MOD) (Navy) fuel depots

These installations may be approved as warehouses. They may also then:

• receive duty-suspended fuel from another UK tax warehouse or refinery, if it is intended for Navy use
• move duty-suspended fuel between themselves and other similarly approved Ministry of Defence (Navy) tax warehouses, if it is intended for Navy use only

c. Warehouses storing United States Air Force-owned fuel

Installations storing United States Air Force-owned fuel may be approved as warehouses.

d. Department for Energy Security and Net Zero compulsory stock obligations

Companies may be subject to Compulsory Stockholding Obligations (CSO) as set by the Department for Energy Security and Net Zero (formerly the Department for Business, Energy and Industrial Strategy (BEIS)). In these situations, a proprietor must be able to prove fuel stocks are held at an installation for more than 30 days specifically to meet the company’s stockholding obligation. Where this is the case, we may approve the premises for this purpose.

In applying for duty-suspended status, the proposed warehousekeeper must:

• produce documentary evidence of their Compulsory Stockholding Obligations, such as the obligation letter from the Department for Energy Security and Net Zero
• be able to demonstrate that this requirement is being met, and that fuel stocks are actually being held at the installation for more than 30 days

Where these criteria are met, we will consider approving the holding of duty-suspended stock in that quantity by which the total stockholding at an installation exceeds 30 days.

e. Specialised product warehouses

We may approve as warehouses those places used for storing solvents, fuel additives, industrial oils, and oil feedstock (for example, oil intended for a process of chemical conversion to a non-oil).

Applications will only be considered if approval under the terms of the tied oil scheme (read Get relief for mineral oil put to certain uses (Excise Notice 184A)) does not fulfil the trade need. For example, an approval may be granted if a duty point would otherwise be created.

f. Pipeline warehouses

We may approve as warehouses pipelines carrying duty-suspended oil between separately approved installations (read paragraph 9.13).

3.9 Duty-suspended approval and common storage

Only those tanks dedicated to the storage of duty-suspended fuels will be approved. Although complete segregation of duty-paid and suspended stock is usually required, where a warehousekeeper can demonstrate that this is operationally impractical, we may allow common storage of fuel of the same description.

Provided you comply with the following accounting requirements you may adopt the form and method of keeping common stock accounts which best suits your accounting and operating procedures. You must:

• maintain stock accounts to account for the duty due on any fuel held in duty suspension
• keep either a separate stock account for each consignment received, or a continuing account for all fuel of the same description
• balance your stock accounts monthly against the physical stock or whenever required to do so by HMRC
• calculate physical losses or gains in storage by balancing the total account and calculate the percentage loss or gain by reference to that total — you should then apportion the loss or gain between duty-suspended and duty-paid oils — more information is given at Appendix G

In conformity with our long-standing policy on temporary debonding (read paragraph 3.11) this facility is not to be used to forestall duty increases. The duty-suspended element within a common storage tank may not be converted to duty-paid status. Physical delivery of product from common storage to home use is required before such product assumes duty-paid status (read paragraph 3.11).

3.10 Temporary conversion duty-suspended tankage to duty-paid status

Occasionally, you may wish to use duty-suspended tankage to store duty-paid oils. You must obtain our prior approval to do this. We only allow this where there is a genuine trade need. In such cases the following conditions are applied:

• remaining duty-suspended capacity must not fall below 1 million litres
• all connections between duty-suspended and temporarily duty-paid storage and pipework must be disconnected or sealed off securely
• a suitable record should be maintained of the temporarily duty-paid storage (but the approved schedule need not be altered)

We will not permit this facility if there is a possibility of attempted Budget forestalling (read paragraph 3.11).

You must first contact HMRC to discuss any such planned change.

3.11 What Budget forestalling means

We define Budget forestalling as ‘the clearing of goods before the Budget for consumption afterwards, with the intention of avoiding any subsequent duty increase’.

You should not be in breach of our requirements provided that you comply with the requirements of:

• the law
• this notice and others in the Fuel Duty series
• Excise Notice 203a: registered consignees

We will not actively facilitate forestalling under any circumstances.

You should note the following points:

• the duty-suspended element within a common storage tank may not be converted to duty paid without a physical movement from the tank to home use
• we will not permit temporary change from duty-suspended to duty-paid storage in order to facilitate forestalling

In the period leading up to a Budget, we will not allow any increase in the number of tanks, or the total storage capacity, for which common storage approval has been given, unless it can be demonstrated to our satisfaction that there is a genuine trade need.

Tanks which already have approval for common storage may be used to store duty-paid oil from all sources, but you must make sure that such tanks continue to store duty-suspended oils at all times, otherwise the approval will lapse.

4. Measurement of fuel

4.1 Revenue traders responsibility

Revenue traders who take account of fuel for revenue purposes are responsible for:

• the accuracy of that account and the continuing accuracy of all measuring equipment used
• ensuring that the measurement equipment is secure, and is not improperly manipulated or tampered with
• complying with any direction from HMRC as to the method of measurement or the calibration or conversion tables to be used to determine the quantity of fuel in a particular instance

The accuracy of a measuring instrument or system is defined by its comparison with a reference standard traceable to national standards or against a result using a reference instrument procedure. The degree of uncertainty of a measuring instrument, or system, applied for HMRC purposes does not include the uncertainty of the reference device itself.

In the absence of specific guidance in this section you should generally follow the recommendations of competent authorities (for example, the Energy Institute (formerly the Institute of Petroleum) (read paragraph 4.6).

We do not formally approve meters or automatic tank level gauges. We restrict our mandatory measurement requirements to a statement of an accuracy requirement for each form of measurement as outlined in paragraph 4.10.

4.2 What unit of quantity to use

All accounts of the volume of fuel must be determined or calculated in metric units. The quantity of fuel received, stored, used or delivered is generally to be assessed in litres at 15°C, that is, the volume that the fuel would occupy if its temperature were 15°C. It should also be assessed at a pressure of 1.01325 bar, that is, the volume that the fuel would occupy if its temperature were 15°C under atmospheric pressure at sea level.

There are exceptions to this general rule (for further details read paragraphs 4.4 and 4.5).

For details about the measurement of road fuel gases, such as LPG, read Excise Notice 76: excise duty on gas for use as fuel in road vehicles.

4.3 What ‘standard temperature accounting’ means

The unit of quantity for excise duty purposes is ‘litres at 15°C’. ‘Litres at 15°C’ are referred to as ‘standard litres’ and the measurement and conversion process is referred to as standard temperature accounting (STA).

An HMRC and oil industry working group has produced guidelines for the operation of STA by best practicable means.

The guidelines specify acceptable procedures for converting ‘bulk litres’ (that is, the volume of fuel at the temperature at which the volumetric measurement was made) to ‘standard litres’. They also specify instances where conversion of bulk litres to standard litres is not required (read Appendix H).

You may also find it useful to obtain a copy of document HM38 User guidelines for standard temperature accounting from the Energy Institute.

4.4 How to convert ‘bulk’ litres to ‘standard’ litres

The information needed to convert bulk to standard litres comprises the bulk litre figure, the temperature of the product and the density of the product. By using the conversion procedures specified at paragraph 4 of Appendix H, it is then possible to convert bulk litres to standard.

4.5 When to apply a pressure correction factor to bulk litres for fuel STA purposes

Although there is no legal requirement for excise duty purposes that measured volumes are corrected for the effect of pressure, they should be corrected if the line pressure is greater than 5 bar, to maintain accuracy.

4.6 The Energy Institute ‘recommended measurement practice’ document HM39 (formerly PMP no 7)

4.6.1 General

To assist revenue traders in meeting our measurement accuracy requirements, the Energy Institute has published document HM39. A guide to recommended measurement practice for compliance with this notice.

Enquiries concerning the paper should be directed to the Energy Institute.

4.6.2 Status of HM39

The paper contains recommended guidance for complying with the requirements of this notice.

Where our mandatory requirements are reproduced in HM39 they appear in bold type. This is to differentiate between recommended practice and mandatory requirements.

Although the ‘recommended practice’ in the paper is not mandatory, we strongly recommend that you follow it.

4.7 How to measure quantities of fuel received, delivered and used in stock

You must measure the fuel by the most accurate means available at the duty-suspended site. These will normally be:

• gauging a calibrated storage tank
• reading an automatic tank level gauge
• reading a volumetric meter
• dipping or ullaging rail tank wagons

We support and encourage the use of volumetric meters and automatic level gauges for revenue accounting purposes when they provide better security, reliability and accuracy than any other method. Indeed, in some circumstances the use of meters is compulsory.

You must discuss with HMRC beforehand any proposal to take revenue account by:

• calculation of volume from the weight and density of oil (such proposals must give adequate protection against irregularity)
• dipping craft (you must be able to demonstrate to HMRC that no other method of measurement is practical)

We specify minimum acceptable levels of accuracy for various types of measurement. You must comply with these accuracy requirements (read paragraph 4.10).

Equipment must be properly maintained and calibrated in order to meet at all times the specified minimum accuracy requirements for the type of measurement to which it is applied. Records should be kept of maintenance and calibration work.

For STA purposes, (read paragraph 4.3) we accept the conversion of bulk litre measurements to standard litres by ‘best practicable means’.

4.7.1 Meters — general

You must use volumetric meters for the revenue accounting of all light and heavy oil (marked or unmarked) delivered out of duty-suspended installations into road tank wagons. Specialised vehicles at airports used solely for the refuelling of aircraft are not regarded as road tank wagons for the purpose of this notice.

HMRC may authorise exemptions from this requirement where, for example, meters would add little to revenue security, or to accuracy in accounting.

4.7.2 Types of volumetric meter that may be used for revenue accounting

We accept the use of positive displacement and turbine meters for revenue accounting.

We will also consider applications for the use of other meters such as mass meters (Coriolis, Ultrasound) but we will need assurance that such meters are able to meet our mandatory accuracy requirements.

Our preference is for meters that automatically correct measured volume to standard temperature conditions. However, the use of such equipment is not mandatory. Even where the use of meters is mandatory, we do not insist that automatic correction is carried out.

4.7.3 Automatic tank level gauges (ALGs)

Sometimes referred to as automatic tank gauges (ATGs), used for revenue accounting must be properly installed, tested and adjusted as recommended by the Energy Institute. You should:

a. make sure that the equipment on each tank is:

• properly installed and set up to give readings which can be related to those in the relevant calibration tables and to make sure that any temperature measuring equipment associated with the gauge gives accurate readings
• maintained in a reliable and accurate condition
• periodically tested against the results of manual gauging and, if necessary, independent temperature assessment

b. make arrangements for determining the depth of water bottoms in any tank to which the equipment is fitted:

c. keep a record available for inspection by HMRC on request, showing:

• the serial or identifying numbers of the equipment fitted to each tank, and any subsequent changes
• the results of the test carried out under a. and of any resulting adjustments
• details of the dates of servicing, maintenance inspections and adjustments carried out on each gauge and the outcome

4.8 Telling HMRC about the method and equipment you use to measure product for revenue purposes

You must tell HMRC the method and equipment used to measure product for revenue purposes. We use this information to assess the revenue we perceive to be at risk at each installation. We may also require you to notify us of certain changes or modifications to that equipment. You will not need to notify us routinely of minor changes.

You should agree with HMRC the:

• format in which information is to be supplied
• details required, including the type of changes to be notified

4.9 When to provide calibration tables

4.9.1 General

If as a warehousekeeper, producer or remote marking trader you take account by level measurement you must provide calibration tables for the storage vessels concerned.

Vessels must be calibrated and tables prepared by a competent person in accordance with the recommendations of the Energy Institute. The quantities in bulk litres must be determinable at every 2 millimetres (mm) of depth.

4.9.2 Floating roof tanks

In addition to complying with paragraph 4.9.1, tables for floating roof tanks must state the liquid depths at which the roof comes to rest firmly on its legs and at which it floats freely. They should include directions for reducing the tabulated quantity to allow for the displacement of oil by the roof when it is floating.

4.10 What accuracy requirements we need

4.10.1 General

You are responsible for the calibration and continuing accuracy of measuring equipment used to raise revenue accounts. You must comply with the following accuracy requirements (these requirements are referred to in the Energy Institute good practice document as HMRCs mandatory requirements).

The following are minimum acceptable accuracy requirements. If your measuring equipment is capable of a better standard of accuracy that better standard should be applied.

In addition to HMRC requirements for individual meters, the overall system Maximum Permitted Error (MPE) must be no more than +0.30%. This applies to all devices required to ensure correct measurement of standard volume.

4.10.2 Volumetric meters

The MPE of a meter used for revenue accounting (under its rated operating conditions) shall not exceed at any time for:

• unheated oils (+0.20%)
• heated oils (+0.20%)

You should note the following:

1. ‘Heated oil’ means heavy oil having a temperature exceeding 15°C and shown to the satisfaction of HMRC to be artificially heated.

2. ‘Artificially heated’ oils are those, which have been heated from an external source, such as steam heating coils, during storage or delivery, to facilitate handling. The temperature of these oils is normally kept substantially above 15°C. Oils which have not been intentionally heated subsequent to a production process, for example, in a refinery, but which may retain some residual heat from that process, are not regarded as being ‘artificially heated’.

4.10.3 ALGs and ATGs

The accuracy of an ALG used for revenue accounting, over the working range in which it is installed must be within +8mm of a measurement made by reference manual gauging. Again, under the provisions of the Measurement Instruments Directive, we have agreed that for all equipment installed after 30 October 2006, this accuracy level will be ±5mm.

ALGs and ATGs are used to measure the depth of fuel in tanks.

Technical information on the various types of ALG is in paragraphs 4.10.4 to 4.10.8.

With a temperature probe as additional equipment, they can also measure temperature. Such equipment can be set to read in or convert to volume at 15°C.

Setting-up and servicing ALGs requires a high degree of care. Experience has shown that their reliability depends on the trader’s observing the full maintenance procedure recommended by the manufacturer.

In addition to the readings given on tank-side indicators, some types of equipment may be connected to electronic units, which transmit information to a central control room. Traders’ schedules of measurement methods used at duty points will indicate those gauges used for duty accounting.

Tank gauges will usually be used for receipt accounting of bulk volumes taken into storage tanks and for stock control.

When properly installed and serviced, ALGs provide rapid and accurate tank dips and temperatures for operational and stocktaking purposes without interrupting the processes. They contribute to safety and to the economic use of traders’ manpower by reducing the need to climb tanks for manual dipping.

4.10.4 Manual gauging

The accuracy of a working dip-tape used for revenue accounting must lie within ± 2mm throughout each 30 metre length (+1.5mm when new).

4.10.5 Temperature and pressure measurement

When compared with a reference thermometer, the temperature measuring equipment used for revenue accounting must at all times be accurate to within:

• +1.0° C for heating oils
• +2.0° C for heated oils

If pressure is measured it should be accurate to within +0.50 bar.

4.10.6 Density measurement

Density must be measured by the use of densitometers or by testing samples (drawn from the appropriate vessel) with suitable hydrometers.

Density measurement equipment must be maintained and tested as recommended by the Energy Institute.

4.10.7 Public weighbridges

After an initial check, the Trading Standards Officer (TSO) must carry out the reproving of the weighbridge at 6-monthly intervals. The weighbridge may be assumed to be accurate for revenue accounting if it has been stamped by the TSO.

If the weighbridge fails to meet the required standard the TSO, will obliterate the stamp and apply a new stamp only when the required standard has been met.

4.10.8 Private weighbridges

The TSO will stamp private weighbridges after initial proving, but thereafter traders will need to arrange for routine reproving which should be done at least annually.

There is no Weights and Measures Acts trading standards requirement for a private weighbridge to be checked at regular intervals; it is left to the owner to request re-proving.

Before basing any revenue account on the weighing of road and rail vehicles or drums you must first notify the HMRC excise and customs helpline on Telephone: 0300 200 3700 to allow consideration of your proposals.

4.11 What you should do if your measurement equipment breaks down

To cater for this eventuality you should agree an ‘emergency measurement’ procedure with HMRC. Owners of third party warehouses should also agree an emergency procedure with us.

This method should be the next most accurate method of measurement available (for example, if a road loading meter breaks down, this may be road tank wagon dips or ullages where these may be taken safely).

You must make sure that:

• your operatives are aware of the procedure
• urgent action is taken to repair the defective equipment
• the use of the emergency measurement procedure, and the reason for its use, is recorded in a format agreed with customs and that record is retained for examination by HMRC (RTR reg 6)

4.12 What to do if you find your measuring equipment is operating outside our accuracy requirements

You must immediately stop using the equipment for revenue accounting, and report the matter immediately to HMRC. It is in your own interest to plan for this eventuality and to have a back-up measurement system in place (read paragraph 4.11). This also applies to third party warehousekeepers.

You may commit an offence if you intentionally use measuring equipment that you know to be incapable of operating within our accuracy requirements.

4.13 What you should do about revenue accounts which have already been raised using equipment which has been found to be inaccurate

You must investigate the circumstances to find out:

• when the equipment became inaccurate
• you must re-check all revenue accounts raised back to a period when you can demonstrate that the equipment was operating within our accuracy requirements — if your enquiries reveal that you have underpaid duty you should make payment immediately in accordance with paragraph 11.7

If you have overpaid duty, you should contact the HMRC excise and gambling duties helpline for advice.

Third party warehousekeepers must contact HMRC and their clients as quickly as possible.

4.14 Decreasing dip arrangement

We may allow you to assess the duty due on certain fuels (other than light oil, kerosene or gas oil) on the basis of the decrease in the warehoused quantity during each accounting period. In such cases duty becomes payable on storage losses, but this may be offset by economies that you can make in your handling and accounting procedures.

You should discuss this with us before completing your application for approval.

4.15 Concurrent receipts and deliveries

We do not usually allow concurrent receipts and deliveries in tanks used for deliveries from the warehouse, except where the product is volumetrically metered on delivery from the tank in accordance with this notice.

If there is a genuine trade need for a concession in other circumstances (for example, only one duty-suspended tank of a given product at an installation, and receipts occur at times when deliveries are taking place), you should contact the HMRC excise and gambling duties helpline stating the procedure to be adopted to make sure accurate measurement and revenue accounting.

4.16 Providing facilities for checks

Where required by us you must provide facilities for independent checks of quantities in containers, wagons or craft loaded or unloaded at the premises. You must also make sure such facilities meet the required health and safety standards.

5. Receipts

5.1 Procedure for imports of fuels

5.1.1 Procedure generally

Fuel imported into the UK for warehousing, for use in a fuel producer’s premises, or for removal to approved remote marking premises for marking or delivery under a marking waiver, must be declared as directed in the UK Trade Tariff volume 3. Fuel for use in duty-suspended premises must be warehoused before use.

If the fuel is liable to Customs Duty, the guidance in How to use your duty deferment account explains how payment of Customs Duty at importation can be deferred.

Paying VAT on imports from outside the UK to Great Britain and from outside the EU to Northern Ireland explains the VAT procedures that apply to imports.

5.1.2 Bulk importations

Warehousekeepers should give prior notice of all vessel arrivals to HMRC using a locally agreed procedure. Once a vessel has arrived, details of cargoes must then be notified to us by means of a ‘presentation’ document.

When this has been lodged you may assume that you have our permission to discharge into approved tanks at an approved wharf. Within 24 hours of arrival the fuel must be declared to HMRC by a ‘summary declaration’ which may take the form of an import declaration (form C88).

Fuel intended for warehousing may also be discharged direct into approved tanks at a duty-suspended warehouse before it is examined by HMRC, once all other HMRC requirements in respect of the importation have been complied with and the warehousekeeper or producer:

• keeps available for official inspection an up-to-date programme of the tanks to be used for receiving fuel from import in the next 24 hours
• makes sure that the receipt tanks are isolated from all other tanks and that outlets remain closed from the time when dips are taken before discharge until the final dips have been completed
• makes sure that any fuel conveyed under duty suspension in the same ship is physically segregated and its receipt is accounted for separately (EWER reg 11)

After examination and clearance of the import declaration (C88), HMRC may wish to compare the C88 with the master’s declaration and a declaration from the trader as to the calculated figure landed (or out-turned).

The master’s declaration (on form C13) is completed by the master of the vessel carrying the import cargo and includes a description and quantity of cargo on board and the site, or sites, at which it is to be discharged. It is presented at the local boarding station or import control station through the ship’s agents.

The warehousekeeper must present a declaration of the receipted figure calculated on shore tank dips, confirming the actual quantities of product landed.

Comparisons made between these 3 documents will determine whether the whole of the cargo has been accounted for.

5.1.3 Importations direct to remote marking premises

Unmarked gas oil, kerosene or light oil furnace fuel imported for delivery to remote marking premises for marking must be declared at the appropriate unrebated rate of duty (HODA s6 (1)(a)). Rebate may be claimed in accordance with paragraph 8.17.

5.2 Procedure for fuel shipped to Northern Ireland from EU member states

Movement of the oil products listed in Appendix I within the UK and the EU, is subject to the provisions of the Excise Movements Directive (Council Directive 2008/118/EC).

The requirements for the movement of excisable goods, other than fuel, under excise duty suspension within Northern Ireland and the EU, are set out in Receive goods into and remove goods from an excise warehouse (Excise Notice 197).

The requirements for the movement of fuel broadly follow those in respect of other excise goods, but the fact that fuel products are sometimes traded at sea and consignors do not know the final destination has caused special arrangements to be made for them. The procedure is set out in paragraph 5.3.2.

5.3 Receipts under excise duty suspension

Since 1 April 2010, the Accompanying Administrative Document paper documentation system has been replaced by the electronic administrative document (eAD), as a result of the introduction of the Excise Movement and Control System (EMCS).

EMCS is an electronic system for recording and validating movements of duty-suspended excise products.

In Great Britain (England, Scotland and Wales) it is only necessary to use EMCS for movements of energy products in the specific circumstances of movements by registered consignors from a place of import, either to a warehouse of directly to a place of export.

In Northern Ireland, intra-EU movements of duty-suspended energy products in specific circumstances will continue due to provisions within the Northern Ireland Protocol.

A registered consignor will be required for imports of duty-suspended excise goods into Northern Ireland from outside the EU. The consignor must register with HMRC and enrol for EMCS before moving duty-suspended goods.

The consignor of the duty-suspended excise goods must complete and submit an eAD using EMCS before a movement of excise goods can take place.

There are guidance notes and help text online explaining how to use EMCS and there’s help on the EMCS screens.

Once the detail entered on the eAD has been validated, EMCS will generate a unique Administrative Reference Code (ARC) for that particular movement. The ARC is required to travel with the goods and must be made available for presentation when requested during the course of the movement.

This means the consignor must provide the person accompanying the goods (for example, the driver of the vehicle) during the course of the movement with a printed version of the validated eAD or any other commercial document on which the unique ARC is clearly stated.

Find more details on the EMCS in Receive goods into and remove goods from an excise warehouse (Excise Notice 197).

Details of how excise warehousekeepers and registered consignors can register, enrol and access EMCS are contained in Registration and approval of excise goods held in duty suspension (Excise Notice 196).

5.3.1 Exceptions where EMCS is not used

Circumstances where EMCS is not used for movements of energy products include:

• the excise goods are moving under fallback procedures because EMCS is not available (read section 3 of Receive goods into and remove goods from an excise warehouse (Excise Notice 197)
• the duty-suspended movement is one that meets the criteria for simplified procedures (read section 4 of Receive goods into and remove goods from an excise warehouse (Excise Notice 197)
• a duty-suspended movement of energy products is taking place wholly between warehouses within the UK or from a UK warehouse to a place of export — these movements do not take place on EMCS; they must be accompanied by a W8 (or commercial equivalent) instead

5.3.2 Registered consignees — formerly registered excise dealers and shippers (REDS)

(REDS) — and temporary registered consignees, formerly occasional importers — apply in Northern Ireland only

Registered consignees (apply in Northern Ireland only) — known previously, before the introduction of EMCS, as REDS, as revenue traders who are approved by and registered with us to receive and account for the duty on duty-suspended excise goods from EU member states.

Registered consignees must account for the duty when the goods are received in the UK. Registered consignees may not hold or dispatch goods under duty-suspension arrangements.

A registered consignee must be approved by HMRC before they are permitted to receive goods under duty-suspension arrangements, whether or not they own those goods at the time they receive them.

Find more information in Excise Notice 203a: registered consignees (Northern Ireland only) on the Temporary Consignee system.

Temporary registered consignees (TRC) (apply in Northern Ireland only) — replacement scheme for the occasional importers system

Find out more in Temporary Registered Consignees (Excise Notice 204a) (Northern Ireland only) for more information on the TRC system.

5.3.3 Receipts of oil where the final destination had been uncertain at the time of dispatch

Also read paragraph 5.3.4 (which only applies to movements between the EU and Northern Ireland).

An eAD is normally required for all movements including those to ‘uncertain destinations’. However, regulation 44 of the Excise Goods (Holding, Movement and Duty Point) Regulations 2010 covers outbound consignments of this type, allowing the name of the consignee to be entered later, while inbound consignments are similarly covered by their EU member states’ equivalent legislation under Directive 2008/118/EC.

In such cases, the eventual receipt of the oil in the UK must be treated as a re-import and requires an import declaration.

The appropriate Customs Procedure Codes are 07 00 00 for receipt into duty-suspended oils warehouses, or 40 00 58 for receipt into premises not under fiscal control. The UK Trade Tariff volume 3, Appendix E2 refers.

In such cases, the importer must also produce evidence of EU origin to demonstrate that the imported oil is not liable to Customs Duty. The EU agreed evidence is form C&E1158 Pay less import duty and VAT when re-importing goods to the UK, but within the UK commercial documentation demonstrating free circulation is acceptable.

Import VAT will be payable on such fuel as described in Paying VAT on imports from outside the UK to Great Britain and from outside the EU to Northern Ireland.

5.3.4 What happens when a duty-suspended movement from the UK with an uncertain destination or a non-UK destination is diverted to return to Northern Ireland (only applies to movements between the EU and Northern Ireland)

On rare occasions a duty-suspended movement, having left a Northern Irish load port with an ‘uncertain destination’ might return to Northern Ireland as a result of trading or because of a problem with the vessel resulting in the goods being discharged within the Northern Ireland.

These isolated movements may be treated as duty-suspended movements within Northern Ireland and the EU, provided we are satisfied that the circumstances are exceptional.

5.3.5 Excise duty-suspended movements within the UK — accompanying documentation form W8

Duty-suspended movements within the UK require accompanying documentation (form W8). Financial guarantees may also be required for some movements. Warehouses can have their own commercially produced version provided that it meets the requirements of HMRC and is approved by us.

The authority for these requirements is contained within the EWER.

Duty-suspended movements are restricted to the circumstances described as:

1. Low risk products: unfinished products, such as crude, condensate and basic feedstocks (for example, crude benzene) which require further refining may move under excise duty suspension. Such product may be considered low risk. If delivered frequently by road, rail or pipeline, scheduling on a monthly basis may be allowed. These schedules can take the form of normal commercial documentation, but they must contain all the information required by the W8 form.
2. Pipelines: pipelines in the UK can only carry duty-suspended finished product under the circumstances outlined in paragraph 2.5. Where this does occur a form W8 will be required. The form W8 should be sent from the responsible person at the point of dispatch to the responsible person at the point of receipt by post, fax or email.
3. Fuel substitutes: these do not tend to travel under duty suspension within the UK. This is because they are either set aside for a chargeable use and are consequently duty paid, or they are not set aside for chargeable use and are therefore not excisable goods. Consequently they will not move under duty suspension or be warehoused.
   The question of form W8s does not therefore arise unless the producer wishes to remove fuel substitutes under the duty-suspension provisions. In that case the accounting procedure proposed by the producer is to be considered and approved by HMRC.
   It is the responsibility of the producer when they send out the fuel to make sure that the site to which the goods are being transferred is approved (and remains approved) by HMRC for duty-suspended storage. Contact the HMRC excise Movement and Control System helpline if there is any doubt.
   If such a site is not approved for duty-suspended storage (or approval is withdrawn), excise duty should be charged and entered to the motor and heating fuels record before the goods are transferred.
4. Fuel additives and extenders: these can be either fuels or non-fuels. If they are not fuels, then they should be treated as fuel substitutes. If they are fuels, they would be treated in accordance with Directive 2008/118 and could therefore require an eAD if travelling intra-EU or a form W8 when moving within the UK, under part 6 of the Excise Goods (Holding, Movement and Duty Point) Regulations 2010.

5.4 Scheduling of form W8s

Form W8s may be scheduled in the following circumstances:

• pipelines, where they are subject to a warehouse approval — we may accept monthly schedules of movements instead of W8 forms
• low risk road movements — we may consider monthly scheduling of form W8s

5.5 W8 forms and losses

Goods entered for removal from an excise warehouse must travel with an accompanying document W8 form, which has been completed in accordance with the instructions on the reverse of the W8 form.

In the case of pipelines, the form W8 will be forwarded separately.

If all of the goods as described on form W8 do not arrive at the consignee’s address, duty may be due on the whole consignment (reg 17).

In the first instance contact the HMRC excise Movement and Control System helpline for advice.

Warehousekeepers sending out goods must notify HMRC where a certificate of receipt is not obtained for all goods that have been sent out in duty suspension (reg 15). There is a clear requirement on the consignor to inform HMRC where copy 3 of form W8 is returned by the consignee showing a shortage upon receipt.

Losses must be reported by forwarding a photocopy (both sides) of copy 3 of form W8 to your nominated HMRC representative as per paragraph 5.3 within 3 days of its receipt.

However, for bulk sea movements over 50,000 litres, only losses in excess of 0.5% of the quantity shown as having been shipped must be reported.

5.6 Procedure for receipts under excise duty suspension

When oil is received under duty suspension under the W8 form system, the warehousekeeper must send a certificate of receipt to the consigning warehousekeeper. Any discrepancies between the amount shown on the delivery document and the quantity received should be noted on the certificate of receipt.

The certificate of receipt should be sent within 5 days of the goods being warehoused. Failure to do may result in penalties being imposed and approval being reconsidered.

For the procedure under the EMCS read Receive goods into and remove goods from an excise warehouse (Excise Notice 197) for further details.

5.7 Fuel previously delivered for home use

5.7.1 General

There is no general restriction on the receipt of fuel previously delivered for home use into a warehouse or fuel producer’s premises, subject to paragraph 3.7.4. Such fuel may also be received into duty-paid remote marking premises.

However, the descriptions of fuel that may be received into a particular warehouse (including vessels and places approved as a warehouse at entered premises) may be restricted by a:

• limitation or a condition in the warehouse approval
• direction applicable to the warehouse or class of warehouses

5.7.2 Credit of duty

We do not generally allow credit of excise duty on duty-paid fuel, or on the fuel content of composites (fuels of different descriptions), delivered from warehouse on payment of duty and later returned to duty-suspended storage. Paragraphs 5.7.3 to 5.7.8 set out when we will allow credit, and also when we will not.

In particular we do not allow credit of duty on frustrated deliveries unless contamination or accidental mixing, after delivery and duty payment, can be established as the reason for return (HODA s20).

5.7.3 Meter proving — fuel that has been returned to duty-suspended storage after use for proving delivery meters at duty-suspended premises

This oil may be returned to duty-suspended stock on credit of excise duty at the rate charged at the time it was metered.

5.7.4 Contaminated or accidentally-mixed fuel returned to duty-suspended storage

Credit of excise duty may be allowed for fuel which has become contaminated or accidentally mixed since being removed from duty suspension on payment of duty and which is received into duty-suspended storage (HODA s20).

If returned fuel is added to bulk marked stocks, sufficient additional marker must be added so that subsequent deliveries from that stock meet the statutory minimum marking requirement.

Contaminated or accidentally mixed oils may be taken to include returns of off specification aviation fuels.

Oil used at duty-suspended premises for vehicle flushing, or that is contaminated in the course of testing ships’ tanks or rinsing out oil bottles or drums, may also be included, provided duty-paid or other orthodox delivery is not possible.

Draining of line contents of wet-hose vehicles are excluded from these arrangements.

When contaminated or accidentally mixed fuel on which duty credit is to be claimed, is received at a duty-suspended installation, the warehousekeeper should immediately record details of:

a. the date of the contamination or accidental mixing and the date or proposed date of return to duty suspension;

b. the description and quantity of contaminated fuel and the nature of the contamination, or the quantities and descriptions of the different kinds of fuel which have become accidentally mixed, with the results of any independent laboratory analyses;

c. the circumstances in which the fuel became contaminated or accidentally mixed

d. the name and address of the person or premises from which the fuel is to be, or has been, uplifted

e. the duty-suspended vessel into which it is to be deposited, and the proposed method of treatment

f. evidence held that the oil constituents of the contamination or accidental mixing had previously borne excise duty — this comes under the record keeping requirements in RTR reg 6

Further action should be taken in accordance with procedures agreed with HMRC (for example, we may occasionally wish to examine, sample and take account of the oil in the container in which it is returned to warehouse).

For regular routine returns of small quantities of contaminated or accidentally mixed fuel (for example, vehicle flushings), there may be no need to notify HMRC specifically, but the record must be retained and be made available for inspection by us when required.

Where there is doubt about the nature or degree of contamination or accidental mixing, we may require warehousekeepers to submit samples for laboratory analysis at their own expense.

If there is any significant divergence between test results and the details of contamination or accidental mixing set out in the claim, we may ask for an explanation or we may send a sample for analysis by our appointed chemist.

Duty credit must be based on the quantities of each revenue category of oil present in the contamination or mixture. Credit must be claimed at the rates of duty which would have been applicable had those quantities been delivered uncontaminated or unmixed on duty payment at the time the contamination or accidental mixing took place (HODA s20 (3)).

Pipeline interfaces returned to duty suspension must be claimed for duty credit only as charged by the pipeline Duty Adjustment System (DAS).

Each quantity returned is to be shown in the accounts and included in the warehouse stock. The accounts should contain details of the quantity of oil on which credit of duty has been claimed, and the rate of duty applicable in accord with HMRC provisions (RTR reg 6).

Credit should be taken by set-off in the duty deferment account.

Mixings, accidental or otherwise, after delivery on duty payment may incur an extra charge of excise duty and VAT (HODA schedule 2A).

5.7.5 Contaminated or accidentally mixed oil returned to remote marking premises

A record containing the details required by paragraph 5.7.4 should be made and notified to us before contaminated or accidentally mixed oil is received into remote marking premises where the proposed method of treatment will result in any:

• unrebated fuel in the contamination or mixture being marked or flooded into marked stock
• rebated fuel in the contamination or mixing being flooded into unrebated fuel stock (RTR reg 6)

Further action should be taken in accordance with procedures agreed with HMRC (for example, we may occasionally wish to examine, sample and take account of the fuel in the container in which it is received).

Where treatment does not result in any additional liability to duty, there may be no need to specifically notify us.

For example, a marked gas oil and marked kerosene mixture returned to marked rebated stock would not need to be notified, unless the mixture was intended to fuel any engine or motor. In such instance duty (at reduced rate for gas oil) would be due on the kerosene content of the mixture (read paragraph 5.7.4).

We cannot pay a rebate on any duty unless the fuel in question is returned to a tax warehouse. A registered remote marking premises (RRMP) is not a tax warehouse. Any compensation for losses incurred from contamination would have to be sought from your supplier.

5.7.6 Contaminated or accidentally mixed oils returned other than to duty-suspended premises

It is not possible to claim a rebate of duty on contaminated or accidentally mixed fuel in these circumstances. You must consult HMRC on how to proceed.

Each case will be dealt with on its merits and we will issue removal, marking or accounting instructions as appropriate. Above all, contaminated fuel should never be sold as road fuel unless it is first treated in a way approved by HMRC.

5.7.7 Duty-paid oil-based composites received into duty-suspended premises for addition to duty-suspended stocks

Although there is no general entitlement to credit of excise duty on the duty-paid fuel content of these composites (marker concentrates or fuel additives) before delivery, we may allow credit of duty on certain motor fuel additives, and on gas oil and kerosene marker concentrate manufactured in duty-paid premises.

Credit of duty is allowed on addition of the composites to oil in duty suspension, not on their receipt into duty-suspended premises.

Applications for authority to claim credit of duty in these and similar circumstances should be made to HMRC, no set-off can be made until you receive our authorisation.

5.7.8 Used duty-paid oil received into a fuel producer’s premises for re-refining

You may apply for the amount of duty previously paid to be offset against the duty charge on the oil available for removal from site after treatment, where used duty-paid oil is received into a fuel producer’s premises.

6. Operations

6.1 Operations that may be performed in approved warehouses

In an approved warehouse, and subject to any restriction imposed by Commissioners’ (HMRC) direction or conditions of approval, fuel may be:

• filled into drums, cans or other receptacles
• cleaned by straining or any other means (for example, heat treatment or chilling) which does not change the liability of the fuel to duty or its entitlement to rebate
• marked or dyed
• mixed with additives

Other treatment of fuel is not normally allowed in a warehouse (CEMA s92).

6.2 Operations that may be performed in a fuel producers’ premises

6.2.1 General

In an entered fuel producer’s premises any treatment of oil may be performed and fuel may be produced from any material. Producers may obtain it from any natural source (for example, an oil well or from shale) or from any non-oil material (for example, coal). They may refine, purify, blend and carry out any process on the fuel.

However in that part of the entered premises approved by us as a warehouse, producers may perform only those operations, which are normally allowed in a warehouse (read paragraph 6.1).

6.2.2 Use of fuel without payment of duty at a fuel producer’s premises

Producers (including power plants approved as producers) may use fuel without payment of excise duty:

• as feedstock, that is, material used in the production of fuel or chemically transformed into a substance which is not fuel
• as fuel for producing heat, light and power required for processing the feedstock (including fuel for machinery used to process the feedstock)
• for producing electricity supplied to the National Grid where this is incidental to the second bullet point in this list of bullets, and subject to meeting the criteria in Appendix J — in effect, surplus production
• for lubricating machinery used in the treatment of fuel (HODA s9)
• as a solvent in the production of fuel (HODA s9)

Except as listed at paragraphs 7.9 and 7.11, the excise duty charged on fuel which is used in a producer’s premises cannot be repaid.

6.2.3 Setting fuel aside for use

We may require that fuel which is to be used in a refinery for any purpose be ‘set aside’ before it is taken for use (HOR reg 7).

Fuel set aside for use in a refinery must not be diverted for any other use or purpose without our permission. For example, fuel received for use in the production of non-fuel substances is deemed to have been set aside. Such fuel is not to be put to another use or disposed of for any other purpose, for example, delivered to other premises, used in oil-to-oil production, or destroyed, unless our permission is obtained.

This restriction does not apply to fuel by-products, residuals or other substances resulting from refining operations.

HMRC will consider applications to deliver set-aside fuel on payment of duty or for removal under duty suspension when:

• a producer wishes to dispose of remnants of stock because the production premises are closing, the tanks in which the remnants are stored are to be demolished or used for a different purpose, or the use of the kind of oil concerned has been discontinued
• the oil has inadvertently become too contaminated to be used in the premises
• the trader wishes to make an isolated delivery on behalf of another producer to meet an unexpected or emergency shortage there

Remember that before gas oil or kerosene may be removed from duty suspension on payment at a rebated rate of duty, it must be marked to satisfy UK regulations (read section 8).

6.3 Where gas can be incorporated into fuel

Hydrocarbon gas may be incorporated in fuel only in an entered fuel producer’s premises (HOR reg 5).

6.4 Control of recoverable or ‘waste’ oil from interceptors

Waste oil in warehouses, such as slops, spills, waste from tank cleaning, tank bottoms, can result from a number of operations. These wastes are often collected in interceptors where oil and water are separated.

If we are satisfied that the waste oil is from interceptors which have been filled from wholly duty-paid sources (for example, duty-paid gantries, provided no duty credits have been allowed on spillages), we may allow destruction or removal of the oil without restriction.

In all other cases the oil is to be disposed of in one of the following ways:

• destroyed in an approved manner, for example, not burned to produce useful heat
• delivered to home use on payment of duty at the appropriate rate
• removed under duty suspension
• to another warehouse or producers’ premises subject to the standard conditions
• returned (without credit of duty) to duty-suspended stocks within the same warehouse or producer’s premises

6.5 Oil used in a chargeable process: Customs Duty

When fuel which is liable to Customs Duty is used in a process which cannot be performed in a warehouse and that process does not in itself give entitlement to Customs Duty relief, the duty becomes payable at the time the fuel is taken into process.

However, arrangements may be made (as explained in Hydrocarbon Oils — Customs Duty) for claiming suspension of Customs Duty where the products of the process are intended for exportation.

Guidance in Check if you can delay customs payments and declarations explains the conditions and procedures that must be complied with and a reasonable method of estimating home use and export allocations must be adopted.

If a product of the process is a fuel that is to be re-warehoused, the quantity derived from the export allocation should be entered in the records as ‘for export only’. Any diversion of this fuel to home use would attract a Customs Duty charge, at the rate and on the value applicable to the fuel from which it was derived, at the time that the fuel was put into process.

7. Delivery procedures

7.1 General

The removal or delivery of fuel from warehouse occurs at the boundary of the warehouse. Such deliveries may take place through a volumetric meter or other form of taking account of revenue. The warehousekeeper must make sure that all loaders, drivers and carriers know and comply with the delivery procedure that has been agreed with HMRC. Any change in the procedure must be agreed with us before implementation.

In general, fuel may be delivered from a warehouse or a producer’s premises at any time on any day. However, CEMA section 128 provides that during any period not exceeding 3 months we may refuse to allow the removal for home use of quantities of fuel exceeding those which appear to us to be reasonable in the circumstances.

For more information on Budget forestalling read paragraph 3.11.

7.2 Conditions that apply to the delivery of tied oil

Provided the supplier has complied with paragraphs 8.5.1 and 8.5.2, the approved person to whom the tied oil is supplied is responsible for accounting for its disposal.

Further guidance on the tied oil scheme is given in Get relief for mineral oil put to certain uses (Excise Notice 184A).

For further information read paragraph 12.1 — Category 4.

7.3 Procedure for the removal of fuel under duty suspension

Fuel may be removed without payment of duty from one duty-suspended installation to another only as described in section 2.

For products removed from one producer’s premises to another as a volume adjustment under exchange partner arrangements, the business sending the oil under duty suspension should advise HMRC, in accordance with locally agreed procedures, that it is to be treated as an adjustment transfer.

7.3.1 Restrictions on removal

Fuel may be removed under duty suspension subject to the following restrictions.

a. Fuel may be removed in any suitable vehicle or craft. If you wish to convey fuel removed under duty suspension in the same vehicle or craft as other fuel that is delivered for home use you should agree the procedure with HMRC.

b. Oil set aside for refining under paragraph 6.2.3 may be removed only with HMRC permission.

c. HMRC’s authority is required before fuel may be removed under duty suspension to refining plant, which is not approved as a warehouse.

In all cases, the duty on the fuel remains the responsibility of the supplier for the premises from which it is removed until the consignee returns the certificate of receipt for it (read paragraph 5.7) (EWER reg 15, HOR reg 11).

7.3.2 Removal accounts

Traders involved must make sure that accurate accounts are taken of fuel delivered and received and that the tank wagons or tank craft, which convey it are fully discharged at the place of receipt.

If for any reason a wagon or craft is not fully discharged, an account must be taken of the remnant, and, unless an alternative procedure has been authorised, businesses must notify the HMRC office responsible for the warehouse of receipt (this information can be obtained from the excise and customs helpline on Telephone: 0300 200 3700) of the quantity remaining in the wagon or craft and its disposal.

Where different consignments of fuel are conveyed under duty suspension in the same vehicle or craft, the transporter must make sure that there is no intermixing between consignments.

If the fuel is not to be segregated in transit, arrangements satisfactory to us for apportionment of the quantities discharged must be established and maintained.

If accidental mixing occurs (for example during loading), you must record the relevant details and take further action in accordance with procedures agreed with HMRC. Unless this is done we will not necessarily accept an increase in one consignment as an explanation of a deficiency in another.

7.3.3 Constructive warehousekeeping

A warehousekeeper or producer to whom fuel is consigned on removal under paragraph 7.3 may, without physically receiving it into approved premises, re-consign it on the basis of the advised description and quantity for:

a. a further removal as described in the previous paragraph

b. exportation or shipment as stores (read paragraph 7.6)

c. supply as tied oil subject to the relevant conditions (read paragraph 7.2)

In all such cases, all records, certificates and other documents are to be completed and dealt with as if the fuel had been taken into stock and re-delivered.

Fuel removed under duty suspension may not, without our consent, be delivered on payment of duty until it has physically been taken into stock and full accounts of the description and quantity of the oil have been taken on receipt and on re-delivery.

We will give consent only in special circumstances, for example, where a remnant in conveying wagon or craft has for good reason not been received into stock (HOR reg 4, EWER reg 17).

7.4 Removal of fuel to the Isle of Man

7.4.1 For immediate duty payment without re-warehousing on the island

Fuel may be removed without payment of excise duty from a UK warehouse or oil producer’s premises to the Isle of Man for duty payment there without re-warehousing on the island.

The sender must insert prominently on the commercial delivery document ‘for duty payment at’ (the place of landing in the island). In the case of gas oil, that document must specify whether or not the fuel is marked to UK requirements.

The fuel must be produced to the proper officer on arrival and the appropriate Isle of Man duty must be paid.

7.4.2 Under duty suspension

Fuel may be removed without payment of UK excise duty from a warehouse or a fuel producer’s premises in the UK to Isle of Man bonded warehouses:

Manx Petroleum Ltd
Douglas No 2
Battery Pier
Douglas
Isle of Man

Ellan Vannin Fuels Ltd
Douglas No 9
and Mill Road
Peel
Isle of Man

The delivery note must be endorsed in accordance with the following statement:

Oil (or fuel) removed under duty suspension if:

• not liable to Customs Duty ‘This oil has not borne excise duty’
• liable to both Customs Duty and excise duty ‘This oil is liable to both Customs Duty and excise duty’
• kerosene ‘This oil has/has not been marked’ (as appropriate)

7.5 Conditions which apply to delivery of fuel for vessels on marine voyages

Find further information in Excise Notice 263: marine voyages — relief from fuel duty.

7.5.1 Duty-free delivery direct from warehouse

Heavy oil may be removed without payment of excise duty from a warehouse or producer’s premises for use on board vessels (including hovercraft) other than pleasure craft, whilst engaged on marine voyages, that is, voyages in which a vessel is at all times either at sea or within the limits of a port.

Full details of the procedure to be followed are given in Excise Notice 263: marine voyages — relief from fuel duty. Security is not normally required for such movements, but read paragraph 3.5.

The owners of the vessel or a person authorised on their behalf must request duty-free shipment of the fuel and certify that it will be used on board a vessel engaged on a marine voyage.

The request and certificate on behalf of the vessel’s owner is to be given either:

• on a copy of the delivery note for each consignment
• where locally authorised by us, in a monthly statement furnished to HMRC for the supplying installation

7.5.2 Delivery from duty-paid storage

Alternatively, traders approved for duty deferment (and intermediaries named with their netting arrangements) may make deliveries of heavy oil directly to similarly entitled vessels at duty exclusive prices from duty-paid storage and claim repayment of the duty under the netting arrangements described in section 12, or may pass on the duty to be reclaimed by the ship’s owner or master.

7.6 Procedure for fuel which is exported or shipped as stores

7.6.1 General

Fuel for exportation or shipment as ships’ stores may be removed from a warehouse or fuel producer’s premises without payment of excise duty.

7.6.2 Exports

Traders should check whether they need to declare goods being brought into, or taken out of the UK.

7.7 Moving fuel under duty-suspension arrangements to an EU member state (applies within Northern Ireland only)

Movement of the fuel products listed in Appendix I within Northern Ireland and the EU is subject to the arrangements required in the Excise Movements Directive (Council Directive 2008/118/EC).

The requirements for the movement of excisable goods under duty suspension within Northern Ireland and the EU are set out in Receive goods into and remove goods from an excise warehouse (Excise Notice 197).

7.7.1 System for Exchange of Excise Data

Except where the destination is uncertain, it is the responsibility of the warehousekeeper, as the consignor (sender), to confirm the status of the consignee before sending goods. This is achieved through a reference numbering system applied throughout Great Britain and Northern Ireland.

In the UK the database is called the System for Exchange of Excise Data (SEED), maintained by HMRC.

The EU member state is required to supply, by computer disk, a list of their authorised warehousekeepers and registered traders, to Northern Ireland, the reference number having been allocated by the respective fiscal authority.

Northern Ireland and EU member states therefore hold a composite Northern Ireland and the EU list of authorised traders on a database.

Within Great Britain, the SEED database will be self-contained and due to EU Exit data will not be shared with EU member states (and the other way round).

7.7.2 Known and uncertain destinations (applies to Northern Ireland only)

You should follow your usual commercial practice which will differ depending on whether the consignment is destined to go to a ‘known’ or ‘uncertain destination’.

Normally, to ‘known destinations’, you may send goods in duty suspension only to authorised warehousekeepers or registered traders (the latter category being registered consignees in EU member states).

The EMCS provides a pre-validation facility which allows you to check that the recipient is authorised to receive the goods.

Contact the HMRC Excise Movement and Control System helpline who may also be able to help if you encounter problems in confirming authorisation.

You must not release excisable goods unless you are satisfied that the consignee is properly authorised or registered in the EU member state of destination.

Clearly where movements are to ‘uncertain destinations’ it is not possible to confirm details of the status of the ultimate destination but whether the consignment is bound for a ‘ known’ or ‘uncertain destination’ liability for duty on goods which go missing during an intra-EU movement may fall on:

• the proprietor, that is, the owner of the goods or any person who has a beneficial interest in them
• any other person who causes or has caused the goods to reach an excise duty point

All parties involved in arranging the movement, or having a connection with the goods at the duty point, may be jointly and severally liable for the duty, including, for example, transporters or carriers.

The liability of the authorised warehousekeeper of dispatch and, if the case arises, that of the transporter, may only be discharged by proof that the consignee has taken delivery of the products, or where appropriate in the case of movements to ‘uncertain destinations’, by proof that the product has been exported.

You may also receive orders from EU traders who are the equivalent of TRCs. For such consignments, the consignee must pay or secure the destination EU member state’s duty on the goods, and supply evidence of this to you, as the consignor, before dispatch.

You must make sure that this evidence of payment travels with the consignment, as well as the accompanying document, which varies according to the duty status of the goods to be dispatched if the goods are:

• Northern Ireland duty suspended, complete an eAD
• already Northern Ireland excise duty paid, you must instead complete a simplified administrative accompanying document (AAD) (or an equivalent commercial document) — in these cases, an approved guarantee is not required to cover the movement

Consignors sending duty-paid excise goods should also make sure that they are aware of the conditions for claiming drawback, in Excise Notice 207: excise duty drawback.

Also read paragraph 5.3.2 which explains that whilst an eAD is normally required for all movements including those to ‘uncertain destinations’, legislation under Directive 2008/118/EC allows the consignee name to be entered later where the destination is uncertain but is likely to be outside Northern Ireland and the EU.

7.7.3 Financial security you will need

For movements of fuel products in duty suspension a guarantee must be provided to cover the suspended duty (regulation 39 of the Excise Goods (Holding, Movement and Duty Point) Regulations 2010).

However, bulk movements by sea or pipeline do not require a movement guarantee.

Find out more in Receive goods into and remove goods from an excise warehouse (Excise Notice 197).

The guarantee normally has to be provided by the authorised warehousekeeper, although HMRC may allow it to be provided by the:

• owner of the goods being removed
• person transporting the goods
• consignee of the goods

This can only happen as long as the:

• principal and the guarantor are UK legal entities
• guarantor is one acceptable to HMRC
• guarantee has been lodged with and accepted by us

Where either the proprietor, transporter or consignee of the fuel provides the guarantee, the warehousekeeper must obtain a written statement from these parties to this effect. The statement should provide information to allow HMRC to confirm the validity of the guarantee.

The size of the guarantee will depend primarily on the amount of suspended duty and the destination of the consignment. You will have to make commercial decisions about the cover you may need. Get in touch with us if you would like to discuss how to provide an appropriate guarantee for the goods you send.

7.7.4 Accompanying documentation you must issue

You must complete an eAD on the EMCS each time you send excisable goods to an EU member state from Northern Ireland.

For detailed guidance read Receive goods into and remove goods from an excise warehouse (Excise Notice 197).

The fallback procedure, should EMCS be temporarily unavailable, is to use accompanying paperwork in the format of the old AAD.

For further details read section 12 of Receive goods into and remove goods from an excise warehouse (Excise Notice 197).

The layout on commercial documents can differ from that the standard layout, but each item of required information must have the same box (number and heading) as shown in the standard AAD.

Whether you use the standard layout or commercial documents, it is your responsibility to obtain or produce the document, as HMRC does not supply accompanying documents.

Should you choose to use commercial documentation containing additional information to that required on the standard layout, you must make sure that all the information shown is accurate and that the layout is approved by HMRC.

The eAD or AAD information relates to a complete movement (of one or more products) from one consignor to one consignee (for movements between Northern Ireland and the EU). You must complete an individual eAD or AAD for each separate consignment if the movement details are known to differ.

You must keep copy 1 of each AAD for your own records. Copies 2, 3 and 4 must accompany the goods throughout the movement. You must monitor the return of copy 3, which is a certificate of receipt from the consignee.

You can request authorisation to dispense with the requirement to sign individual AADs and instead print a ‘stamp’ on the AADs or commercial documentation. If you wish to apply for such authorisation contact the HMRC Excise Movement and Control System helpline.

7.7.5 Changing the consignee or destination of goods in transit (applies to Northern Ireland only)

You must obtain permission from HMRC before changing the consignee or destination of the goods.

Find out more in paragraph 12.8 of Receive goods into and remove goods from an excise warehouse (Excise Notice 197).

7.7.6 How the movement and, where appropriate, the movement guarantee is discharged

Details of these procedures can be found in paragraph 12.9 and section 13 of Receive goods into and remove goods from an excise warehouse (Excise Notice 197).

7.7.7 What to do if your certificate of receipt is slow to arrive (applies to Northern Ireland only)

Details can be found in Receive goods into and remove goods from an excise warehouse (Excise Notice 197):

• section 5 for intra-EU movements
• section 7 for imports

7.7.8 What happens if a movement is diverted to a destination within Northern Ireland or to one outside the EU (applies to Northern Ireland only)

Paragraph 7.7.5 advises how you should deal with changes to the consignee or the destination. In the event that a movement is diverted outside the EU you will need to produce commercial evidence and make an appropriate declaration when immediately notifying HMRC.

We recognise that, exceptionally, diversions may result in the goods being discharged within Northern Ireland. These isolated movements will be treated as duty-suspended movements within Northern Ireland and the EU provided that they are isolated and due to unforeseen circumstances.

However we will be alert to calculated attempts to circumvent our normal policy of not allowing duty-suspended movements of finished oil products within Northern Ireland for spurious reasons and may impose assessments and penalties accordingly.

7.8 Exports (including free trade area, free zones and free warehouses in non-EU countries) through EU member states (applies to Northern Ireland only)

Direct exports may be covered under the new electronic provisions for exports (New Export System (NES)). Current information can be obtained on our website. The following key factors are extant in principle, but the new provisions may affect the operational procedures.

An important issue is whether the goods are moving under a single transport contract for carriage to a non-EU country (Commission Regulation (EEC) No 2454/93 refers) and whether the sea journey is by regular shipping lines or not.

a. If the goods are moved under a single transport contract by rail, or sea, the customs location from where they are moved by the railway company, or by the shipping company operating a regular route, is both the office of export and the office of exit from the UK or EU. No accompanying document will be needed for excise purposes (that is, the eAD or commercial equivalent). An export entry C88/SAD (Single Administrative Document) should be raised at the UK port of export. Copy 3 of the C88/SAD is not required to travel with the goods but the transport documents should be authenticated by HMRC with the word ‘Export’ in red ink as evidence that export formalities have been carried out in the UK. The export is considered to be from Northern Ireland, not from the EU member state.

b. Where excise goods are not moving under a single transport contract, or the sea-journey is by non-regular route or are moving by road, a C88/SAD should be completed as well as an EMCS entry, and the form produced to customs at the port of export for authentication. Copy 3 of the C88/SAD will be authenticated and returned to the declarant for retention while on EMCS the word ‘export’ should be entered. The warehousekeeper is then to keep the SAD as evidence of completion of the export formalities.

7.9 Delivery of fuel for use in fuel producer’s boilers

Fuel used in a producer’s boilers (read paragraph 6.2.2) may be delivered under duty suspension for this purpose from a duty-suspended warehouse. Alternatively, suppliers approved for duty deferment may deliver rebated fuel for such use at duty exclusive prices from duty-paid stocks, and recover the duty by way of netting arrangements (read section 12).

All fuel received at a producer’s premises under either method must be dealt with and accounted for as if it were delivered under duty suspension from a duty-suspended warehouse, subject to the recipient premises qualifying for this relief (HODA s27 (1)).

Before making the delivery, the supplier’s central accounting point (CAP) must hold a letter from the producer confirming that the premises are approved for such duty-free use.

7.10 Other deliveries which may be made without payment of duty

Fuel may sometimes be supplied without payment of duty for official use by the forces of the United States or other NATO (North Atlantic Treaty Organization) countries. More information may be obtained from HMRC.

7.11 What happens if used oil is re-delivered after process

When duty-paid fuel is taken back into a fuel producer’s premises for reprocessing, any application for credit of duty should be made to HMRC. If credit is allowed on the duty-paid oil it will be subject to special directions issued by HMRC (HODA s20A).

7.12 Delivery of rebated light oil for use as furnace fuel

Light oil delivered by an approved person for home use as furnace fuel for burning in vaporised or atomised form is entitled to a lower (that is, rebated) rate of duty (HODA s14).

Instructions to users of such furnace fuel are given in Rebate of duty on light oil used as furnace fuel (Excise Notice 184B).

Warehousekeepers or fuel producers may deliver light oil on payment of duty at the rebated rate provided that:

a. it has been marked and dyed in accordance with the relevant directions in section 8 (HOR reg 17)

b. they hold a certificate from the consignee in the form shown in Rebate of duty on light oil used as furnace fuel (Excise Notice 184B)

c. they comply with our requirements for statements on delivery notes (Appendix K)

We may modify these requirements or impose special conditions in particular cases.

We will normally dispense with the requirement for marking and dyeing light oil where the oil is removed by a closed pipeline from the duty-suspended storage to the furnace in which the oil is burned.

If suppliers have any doubts about the entitlement of a customer to receive rebated light oil, they should withhold delivery and consult HMRC. For import declaration requirements, read the UK Trade Tariff volume 3.

7.13 Disposal of waste oil and sludge

Waste oil and sludge such as that removed from tank bottoms, filters and interceptor systems at duty-suspended warehouses, remains liable to excise duty.

Warehousekeepers may destroy waste oil or sludge without payment of duty by any method, which does not make use of the oil in a chargeable way (for example, to produce useful heat). A record of destructions must be kept (RTR reg 6) in a format agreed with us.

The record should contain the following:

• details of the type and quantity of oil destroyed
• the method of destruction

Where destruction takes place outside the warehouse, the record should include the:

• name of the contractor
• address of the premises involved
• date of removal

When the oil is removed from the warehouse premises, the warehousekeeper must issue a delivery note to the consignee with a declaration that complies with section 5.

The facility to destroy defective oil or sludge without payment of duty does not affect the warehousekeeper’s responsibilities in non-revenue respects, for example, compliance with the Control of Pollution Act 1974, Environmental Protection Act 1990 and with any local authority regulation or requirement.

7.14 Requirements for delivery notes and alternative delivery documents

7.14.1 General

Warehousekeepers or fuel producers must, for each consignment delivered from their duty-suspended premises which is not covered by the eAD and form W8 provisions:

a. issue a delivery note to the consignee

b. make sure that, at the time of delivery, the fuel is accompanied by the original, or a copy delivery note, or by an alternative delivery document, unless it is delivered by pipeline or HMRC has authorised other arrangements

Provided they contain the details and are issued as required by the following paragraph, they may be drafted in a form that suits the commercial interests of the trader.

Delivery notes and alternative documents may be supplied by another person (for example, the owner or purchaser of the fuel) provided the warehousekeeper or fuel producer accepts responsibility for their contents and manner of issue.

The consignee shown on a delivery note may be the person to whose premises the fuel is to be delivered or a person who takes charge of it from the warehouse or fuel producer’s premises.

7.14.2 Contents of delivery notes

The delivery note must show:

• the address of the premises from which the fuel is removed
• the date of removal
• the description and quantity of fuel
• the name and address of the consignee
• identifying particulars of the conveying ship or vehicle or other means of transport (for example, pipeline)
• any statement or particulars required by us
• in the case of tied oil, oil removed under duty suspension or oil delivered on condition that it is received at authorised premises, the address at which the oil is to be received if this is different from the consignee’s address
• on any day when the rate of duty (or rebate) changes, for example Budget day, whether the fuel is charged to duty at the old or the new rate

7.14.3 Copies of delivery notes

A copy of each delivery note must be retained by the consignee. A further copy is required for a certificate to be given by the consignee to the supplier at the destination for each delivery of the following:

a. tied oil or fuel removed under duty suspension, marked ‘For HMRC use’, to be used as the certificate of receipt given to the consignor

b. fuel for shipment duty-free for use on board vessels on marine voyages, or as ships’ stores to be used for the certificate of shipment

c. fuel covered by paragraph 7.11, to be used for the certificate of receipt unless an alternative procedure has been authorised, and

d. tied oil, for the consignee’s certificate, if the certificate is not given on another document.

Each copy must be clear and legible. Any copy may also be used for trade purposes. If copies required for certification under b. or c. are endorsed for another revenue purpose, for example, VAT. The endorsement and the certificate of shipment or receipt must be separately signed.

7.14.4 Statements and particulars required

Read Appendix K.

7.14.5 Time of issue of delivery notes

a. Where the document is required either to accompany the fuel or to advise particulars of the delivery to the person named in the alternative delivery document (read paragraph 7.14.6, option e.). Not later than the time of removal of the fuel.

b. Where the document is required for use as a certificate of receipt or shipment. In sufficient time to reach the destination before the certificate of receipt or shipment for the fuel is required to be given.

7.14.6 Alternative delivery documents

If, for whatever reason, the document that accompanies the fuel is not an original or copy delivery note, it must contain the following particulars:

a. a description and quantity of fuel

b. any statement at Appendix J that applies to the fuel

c. identifying particulars of the conveying ship or wagon

d. particulars sufficient to identify the delivery note for the fuel (for example, a serial number)

e. the name and address of the person who holds the delivery note for the fuel or who has a record of all the particulars required by paragraph 7.14.2

f. if the oil is tied oil, is removed under duty suspension or is delivered on condition that it is received at authorised premises, the address at which the fuel is to be received

Where the quantity of fuel is determined by dipping or weighing a vehicle or by dipping a ship, and a trader needs to remove the fuel before the quantity in litres is calculated, the dips or gross and tare weights may be shown on the alternative delivery document instead of the quantity in litres.

HMRC’s long-term agreement should be obtained as to the form of document to be used.

7.14.7 Special arrangements for deliveries by rail

For removals by rail minimum particulars should be advised either on a consignment note accompanying the train, by fax or email, before the expected arrival of the train the:

• number of wagons in the train
• description and quantity of fuel

Full documents should follow within 24 hours.

7.15 Wet line contamination

Wet line delivery systems have been around for many years but the nature of the delivery system causes an issue of potential fuel contamination. Wet line contamination involves the cross contamination of full duty paid fuel with rebated fuels, which will either be red diesel or kerosene.

The wet line contamination guidance covers the wet line metering system in use for trade.

8. Marking rebated fuel

8.1 What HMRC means by marking

We mean the addition of certain chemical markers and dyes to fuel for use in excepted machines. These chemical markers and dyes show that the fuel has borne a lower (rebated) rate of duty.

If the markers and dyes are added before the duty is charged, the owner of the fuel pays a rebated rate of excise duty to HMRC when the oils are delivered to home use.

If the markers and dyes are added after this time at registered remote marking premises, we allow the owner of the fuel to reclaim a sum equivalent to the rebate.

Registered remote markers (RRMs) (those who mark these oils at premises other than at a tax warehouse or on behalf of the owner of the oil at registered remote marking premises) are restricted in the types of oils that they can mark and where they can be marked.

You may not deliver marked oils where the proposed use is not a permitted use for rebated fuel.

8.2 Who can mark oils

Oils can be marked only by the following persons if they have been approved by HMRC to do so:

• operators of duty-suspended installations
• operators of duty-paid oils terminals that are also registered remote marking premises
• registered remote markers (for marking at premises other than their own)

You can find details of how to obtain approval to mark oils at paragraph 8.8.

8.3 Which oils need to be marked and what the appropriate markers and dyes are (Hydrocarbon Oil (Marking) Regulations 2002 reg 3)

Some rebated fuels are required to be marked with chemical markers and, in the case of gas oil, biodiesel and gas oil bioblend, with coloured dye.

The following fuels must be marked as a condition of allowing a rebate of fuel duty:

• kerosene 
• kerosene bioblend 
• gas oil 
• biodiesel 
• gas oil bioblend 
• light oil to be used as furnace fuel by approved persons

Markers to be used for all fuels required to be marked

To each 1 million litres of fuel there must be added not less than: 

• 3kg of solvent yellow 124
• 2.5kg of Accutrace S10 
• 9.5kg, and not more than 14.25kg, of n-butyl phenyl ether 

Additional marker for kerosene and kerosene bioblend 

To each 1 million litres there must also be added not less than 2kg of coumarin. 

Additional marker for gas oil, biodiesel, gas oil bioblend, and light oil for use as furnace fuel

To each 1 million litres there must also be added not less than 1.75kg of quinizarin.

Colouring substance for gas oil, biodiesel, gas oil bioblend, and light oil for use as furnace fuel 

To each 1 million litres there must be added a colouring substance that consists of not less than: 

• 0.4kg of solvent orange 2 
• 4kg of red dye of which at least 50% must be solvent red 24, with any remainder made up of one or more of:
  • solvent red 23
  • solvent red 25 
  • solvent red 26 
  • solvent red 27

8.4 Hydrocarbon Oil (Marking) Regulations 2002 — regs 14 to 17 prohibitions

These regulations specify that no:

• oil may be marked except in the circumstances prescribed by these regulations
• marker may be removed from any oil
• substance calculated to impede the identification of any marker may be added to any oil
• other chemical identifier or dye other than a marker may be added to gas oil and kerosene governed by the regulations except for those falling under the waiver provision of HOMR 6, when for technical or health and safety reasons the prescribed markers are unsuitable (read paragraph 8.5.2)
• oil maybe imported for marking where any substance calculated to impede the identification of any marker has been added
• dark oil may be sold as fuel for a heavy oil vehicle — dark oil is any oil which is sufficiently dark to prevent the prescribed colouring substance from being readily visible if present in the oil

8.5 Marking oils that are relieved of duty

There are some instances where we allow delivery of oils without requiring the oils to be marked. These include oils that are fully relieved of duty and are not subject to a rebated rate. Certain rebated oils can be delivered under a marking waiver.

8.5.1 Tied oils

If the oils are to be put to certain industrial uses, they can be fully relieved of excise duty. In these circumstances they are referred to as ‘tied oils’.

More information about the Tied Oils Scheme can be found in Get relief for mineral oil put to certain uses (Excise Notice 184A).

Gas oil and kerosene intended for industrial use need to be marked, unless they qualify for marking waiver. For how to apply for a marking waiver read paragraph 8.5.2.

8.5.2 Marking waiver

There is a provision under HOMR 6 to waive the requirements for marking if we are satisfied that the marking of oil would create technical or health and safety problems.

If you supply unmarked oils under the authority of a marking waiver, you must keep a record of each authority at each set of premises from which you deliver unmarked/un-dyed rebated oils to authorised persons. An example would be rebated heavy oil used for the bench testing of engines.

We may allow a marking waiver for the rebated gas oil or kerosene to be used in such testing provided that the recipient of the oil can show that marking would be detrimental to the intended use.

For the testing and calibrating of engine fuel systems where the oil is not combusted, we would not consider this to be a fuel use. In these circumstances full relief is given under the Tied Oils Scheme.

8.5.3 Applications for marking waiver

If you are the user of the oil concerned, apply in writing. You will need to show us why you need a marking waiver. We will then provide written permission which you can then show to the supplier as proof that you are eligible to receive unmarked rebated oil.

Apply to the Mineral Oil Reliefs Centre at morcapprovalsteam@hmrc.gov.uk.

This letter must state:

• the address where the oil will be stored and used
• all the uses to which rebated gas oil or kerosene is to be put
• the particular use or process in which the marked oil would not be suitable, with specific substantiated reasons why marked oil is unsuitable for such purposes
• the sources of supply of the oil and how it is received and stored (for example, in drums, by road tanker into storage tanks)
• the frequency of receipt and the average quantity received on each occasion
• the estimated annual usage of rebated gas oil and kerosene for all purposes and for the purpose of the process in which marked oil is considered to be unsuitable
• whether there will be any recovery of the oil after the process, the manner of its further treatment, and by whom
• its disposal

The application should also state whether the user of the oil operates any machinery or vehicles that use heavy oil or keeps stocks of full duty paid heavy oil.

If we give approval, we will review it on a periodic basis. Any variation to the approval needs to be authorised by HMRC, and we will issue an updated approval letter. Any lapsed or revoked approvals should be returned to us.

8.5.4 Aviation turbine fuel (avtur)

Avtur is unmarked kerosene or a blend of kerosene and other fuels which is intended for use in aircraft engines. Avtur must comply with strict quality standards which preclude the addition of any statutory marker. Avtur is therefore delivered under a general marking waiver. Aviation turbine fuel (Excise Notice 179a) gives more details of the treatment of avtur for duty purposes.

8.5.5 Other

Marking of oil is not legally necessary if the oils are fully relieved because they are:

• delivered for exportation under duty suspension
• shipped as foreign-going ships’ or aircraft stores
• shipped under duty suspension for use in the machinery of vessels engaged upon marine voyages
• removed for use by a general lighthouse authority or by United States or other NATO (but not UK) forces for official use
• delivered as duty-free samples
• arrangements have been made with the United States Air Force under which all gas oil supplied to them under this paragraph will be marked — contracts for these supplies are renewable annually, normally with effect from 1 July — these arrangements do not extend to oil delivered for Army and Air Force Exchange Service (AAFES) use, which is the subject of a separate contract and continues to be supplied unmarked

8.6 Using a composite solution to mark oils

If you wish, you may add composite solutions. These are fiscal markers pre-packaged in the correct quantities with a carrying solution so that they need only be added to a pre-determined amount of oil to mark it correctly. These are commercially available, and are usually known as gas oil marker concentrate (GOMC) and kerosene marker concentrate (KMC).

You should follow the manufacturers’ instructions to make sure that the concentrations shown in paragraph 8.3 are met.

8.7 How to claim credit of duty if duty-paid GOMC is used to mark duty-suspended oil

You must keep a record of the quantity of duty-paid GOMC added each day to duty-suspended gas oil, and use this record to support a claim to credit of duty. You should enter on form HO10 Report excise duty on fuel removed from warehouse section 2b the quantity of GOMC needed. We may allow retrospective claims if we are satisfied that the GOMC has:

• been received duty paid
• been used to mark gas oil in duty suspension
• not previously been claimed

For claim purposes you must establish that all of the GOMC has borne duty at the rebated gas oil rate (tax type 556). You must not claim where GOMC is:

• received on duty-suspended terms into a duty-suspended installation
• used at registered remote marking premises (GOMC will be delivered at the rebated rate of duty)
• added after the duty meter
• used to mark duty-paid stock

8.8 Applications for approval to mark oils, or to deliver oils under a marking waiver

If you are a biofuels producer who operates from entered production premises and you want to mark oils, or deliver them under a marking waiver, then you are automatically approved to mark rebated biodiesel if you have ‘entered’ your production premises.

If you are the operator of a duty-suspended installation and you want to mark oils, or deliver them under a marking waiver, then you will need approval to mark oil, or deliver oil under a waiver, as part of your warehouse approval.

If you are the operator of a duty-paid terminal and you want to mark oils, or deliver them under a marking waiver, then you will need registration of the premises as a registered remote marking premises.

If you are marking oils other than your own and you want to mark oils, or deliver them under a marking waiver, then you will need registration as a registered remote marker. You cannot deliver oils under a marking waiver or submit claims for duty repayment.

If you are the operator of a duty-suspended installation, then you will need to write to HMRC giving the details at Appendix L.

If you are the operator of a duty-paid terminal seeking approval as a registered remote marking premises, then you need to apply to HMRC by completing form HORRM.

Registered remote markers — if you wish to mark oils other than your own and are seeking registration as a registered remote marker, you will need to submit a business case supporting your application. You will have to establish that there is a commercial and operational need for you to be registered. In addition to the security of the revenue, we may require you to address certain health and safety considerations.

Where oil has already borne duty and has been set aside for one use, but has been ‘rebranded’ for another use, it can be marked for registered remote marking premises, rather than having to be returned to a warehouse for marking or reprocessing.

For example:

• contaminated oil may be marked for use as rebated gas oil — note that HMRC cannot pay a credit of duty in these circumstances, because a registered remote marking premises is not a tax warehouse — for a credit of duty to be allowed, the fuel must be returned into duty suspension
• Avtur that is off-spec, contaminated or unwanted can be marked for use as heating kerosene

We will only issue approval for you to mark certain types of oil at specified premises.

8.9 How you will know if you have been approved to mark oil

We will issue you with a registration certificate if your application has been successful.

8.10 Conditions you must observe

The conditions of registration to mark are listed at Appendix M. You must observe all of the conditions laid out in:

• your registration certificate
• the law
• the supporting regulations
• any directions given by HMRC

HOMR includes the following requirements:

• even mixing — you must ensure the markers are mixed into the oil, biodiesel or bioblend so that they are evenly distributed throughout the oil, biodiesel or bioblend (reg 9b)
• storage of markers — markers must be separated, identified and the stock checked and recorded monthly (reg 10)
• storage of marked oil — marked oil must be stored separately from unmarked oil (reg 11)
• labelling — any drum, storage tank or other container or any delivery pump or pipe must bear an indelible notice to the effect that it contains or is a delivery point for marked oil and such oil must not be used as fuel, other than in an excepted machine (reg 12)

The Hydrocarbon Oil (Registered Remote Markers) Regulations 2005 include the following requirements:

• measurement accuracy: you must comply with the measurement accuracy requirements specified in section 4 (reg 8 (2))
• record keeping: you must comply with the record keeping requirements specified in section 13 (reg 8 (2))

If you fail to comply with the conditions of your registration, we may:

• refuse to pay the rebate
• charge the unrebated rate of duty in certain circumstances
• reduce (reduction of the amount of rebate allowed, or the repayment of an equivalent sum to HMRC, occurs when we find evidence of repeated or serious under-marking) the amount of rebate which we allow in certain circumstances
• withdraw your registration to mark oils

You should closely examine the conditions of your registration and be fully aware of your obligations.

Once you have been registered, you may need to advise HMRC of your intention to mark oils. We will advise you if this is the case and explain why it is necessary.

8.11 Your responsibilities

These fall into 2 areas: ‘procedures’ and ‘equipment’.

8.11.1 Procedures

If you mark oils, you must make sure that:

• the marking operation is properly supervised
• you regularly check that the marking equipment is secure from interference, properly calibrated, and in good working order
• your staff are aware of the implications of marking, and that they have been trained to perform the physical and accounting operations correctly
• marked oils are regularly sampled and tested on a basis agreed with HMRC to make sure that they have been properly marked — you should use a Lovibond Comparator (gas oil), or Flourimeter (kerosene), and support your findings by accredited laboratory analysis where possible
• delivery notes must conform to the requirements of HOMR regulation 13, summarised as:
  • the delivery note must bear a statement that the oil is not to be used as fuel for any machine that is not an excepted machine
  • suppliers of marked light oil should also state that the oil is only to be used as furnace fuel
  • suppliers of tied oils must state that the oil is not to be used as fuel in any engine, motor or other machinery or as heating fuel
• you have agreed with us emergency marking procedures if your equipment breaks down

This procedure should make sure that your staff are clear about their responsibilities.

You should quickly repair defective equipment.

This procedure, and the reason for it, is recorded in a format agreed with HMRC.

It specifies the alternative method of marking which will be used while action is taken to repair defective equipment. We prefer the adoption of an emergency procedure that involves marking oil in bulk by direct addition of marker into storage tanks.

Only in very exceptional circumstances will we accept a procedure which involves marking oil by the manual addition of composite solution to the tanks of delivery wagons, and then only for a very short time in the interests of safeguarding the revenue. This is because such arrangements pose a serious risk to the revenue.

8.11.2 Equipment

We accept the following methods of marking oil. They are listed in order of preference.

In-line on receipt to main storage

Injection equipment injects the composite marking solution into pipelines, in small quantities at frequent intervals during oil movements. The equipment falls broadly into 2 categories — automatic and non-automatic or semi- automatic.

Automatic

This equipment incorporates a metering mechanism to inject the correct proportion of composite solution at varying rates of flow. It is used on small lines up to about 50mm diameter. When used in conjunction with a larger line, the equipment may be fitted to a small-diameter bypass line. The injector is adjusted so that the proportion of composite solution is correct for the total quantity of oil passing through both lines.

A positive displacement meter is required to operate the equipment and the delivery meter is used. It is coupled either mechanically or pneumatically to an injector pump and the pump piston is activated by the turning of the meter rotor. Composite solution is fed to the injector pump from a header tank. By adjustment of the length of the piston stroke, a pre-set volume of solution can be injected at each stroke into the line upstream of the meter. The proportion of composite solution to oil thus remains constant for varying rates of flow.

Non-automatic or semi-automatic

This equipment is used in larger pipelines where automatic metering devices would not be sufficiently reliable. It is used for adding composite solution during bulk movements of oil, for example, in jetty lines, or in transfer lines at refineries or warehouse installations.

Non-automatic or semi-automatic injection equipment normally consists of the following:

• a storage tank for composite solution
• a subsidiary tank into which a calculated quantity of composite solution can be drawn off from the storage tank — this must be sufficient to mark correctly the quantity of oil involved in the bulk movement — alternatively a meter can be used to measure the composite solution drawn off from the storage tank — the meter may have a control or automatic cut-off valve set to operate when the calculated quantity has been drawn off
• a proportioning pump which is fed from the subsidiary tank, or directly from the storage tank through the meter, and which injects the composite solution into the main pipeline — the rate of operation or the length of the piston stroke can be varied either semi-automatically or manually to make sure that the calculated quantity of composite solution is added uniformly during the movement of the oil

In bulk direct into main storage

You must make sure that oils marked in this manner are uniformly mixed and that layering does not occur.

In-line on removal from main storage to segregated storage.

By injector on delivery from a producer’s premises by ship, rail, and pipeline

If you wish to mark by injector to road gantries, or in-line to drum filling lines, you must seek approval from HMRC. We will need to be satisfied that revenue risks are addressed.

If you wish to use air-operated injectors, discuss with HMRC.

We normally allow hand marking only in emergencies.

Marker storage tanks

It must be possible to measure accurately the usage of small quantities of composite solution.

If the method of taking account of the daily usage of marker solution depends on dipping the marker storage vessel, the rod or tape calibration must be accurate enough to relate daily usage to the quantity of oil marked.

If existing arrangements are unsatisfactory, you will be asked to consider one of the following means of improving them, they are:

• fitting a smaller tank
• dividing the existing tank into compartments
• reducing the quantity represented by a 2mm dip, for example, by up-ending a lying cylinder; or fitting a meter in the marker solution feed line

8.12 Segregation of marked and unmarked oils

Legally, the presence of markers in gas oil and kerosene is conclusive proof that the oils have borne the rebated rate of excise duty. It is important that marked oils do not contaminate unmarked oils.

We prefer line systems for the movement of marked and unmarked oils to be separate. However, we do not object to the use of a common line, provided:

• the degree of contamination of the unmarked oil is likely to be minimal
• there is no significant diminution of the marker content of the marked oil

Some cross-country pipelines transport both marked and unmarked oils. If you receive marked oils by pipeline, you must make sure that no marked oil (including interfaces) is allowed to contaminate unmarked oil.

Provided that the oil is properly marked before delivery, interfaces may be:

• flooded into appropriately marked oil, or set aside for marking
• injected into a subsequent receipt

You may use the same procedure to deal with mixtures of marked and unmarked gas oil arising from the clearance of warehouse lines.

In exceptional circumstances we may allow kerosene delivered as avtur to be marked, and re-designated as marked kerosene, read paragraph 9.13.4. This is intended to be a temporary solution which is solely to overcome significant and unforeseen operational problems.

You must obtain our authorisation before doing this, and you will need to satisfy us that there is an operational need.

8.13 What to do if you have delivered unmarked or under-marked oils

If oil, which has been duty paid at a rebated rate, has been delivered in error or by accident without satisfactory marking, you will not be given permission for markers or dye to be added to oil outside approved premises. To do so would reduce emphasis on the responsibility of the importer or warehousekeeper to mark properly as a precondition of delivery on rebate of duty. It would also require additional official control and would provide an opportunity for malpractice.

You could be liable to pay the full rate of duty on oils that have been delivered unmarked or under-marked.

If possible you should arrange for the oils to be returned to either:

• the original marking premises
• any other approved registered remote marking premises

The oils should then be properly marked and a form HO9 submitted, if one has not already been submitted.

You should agree with us:

• the format in which records of such incidents are to be kept
• whether there is a need to notify us of such incidents

If it’s not possible to have the product marked, you should consult HMRC.

8.14 Importation and exportation of marked oil

8.14.1 Importation of marked gas oil, biodiesel or marked kerosene

On the importation of gas oil, biodiesel or kerosene marked outside the UK and conforming to UK marking requirements, the import declaration (whether for duty payment or warehousing) must be coded as directed in the Trade Tariff.

Gas oil, biodiesel or kerosene marked outside the UK but not conforming with UK marking requirements may be declared for warehousing and removed to a warehouse so that marking (and, in the case of gas oil and biodiesel, dyeing) may be adjusted to the prescribed UK standards.

The importer’s declaration must include the nature and proportions of all additives present in the oil.

Gas oil, biodiesel or kerosene may be imported into remote marking premises and either marked on receipt, or subsequently, or in exceptional cases (paragraph 8.5.2) be delivered under a marking waiver. At importation, the duty must be paid at the un-rebated rate (tax type 541) and rebate on the quantity marked may be claimed by completion of form HO9.

Traders who do not have duty deferment approval, for oils delivered from duty-suspended warehouse, and therefore cannot claim on form HO9, should ask the excise and customs helpline on Telephone: 0300 200 3700 how that claim should be made.

8.14.2 Importation of marked gas oil, biodiesel or kerosene under duty suspension from the EU into excise warehouse in Northern Ireland (applies to Northern Ireland only)

When importing gas oil, biodiesel or kerosene marked outside the UK, to conform with UK marking requirements, you should indicate that you are importing marked goods on the EMCS by making the following statement:

‘The above consignment of/containing gas oil (or biodiesel or kerosene, as appropriate) has been marked abroad to conform to the marking provisions of the current UK Hydrocarbon Oil Regulations’.

8.14.3 Importation into Northern Ireland of marked gas oil and biodiesel from the EU by a registered consignee (applies to Northern Ireland only)

When importing gas oil and biodiesel marked outside of Northern Ireland, to conform with UK marking requirements, you should indicate that you are importing marked goods on the EMCS by making the following statement:

‘The above consignment of/containing gas oil or biodiesel has been marked abroad to conform to the marking provisions of the current UK Hydrocarbon Oil Regulations’ and signed and dated.

Gas oil and biodiesel may be imported into remote marking premises and either marked on receipt, or subsequently, or in exceptional cases (read paragraph 8.5.2) be delivered under a marking waiver.

On receipt, the duty must be accounted for by the registered consignee at the un-rebated rate (tax type 541) and rebate on the quantity marked may be claimed by completion of form HO9. The registered consignee must declare on EMCS, or elsewhere as agreed with HMRC, the nature and proportions of all additives present in the oil.

Traders who do not have duty deferment approval for oils delivered from duty-suspended warehouse, and therefore cannot use form HO9, should ask the HMRC excise and customs helpline on Telephone: 0300 200 3700 how that claim should be made.

8.14.4 Importation of marked kerosene into Northern Ireland from the EU by a registered consignee (applies to Northern Ireland only)

Registered consignees wishing to import marked kerosene from EU member states should seek guidance from HMRC.

8.14.5 Exportation (or intra-EU movement in respect of Northern Ireland) of marked gas oil, marked biodiesel and marked kerosene to the Republic of Ireland

The Republic of Ireland has different marking requirements from those in the UK. Special restrictions are in force, and any trader wishing to export gas oil, biodiesel or kerosene marked in accordance with those requirements should inform HMRC before exportation.

8.15 What to do if you no longer require registration to mark oils

Tell us in writing, and we will then withdraw your registration.

8.16 What happens if you mark oils infrequently

We may ask you to justify your need to have an approval. It may be more appropriate for you to apply for ‘one off’ approvals for future infrequent or emergency markings.

If we allow you to retain your approval, we will monitor the frequency of marking and may withdraw your approval if infrequent use continues.

8.17 How to claim a rebate of excise duty when you mark oils at registered remote marking premises

8.17.1 Forms you must complete

You must complete form HO9 for each batch of oil marked at, or delivered under a marking waiver from a registered remote marking premises. This form, which is in 2 parts, is how you claim a rebate of duty. Alternatively, we may authorise you to list, on a monthly schedule, the details required on form HO9.

Claims must be based on the measurement of each batch of oil actually marked or delivered under a marking waiver.

8.17.2 What happens next

After you have completed the marking, or have delivered oil under a marking waiver, you must send the original form HO9 to the warehousekeeper at the duty-suspended warehouse from which the oil was supplied.

Alternatively, on the instruction of the deferment approval holder, you should send it to a central accounting point.

You should retain the duplicate form HO9 at the marking (or marking waiver) premises.

The original form HO9 will provide evidence to claim rebate of duty. It is in your own interest to make sure the safe custody and timely transmission of the document. If you fail to supply the necessary information to support a claim for rebate of duty the payment may be delayed or we may refuse the claim.

When the original form HO9 is received at the despatch warehouse or central accounting point, part 2 of the form must be completed and relevant details entered on the HO10 ‘Report excise duty on fuel removed from warehouse’ as a credit for the amount of rebate claimed.

You must balance the stock account for each substance or solution at the end of each month as a check that the rate of use is consistent with the quantity of oil marked.

Any evidence of under-marking should be reported to HMRC promptly.

Form HO9 must then be forwarded to us in accordance with locally agreed procedures.

8.17.3 Special conditions you must observe

You must be able to satisfactorily demonstrate that duty has been paid on product for which you are claiming rebate and the delivery documentation must identify whether the product supplied is marked or unmarked.

This is especially important where a supplier has been unable to meet an original order due to operational difficulties, or where the oil has been obtained under an exchange partner deal. In cases of doubt you should sample and test product for marker content.

You cannot take rebate of duty as a set-off in a duty deferment accounting period earlier than that in which the oil was delivered unmarked from UK warehouse at the unrebated rate of duty. The same applies if the oil was originally imported (through a registered consignee or otherwise).

Claims to rebate cannot be set-off in any accounting period before the duty charge (at tax type 541) has been accounted for. Since import accounting periods differ from the registered consignee accounting periods, and both differ from the ex-warehouse accounting period for oils (read paragraph 10.6), particular care is needed to avoid a breach of this requirement.

You must make sure that:

• all product for which a rebate of duty is claimed has been marked in accordance with the marking regulations or has been delivered under a current marking waiver — if you fail to do so, we may refuse the rebate and may withdraw approval for remote marking
• the rebate payable on marking is at the rate appropriate at the time of delivery of unmarked product from duty-suspended warehouse — where duty rates or amounts of rebate are varied by Budget or Economic Regulator changes, accounting arrangements such as an exhaustion account must be agreed with us to make sure that rebate is claimed at the correct rate for the oil when it was supplied

The law permits duty payment at rebated rates in respect of the oil actually marked. We accept that for the following reasons it may not be possible to relate a particular rebate claim to the volume of oil on which duty was originally paid:

• losses (and occasionally gains) in transit — the volume marked may differ from the quantity on which duty was originally paid
• STA — the requirement to convert ambient volume to standard litres may further distort the volumes on which duty is reclaimed and on which duty was originally paid
• the volume marked may not be directly related to a specific duty-paid parcel, a large duty-paid parcel may subsequently be marked as several smaller parcels — alternatively, several small duty-paid parcels may be marked as one large parcel

8.18 Claiming credit of duty on the markers that you use

We do not allow credit of duty on markers used at registered remote marking premises. Duty credits only apply where oil is marked before the duty point. This avoids double taxation of the marker.

8.19 What oils you can mark

If you have been approved as a warehouse, producer or as a registered remote marker, you can mark those fuels specified in your approval letter or registered remote marking premises registration certificate.

9. Cross-country oil pipelines

9.1 Which pipeline systems this part of the notice covers

This section provides guidance for operators and shippers using cross-country oil pipeline (CCP) distribution systems where the cycle of duty-paid oils transported gives rise to interfaces containing a mixture of oil products on which duty has been paid at different duty rates.

It does not apply to pipelines used to import fuel products (read paragraph 3.2).

9.2 Which law applies on the mixing of oils in pipelines

The law is the Hydrocarbon Oil (Mixing of Oils) Regulations 1985 made under section 20A of HODA. These regulations:

• provide the legal basis to approve pipeline operators and shippers for the mixing of duty-paid oil as the result of movements through cross-country oil pipelines
• impose conditions relating to adjustment of the duty payment

9.3 HMRC’s interest in the movement of oil by cross-country oil pipelines

9.3.1 General

Cross-country oil pipelines transport a variety of different oil products through the same pipeline without physical separation in quantities known as parcels and in a sequence known as the product cycle. The point where 2 different products meet and merge in the cycle is known as the interface.

Interfaces arise at ingress (entry) points and at most egress (exit) points in pipeline systems.

They are usually removed from the pipeline into temporary storage tanks according to their flash point and re-injected into compatible product where they adopt the character and duty status of the product into which they are injected.

Interface storage tanks are normally designated as either ‘high flash’ which is the equivalent of heavy oil, or ‘low flash’ which is the equivalent of light oil. Some interfaces are pumped direct from the pipeline, wholly or partly, into main storage at egress points. Occasionally, the interface mixture is removed from interface storage tanks and returned to the fuel producer’s duty-suspended premises.

9.3.2 Revenue accounting interest

There is an industry need to adjust the duty charged on an interface mixture consisting partly of product duty-paid at one duty rate and partly of product duty-paid at another duty rate, to make sure of equity between shippers.

For example, where an interface mixture consists of fuel of 2 different duty rates and the whole interface is re-injected into the higher rate fuel, additional duty is chargeable on the lower rate element of the interface.

However, a credit of duty is allowed on the higher rate element of interface material re-injected into lower rate fuel.

9.4 Obtaining approval to mix oil in pipeline systems

HODA forbids the mixing of certain oils without our permission. As recognition that oils necessarily mix during transportation by pipeline we issue a pipeline mixing approval to pipeline operators and shippers.

Each operator of a cross-country oil pipeline, and each shipper of oil through a cross-country oil pipeline must apply to HMRC by letter for approval to mix oil in a pipeline system. The application is to be made in the terms specified at Appendix N.

We will issue approvals by letter to both operators and shippers. Approvals will be in respect of specific oil products for mixing in the named pipeline system. Each approval will be subject to the conditions listed in Appendix O.

Pipeline operators and shippers must give an undertaking to observe the approval conditions and to submit returns (read paragraph 9.8).

9.5 Notifying changes

Major changes to the pipeline system affecting any item in the approval must be notified to HMRC by the operator or shipper concerned. The pipeline operator may advise on behalf of the shipper.

9.6 Guidelines on the operation of cross-country oil pipeline systems

It is important that the shipper, the central accounting point and HMRC have a full understanding of the pipeline adjustment system. Operators must provide information on cross-country oil pipelines, preferably in the form of a user manual, to assist both shippers (in discharging their revenue responsibilities) and HMRC. Shippers must also obtain from the operator details of the pipeline system used.

9.7 Pipeline duty adjustment procedure

The calculation of additional duty due or credit of duty allowable as a result of re-grading of interfaces, is based on the industry’s method of adjustment of over and short deliveries between shippers in pipeline systems.

The method used is to relate all deliveries from the pipeline system, including re-graded interfaces, back to the original receipts into the system from the fuel producer’s premises where the duty charge occurred, in litres.

The original duty charge for each product is then adjusted up or down according to the increase or decrease in the quantity received into the system.

To allow for temperature and measurement difference, each monthly delivery figure for each product, and for each shipper, is first adjusted to bring it back to a calculated receipt figure by applying a factor derived from the formula:

Total receipts into pipeline (adjusted for any stock difference) divided by total deliveries out of the pipeline

This factor is known as the pipeline system measurement ratio.

The calculated receipts are then compared with the actual receipts for the month, by product, and by shipper (after allowing for opening and closing stocks) and a debit or credit quantity is calculated for each. These quantities are extended by duty rate to give a debit or credit duty amount by product, by shipper.

9.8 Submitting returns to HMRC giving details of oil mixed and of duty adjusted

The pipeline operator must prepare 2 returns (known as the DAS):

• return A for the pipeline system as a whole
• return B for each shipper on the system

These returns must contain the information required in paragraph 9.7, and must show the additional duty due or the credit of duty allowable.

There must be an adequate audit trail.

We do not produce pre-printed forms, pipeline operators should produce their own return forms either manually or by computer. The pipeline operator must distribute the completed returns as follows:

• return A (system) — original to HMRC officer who visits the pipeline operator — duplicate to be retained
• return B (shipper) — original to shipper — duplicate to be retained

In single shipper pipelines where the pipeline operating company is also the shipping company, only return A is required.

9.9 Accounting procedure

Returns must be prepared for each calendar month and must be despatched in sufficient time to reach the shipper by the 15th of the following month.

Shippers must enter the debit or credit adjustment of quantity and duty for each product line in the deferment period accounts in which the last day of the return falls.

9.10 Duty-paid ingress locations

Some pipelines have an ingress that is at a duty-paid storage premises. The duty adjustment procedures for such duty-paid storage sites must take into account stock movements at Budget dates.

Movement of product duty paid at the pre-Budget rate, must continue to be adjusted at pre-Budget rates until such stock is exhausted.

9.11 Responsibilities of pipeline operators

Pipeline operators are responsible for ensuring the completeness of the data used to prepare the duty adjustment statement and accuracy in the preparation of the statement. Pipeline operators who control the issue of the meter tickets or outturn reports are also responsible for the accuracy and completeness of the systems that generate these documents.

9.12 Responsibilities of shippers

Shippers are responsible for ensuring the accuracy and completeness of any meter tickets and outturn reports they provide to the pipeline operator for the preparation of the duty adjustment statement. Shippers are also responsible for ensuring the accuracy and completeness of any duty adjustment made by them as a result of pipeline movements and any duty liability/rebate arising from product removed or delivered from the pipeline system.

9.13 Approval of pipelines as warehouses

9.13.1 General

Cross-country pipelines linking duty-suspended installations may be separately approved for the transportation of oil that is duty suspended under CEMA, section 92, subject to conditions.

The approval conditions will be similar to those of an ordinary oil warehouse and will refer to the types of oil that may be transported duty suspended, to any security for duty if appropriate (read section 3) and to accounting requirements.

9.13.2 Application for approval

Application for approval (read paragraph 3.8.3) should be made by the owner of the pipeline, or by the operator where ownership is vested in the Crown.

9.13.3 Approved mixing

Some cross-country pipelines may be approved as pipeline warehouses for the transportation of certain oils duty suspended and the same pipeline may also transport oils duty paid. Mixing approval will be required in these circumstances.

9.13.4 Re-designation of avtur as marked kerosene

Rebated kerosene may only be delivered unmarked for aviation use. In other circumstances, kerosene that is unmarked must be delivered with duty paid at the unrebated rate — tax type 541.

This applies also to avtur at the front of a pipeline movement which is designated as kerosene — usually referred to as a ‘buffer’ volume. A repayment of the rebate may be claimed when the product has been marked at an registered remote marking premises at its destination.

If, as a result of exceptional demand for marked kerosene for heating or a temporary operational problem, you wish to divert unmarked kerosene (including avtur) for the product to be remotely marked, you must first obtain the authority of HMRC.

You will need to satisfy us that there is an exceptional operational need for this facility and provide an estimate of the volumes involved.

Where we agree to the diversion of unmarked kerosene, our authorisation will be time restricted for agreed volumes and will be subject to review. We will also advise you of specific record-keeping requirements.

10. Deferment of excise duty

10.1 General

This section explains what duty deferment is, and how to apply for approval to defer payment of excise duty.

Details of VAT procedures for warehoused goods are given in section 15.

10.2 Which law covers deferment of excise duty

Section 127A of CEMA, section 21 of HODA, and the Excise Duties (Deferred Payments) Regulations 1992 (Statutory Instrument 1992 No 3152) provide that the payment of excise duty on fuel may be deferred subject to certain conditions imposed by HMRC.

10.3 Scope of this part of the notice

The conditions and requirements set out in this part of the notice apply to fuel and goods containing that fuel being delivered for UK use from a duty-suspended warehouse or entered premises.

Although CEMA refers to excise warehouses, the HOR allow entered premises to be treated as though they were excise warehouses in relation to the EWER reg 15, 16 and 17.

Regulation 16 contains a provision for removal when duty is paid by duty deferment, and this is confirmed by regulation 5 of the Excise Duties (Deferred Payment) Regulations 1992.

The conditions and requirements apply to all persons approved to defer the payment of duty.

10.4 Who can defer payment

You can defer payment if you’re an:

• importer of fuel
• owner of fuel in a warehouse or free zone
• agent (including a warehousekeeper) who enters goods for importers or owners

If successful, you will be given a Deferment Approval Number (DAN). This will allow you to defer duty on your own goods or on behalf of another deferment account holder.

For further information on deferment read How to use your duty deferment account.

You must then account for the duty on the monthly HO10.

If you need help completing the HO10 Report excise duty on fuel removed from warehouse, contact the HMRC excise and gambling duties helpline.

10.5 How to apply for duty deferment

Find out out to apply for duty deferment.

10.6 Accounting periods for duty deferment

10.6.1 Excise duty on fuel delivered ex-warehouse to home use

The deferment period for excise duty is from midday on the 15th day of each month to midnight on the 14th day of the following month.

Payment day is the last business day of the latter month, although if you pay by Direct Debit (read paragraph 10.6.2), you will need to arrange for earlier payment in order to meet the deadline, because the process takes longer.

Payment is to be made in accordance with section 11.

Warehousekeepers should generally maintain stock accounts that run from 15th of the month, to month end, and then from the 1st of the month to the 14th.

10.6.2 Customs Duty and VAT

The deferment period for Customs Duty and VAT is the calendar month. Payment day in both cases is the 15th day of the following month. Payment is to be made by Bacs (Bankers Automated Clearing System) Direct Debit.

However, HMRC cannot collect direct debits in excess of £20 million. If you have a payment to make which exceeds £20 million, you need to make arrangements with your own bank to make sure payment reaches HMRC by the due date, using an alternative method of payment such as CHAPS (Clearing House Automated Payment System).

If payment is due on a non-business day, payment day will be the next business day, read How to use your duty deferment account.

Excise duty on receipt of oils registered consignees (will apply in Northern Ireland only)

The deferment accounting period for registered consignees is the calendar month. Payment day is the 15th day of the following month.

Find details of the registered consignees scheme in Excise Notice 203a: registered consignees.

10.7 Application forms you must use

The application forms for mineral oils ex-warehouse includes:

• form C1200 — apply to defer payment of excise duties
• form C1201HO — guarantee payments for hydrocarbon oils duty payments
• form C1201 — guarantee deferment of payment to HMRC
• form C1202 — set up a Direct Debit to pay deferred duty on imports and excise goods

Applicants must make clear on form C1200 Apply to defer payment of excise duties that the type of deferment approval required is delivery from a fuel warehouse.

10.8 Security you need for the duty

HMRC allows traders to defer payment of excise duties on fuel imported via a duty deferment account. Using duty deferment may need a trader to provide security in the form of a guarantee.

HMRC may authorise you to pay a reduced or nil security if you meet certain criteria. To apply for a reduction in the amount of security you need to provide and get a guarantee waiver.

Traders in Great Britain can apply for a full or partial guarantee waiver at the same time as applying for a duty deferment account.

If you already have a duty deferment account you should complete a form PFS1.

Traders in Northern Ireland can apply for guarantee waiver through the Excise Payment Security System (EPSS).

The EPSS authorisation team can be contacted by:

• telephone: 0300 052 1242

• email: team.siva@hmrc.gov.uk

Where fuel has been removed from a refinery warehouse you can also defer duty on the fuel released using a form HO10 Report excise duty on fuel removed from warehouse.

If you still need to provide a guarantee to defer your payment of Fuel Duty, it must be enough to cover one month’s maximum duty liability up to £9.5 million.

The Mineral Oil Reliefs Centre will tell you the guarantee limit. For further information read How to use your duty deferment account.

To apply to defer duty from a refinery warehouse, please complete the form C1201H0 Guarantee payments for hydrocarbon oils duty payments.

10.9 Guarantee procedures

Where required, guarantees must be lodged with the Central Deferment Office (CDO) on form C1201HO ‘Guarantee payments for hydrocarbon oils duty payments’ and must be given by an approved bank or insurance company. The guarantee is additional to, and separate from, any other security required (for example, security for goods, premises, or deferment ex-ship).

Approved persons with ex-warehouse deferment account numbers who are in danger of exceeding their secured liability at any time must immediately seek further directions from HMRC.

10.10 What to do if you anticipate exceeding your guarantee limit

Unless the guarantee is capped at £9.5 million, then it is your responsibility to make sure that the level of the guarantee is sufficient to meet the business’s requirements.

If an unexpected increase in trading activity occurs which may cause your guarantee limit to be exceeded, the following options are available within the period in question:

• increase the overall guarantee level
• provide a supplementary guarantee for that deferment period
• restrict deliveries in the period in line with the existing guarantee level
• request the use of the warehousekeeper’s deferment approval (if an independent warehousekeeper is involved)
• exceptionally, restrict the net deferred duty due (for inclusion in that period’s HO10 Report excise duty on fuel removed from warehouse) to an amount not greater than the existing guarantee level, and then continue trading for the remainder of the period outside the deferment arrangements — if this option is preferred, deliveries from warehouse must be pre-entered on form W50 (read paragraph 11.1 section c)

Where an overall guarantee limit is accidentally exceeded, the deferment account holder must immediately ask their local officer for instructions.

10.11 What happens when you have submitted your application

Before your application can be processed, HMRC must undertake certain checks in order to make sure that your business meets our conditions in relation to deferred duty accounting. We will contact you shortly after receiving your application to arrange for one of our officers to visit your business accordingly.

10.12 Getting your approval number

We will aim to process applications within 30 days of receipt, although it is important to note that this may take longer if we have difficulty in arranging a visit or obtaining relevant information. You should make sure that your application is submitted at the earliest opportunity to allow as much time as possible to complete the approval process.

When an application has been processed, we will issue a certificate of approval showing the DAN.

DANs were given a new format to be used from April 2018 in all correspondence. The new format begins with X and in total has 15 characters.

10.13 What happens when the warehousekeeper acts as an agent

Approved persons may authorise warehousekeepers to complete the deferment documentation, and charge duty on their behalf to the approved person’s duty deferment number.

The approved person is responsible for paying the duties deferred under the terms of the approval.

Warehousekeepers should make sure that they have authorisation from the approved person before releasing oils to clients under these arrangements. If they are in doubt they should consult us before delivery of the oil.

Find out more information on How to use your duty deferment account.

10.14 Goods delivered on duty payment from a motor or heating Fuel Duty-suspended warehouse

10.14.1 General

A deferment trader’s liability may be spread over a number of approved premises, but the total amount deferred will be calculated at a central accounting point. For traders at a single warehouse, the warehouse will normally be the accounting point.

10.14.2 Allocation of guaranteed sums to sites

Following the introduction of EPSS and the new system for calculating guarantees (read paragraph 10.8), deferment holders with EPSS approval may no longer need to allocate a proportion of the secured duty liabilities to each duty-suspended warehouse from which they deliver oil to home use.

Holders of guarantees capped at the £9.5 million limit are no longer required to split them between different sites.

For those not subject to the £9.5 million cap, the total of all allocated guarantee levels must not exceed 100% of the approved person’s total secured duty liabilities.

In the case of warehousekeepers acting as agents, warehousekeepers must be notified in writing, email or fax of the amount allocated and they may deliver oil up to this amount provided they hold a valid authorisation.

Notifications must confirm that the total amount of the approved person’s secured duty liabilities has not been exceeded as a result of the allocation.

Approved persons must maintain a permanent record of allocations at their central accounting point and you should make this record available to our staff for examination when requested.

Any change in the amount allocated to a duty-suspended warehouse must also be notified to the warehousekeeper in writing. Increases in allocations at one or more warehouses may require an offsetting decrease elsewhere also requiring notification, to maintain the total of allocations at no more than 100% of the approved person’s duty liabilities. The central accounting point records are to be amended accordingly.

10.14.3 Recording duty due during an accounting period and at period end

Warehousekeepers and fuels producers must maintain a record of all their deliveries under duty deferment arrangements from duty-suspended premises to make sure that, where guarantees are in place, their level is not exceeded. Those warehousekeepers whose liability is not capped at £9.5 million of duty due must adjust the available periodic balance for each DAN accordingly.

To allow approved persons to calculate their total deferred duty due, warehousekeepers, including those acting as agents, must total the deferment account for each DAN within 3 working days from the end of the duty deferment period. They must also notify the deferment holder’s central accounting point of the duty liability due (or claimable) in connection with that DAN at that warehouse.

This notification is to be accompanied by a schedule showing the total quantity of oil of each description delivered on their behalf on deferment during that period.

Copies of each liability (duty payment or claim) notification and the accompanying schedule are to be sent to our officer at:

HMRC
Large Business Oil and Gas CITEX Team
5th Floor SW
Bush House
Strand
London
WC2B 4RD

The schedule must be sub-divided under heavy oils, light oils and other duty headings (read paragraph 13.1.2).

Nil returns are required from all warehousekeepers who held an unused allocation for a DAN at any time during the period concerned.

Fuel delivered from a duty-suspended warehouse on deferment at the unrebated rate of duty may later be the subject of a claim to a sum equivalent to the rebate (read section 8).

Claims for a sum equivalent to the rebate on form HO9 may be processed at the duty-suspended warehouse of despatch up to the time when the warehouse records are totalled.

Claims submitted later than 3 working days after the end of the deferment period may be processed at the business’ central accounting point, up to the time when the total net liability is to be notified, or otherwise claims may be carried forward to the next deferment period.

Rebate cannot, however, be taken by set-off in a period earlier than that in which duty has been accounted for on delivery, unmarked, from warehouse (regulation 6, Excise Duties (Deferred Payment Regulations) 1992).

10.15 Duty deferment guarantees — net duty due

For deferment guarantees below the £9.5 million cap, a deferment holder is allowed to make deliveries up to the limit of the guarantee allocated.

Where forms HO9 are received and entered as a credit in the warehouse accounts, the amount of that approved person’s secured liability (duty due) will be automatically reduced by the warehousekeeper.

For an example of a duty deferment guarantee advice read Appendix P.

More deliveries within the same accounting period can then be made to the extent of the difference between the guarantee and the net liability recorded (read paragraph 10.16).

10.16 HMRC duty deferment traders — when duty claimed is greater than duty due

If, as a user of HO10 Report excise duty on fuel removed from warehouse you make very few withdrawals from warehouse, but you use netting (read section 12) and the option to process forms HO9 through the central accounting point, form HO10 ‘Report excise duty on fuel removed from warehouse’ may result in a balance of duty due to you and not to HMRC, resulting in a repayment of duty (read paragraph 10.18 section e).

10.17 Duty-suspended warehouse records you must keep

In addition to those records required by section 13 and section 15, separate records are required in respect of each deferment approval number for excisable home use deliveries and for non-excisable home use deliveries (for example, tied oil) where only VAT or Customs Duty is deferred.

Details usually included are:

• DANs — it is in the ‘due diligence’ interests of the warehousekeeper to check that the DAN quoted is valid — information is available from the Mineral Oil Reliefs Centre at morcapprovalsteam@hmrc.gov.uk
• (for excisable deliveries) the amount of the secured liability allocated to that warehouse
• a request for deferment
• the quantity and description of the fuel
• the VAT details

Fuel produced or refined in the UK does not attract a VAT charge on removal from warehouse unless it is sold or exchanged while in duty-suspended warehouse. The use of an approved person’s deferment number to defer the excise duty on removal from a fuel producer’s warehouse does not itself constitute a supply for VAT purposes within the warehousing system.

For removals to home use of fuel which does not attract a VAT charge, the entry in the record is to be noted with:

• ‘UK produced: No supply’
• any outstanding liability to pay Customs Duty
• the amount deferred (sub-totals are required in respect of each duty, that is, Customs Duty, excise duty, and VAT)
• the current net allocation remaining unused in respect for each deferment number at that warehouse
• for claims on form HO9 received at the warehouse, the full details of rebate claimed on oil marked, or delivered under marking waiver, at approved premises subsequent to delivery on payment of the un-rebated rate of excise duty
• details of centrally processed claims on form HO9 notified by central accounting points for credit against allocations
• full details of oils returned to duty suspension on credit of duty

The quantity and duty due for each description of fuel received at the warehouse for which rebate has been claimed on form HO9, are to be reduced respectively by the quantity marked and the rebate allowed. A corresponding increase is to be made to the quantity and duty amount in the appropriate gas oil and kerosene records. Form HO9 is to be clearly endorsed to show that this adjustment has been made to the warehouse record.

Entries in the deferred duty account at the warehouse are to be made no later than midday on the second working day following deliveries of chargeable fuel.

If there is a change in the duty or rebate rates during a deferment period, the record and schedule are to identify the quantities delivered at each duty rate.

Warehousekeepers must make sure that:

a. dutiable use at or deliveries from the duty-suspended premises are accurately recorded

b. rebates claimed on forms HO9 submitted to the warehouse are accurately recorded

c. the record is correctly totalled at the end of each deferment period

d. the periodic delivery schedules and totals of duty due or claimed for each period (including deferred VAT liability notifications) are forwarded to deferment approval holders, and that they agree with the warehouse records

e. arrangements are made for each duty liability notification to be sent so that they reach the deferment approval holder not later than one week after the end of the deferment period. If receipt is not promptly acknowledged, warehousekeepers should notify HMRC immediately.

Single warehouse traders must also complete the additional records and returns required from an accounting point (read paragraph 10.18).

The quantities of fuel delivered on deferment of duty as shown in the warehouse records are to be recorded in the warehousekeeper’s stock account (read paragraph 13.4.1).

10.18 Records you must keep at the central accounting point

Deferment approval holders must maintain a permanent record showing the total amount of their secured liabilities (duty due or claimed). For each excise duty deferment period, the approval holder must:

a. Acknowledge as soon as possible the receipt of each accounting period schedule and liability notification.

b. Record the details of all accounting periods’ schedules and liability notifications they have received.

c. Total the quantities of fuel of each description delivered on deferment.

d. Total the quantities of fuel of each description rebated at approved premises as recorded on form HO9 and submitted directly to the central accounting point by the marking premises for entry in the duty claimed section of HO10 Report excise duty on fuel removed from warehouse. Form HO9 on which rebate has been credited at warehouse must not be included in these totals.

e. On occasion the total duty claimed figure to be declared in section 2 of HO10 ‘Report excise duty on fuel removed from warehouse’ will be greater than the total duty due figure declared in section 1. You should enter the amount of duty to be claimed in the total duty claimed box.

f. The total duty claimed will also include the total quantity of fuels of each description for which drawback or refund is to be claimed (do not claim reliefs by netting for cash repayments), and finally;

g. Complete the HO10 ‘Report excise duty on fuel removed from warehouse’, signing the declaration.

The net total duty due or claimed under each deferment number will be the total of duty on oils delivered from warehouse under deferment arrangements less:

a. rebate claimed on fuel marked, or granted a marking waiver, at approved premises subsequent to delivery on payment of the unrebated rate of duty.

b. set-off of duty claimed on duty-paid fuel, under the netting arrangements for which a formal claim has been completed and lodged with HMRC.

You must calculate and notify the net duty due or claimed in sufficient time to make sure that HMRC receives payment by the due payment date, which is the last working day of the month.

10.19 Notifying HMRC of change in circumstances

If you are approved for duty deferment, you must immediately email the Mineral Oil Reliefs Centre at morcapprovalsteam@hmrc.gov.uk.

You must also email the Mineral Oil Reliefs Centre by email at morcapprovalsteam@hmrc.gov.uk if:

• you cease trading, or wish to cancel your deferment approval
• your business name or address changes
• you wish to make any other change in the details of your application for approval

You should give sufficient advance notice for any proposal to change banking or guarantee arrangements which would require a new direct debit mandate, for example, a change in bank or branch or account number, or a revised level of guarantee or change of guarantor.

10.20 Keeping your records

You must keep your records at a place agreed with us.

Normally, you must keep your records for 6 years. If this will cause you problems you should ask us to allow you to keep your records for a shorter period.

10.21 Alternatives to keeping paper records

You can keep your records on microfilm or microfiche, provided that the records are legible and you provide the necessary facilities to read the records. You can also keep your records on a computer. However, our assurance staff will need to see the appropriate technical documentation as part of their visit.

Find out more information in Excise Notice 206: revenue traders’ records.

10.22 Revoking an approval

If we have reasonable cause we may vary or revoke an approval granted under the excise duty deferment regulations at any time.

11. Payment of excise duty

11.1 General

Except when duty-free use or delivery is allowed, excise duty must be paid, or charged under the duty deferment arrangements (read paragraph 11.5), on fuel cleared at importation or before it is used at, or delivered from, a fuel producer’s premises or duty-suspended warehouse. This includes waste-derived heavy oil used as a fuel.

The duty account is to be taken at the meter or other approved point for taking the revenue account.

Excise duty is accounted for by one of the following methods:

a. fuel delivered to home use at importation from outside the EU, on the import declaration form C88, or

b. fuel delivered to home use on receipt from the UK or the EU under the registered consignee scheme, or as a TRC, by using the procedures in Excise Notice 203a: registered consignees and Temporary Registered Consignees (Excise Notice 204a) respectively

c. fuel delivered from a producer’s premises or duty-suspended warehouse, by making immediate payment (and completing form W50) to:

National Warrant Processing Unit (NWPU)
HMRC
Excise Processing Team
BX9 1GL

d. other heavy oil including oil delivered for fuel use by someone without an approved fuel producer’s premises or duty-suspended warehouse, by immediate payment and completing form HO101 Pay duty on heavy oil supplied for heating or for an engine other than in a vehicle to:

HMRC Payments Oils
HM Revenue and Customs
BX9 1XR

Telephone: 03000 583 946

before the oil is used or delivered

e. in the case of traders approved for deferment, under the deferred duty arrangements for fuel up to the limit set by the guarantee.

For payment of Customs Duty on motor and heating fuel, read the guide on Import goods from outside the EU.

Duty must also be paid on any deficiency not satisfactorily accounted for.

Since May 2012, HMRC has not been able to collect direct debit payments in excess of £20 million. If you have a payment to make which exceeds £20 million, you should make arrangements with your own bank to make payment by an alternative means such as CHAPS.

11.2 Rates of duty which are payable

The rate of duty payable is that which is applicable to the description of the fuel when the duty point is passed, or in the case of fuel delivered by pipeline, when the complete parcel is accepted into the pipeline (except when a change in duty rate or amount of rebate occurs, when the account will be taken at the time of the change, read paragraph 11.4).

For example, unmarked kerosene, biodiesel or gas oil will be chargeable at the un-rebated heavy oil rate (except when duty-free use or delivery is allowed or a marking waiver has been granted) even though it is intended to deliver all or some of the fuel from a remote marking premises after marking or under a marking waiver. In these circumstances, rebate of duty may be claimed under the arrangements set out in section 8.

Duty will be charged on the quantity delivered to home use and there will be no allowance for any subsequent loss in transit or storage.

The current effective rate of excise duty on avtur is nil. Except in the circumstances listed in paragraph 11.3, duty at the unrebated heavy oil rate is to be paid as soon as regrading or diversion to non-qualifying status occurs (that is, once the oils are not to be used as fuel for aircraft engines).

When this occurs other than in the current deferment accounting period, approved deferment traders should contact us at once to arrange payment. Similarly, non-deferment traders are to notify their local assurance team when duty becomes due.

If you supply or use petroleum fuels derived from waste oils as heating or engine fuel (other than in a vehicle) the excise duty rate will be the rebated rate for fuel oil.

11.3 When the excise duty charged upon kerosene is not payable

Excise duty is not due when:

• contaminated or off-specification avtur is returned to duty-suspended storage
• Civil Aviation Authority samples are returned to duty-suspended storage
• the prescribed fiscal markers are added by a registered remote marker at the premises at which regrading or diversion from avtur to another use occurs, in which case no duty will be charged and no claim to rebate (or sum equivalent to the rebate) is to be made
• when marking is to take place other than at premises at which regrading takes place, but the volume does not exceed 5,000 litres and the person liable to pay the excise duty is approved for duty deferment — in such cases, the duty is to be declared on form HO10 ‘Report excise duty on fuel removed from warehouse’ for the current period, and the sum equivalent to the rebate may be claimed subsequently by completion of form HO9 when the marking takes place

In these instances, no duty will have been charged on the oils, and no claim to rebate (or sum equivalent to the rebate) is to be made.

11.4 What happens at Budget time

When there is a change in the rate of excise duty charged, you should:

• account at the appropriate rate for dutiable deliveries of fuel
• claim at the appropriate rate for fuel marked at approved premises, or delivered unmarked under a marking waiver, or for which drawback or a refund of duty is claimed

Where product is not being delivered at the time of the change in duty rate, you should read meters and dip tanks as appropriate in order to establish the duty position.

Where this cannot be done because, for example, a vessel was loading over the relevant time, other arrangements such as pro-rating according to pumping times may be adopted provided that the revenue is not adversely affected and HMRC’s approval has been obtained.

The rebate payable on marking is at the rate appropriate at the time that the unmarked product was delivered from the duty-suspended premises. Accounting arrangements such as an exhaustion account must be agreed in advance with HMRC to make sure that the rebate is claimed at the correct rate. Any central exhaustion methods agreed for netting purposes are not to be applied to remote marking.

Drawback, or repayment, is admissible at the actual rate of duty borne by the fuel to which the claim relates (or the rate that is deemed to have been borne under an approved exhaustion arrangement). At the time of a duty rate change, the repayment rate is normally determined according to the level of stock on a depot-by-depot basis. Similar arrangements apply to businesses approved for netting unless central exhaustion arrangements have been authorised.

Where a netting business is also a supplier issuing invoices or certificates showing the duty-paid on fuel supplied, the rate certified must be the rate actually paid, or deemed to have been paid in accordance with approved exhaustion arrangements.

11.5 Payment of deferred duty ex-warehouse

Payment of deferred duty is made by Bacs direct debit, which is initiated each month by us. However, on 31 May 2012 the Board of Bacs Payments Schemes Ltd introduced a cap of £20 million on the amount which can be collected in any one Bacs debit or credit.

Payment of deferred duty should therefore be made in the following ways:

• payment in excess of £20 million must be made by CHAPS
• payments up to and including £20 million are normally made by Bacs Direct Debit, which is initiated by HMRC, but may be made by CHAPS

The net liability is to be established and the form HO10 ‘Report excise duty on fuel removed from warehouse’ completed in time to make sure of payment by the due date.

The following times and dates by which your return and payment should be submitted. Your monthly return date is fixed depending on your usual method of payment:

• if you make all of your payment by CHAPS, you should submit formHO10 ‘Report excise duty on fuel removed from warehouse’ by midday on the second last business day of each month and arrangements are to be made for payment to be lodged at HMRC’s bank account by 11am on the last business day of the month
• if you make any payments by Bacs, either exclusively or occasionally, you must submit form HO10 ‘Report excise duty on fuel removed from warehouse’ by 10am on the fifth last business day of each month to make sure payment can be collected by us on the last business day of the month

If there is no duty liability in any month, submit form HO10 ‘Report excise duty on fuel removed from warehouse’ showing a nil return.

Varying the method of payment you use between Bacs and CHAPS does not change the date by which form HO10 ‘Report excise duty on fuel removed from warehouse’ should be received.

If your payments are often over the £20 million Bacs limit and you intend to alter your method to make all of your payments by CHAPS, you may also request to change your return date by writing to the CDO Oils Team. We will confirm when your return due date has been changed.

You should submit forms HO10 Report excise duty on fuel removed from warehouse online using the Government Gateway.

If, for any reason you are unable to use either of these methods, call the HMRC excise and customs helpline on Telephone: 0300 200 3700.

Find bank details for paying into the HMRC account.

Make sure your DAN is quoted when making payment. Failure to comply with the arrangements for the payment of deferred duty may lead to the withdrawal of your certificate of approval.

11.6 Who must sign the duty declaration

Duty declarations such as form HO10’ Report excise duty on fuel removed from warehouse’, are the responsibility of the proprietor or partner. In the case of an incorporated company, it is the responsibility of a director or the company secretary. They may authorise whoever signs the form, but the form is always signed on their behalf.

Whoever signs the form must hold a responsible position in the company (for example, accountant or manager). The authority to sign must be prepared on form C&E2 or company letterhead, must be signed by one of the standard signatories, and must incorporate a specimen of the signature of the persons to be authorised.

You should send the document to your HMRC contact.

11.7 What to do if you need to make an adjustment

Adjustments for errors discovered after the fuel has been delivered from a warehouse, where as a result there is an increase in excise duty liability, are payable:

• immediately — if due from an earlier deferment period which has been accounted for
• at the end of the current deferment period, if due in the current period

When an error is discovered from an earlier period, you must contact us at once, giving details. We will then issue you with an assessment of the duty due on form EX601. You must make immediate payment of the assessment to the address given in paragraph 11.5.

You should send copy 2 of the EX601 with this payment to:

National Warrant Processing Unit (NWPU)
HMRC
Excise Processing Team
BX9 1GL

Retain the original copy for your records. After processing, copy 2 will be returned to you as your receipt.

Reductions in liability due to overpayments should be made in the current deferment period whether or not the reduction relates to an earlier period, or periods. They should only be made after you have received written authority from HMRC.

11.8 How to account for duty on fuels derived from waste oils

Excise duty is due on each delivery (including for your own use) of fuel derived from waste oils.

If you can evidence that waste oil has already had the relevant duty paid on it, you do not need to declare this or pay any additional duty. If this only relates to certain fuels in a mixture of waste oils then you must be able to evidence the specific volume in the mixture that has already had the duty paid on it — otherwise duty is due on the whole mixture.

Contact us at oils.policymail@hmrc.gov.uk to receive our leaflet on waste oil production, including when (and what) duty is due. 

Light oil produced from waste oils 

Fuel produced from waste oil, solvents and hazardous waste that meets the definition of light oil is taxed at the duty rate for light oil. 

The full rate of duty for light oil applies, unless the supply is for use as furnace fuel, including to heat cement kilns, and meets the conditions to qualify for a reduced rate of duty at the rebated fuel oil rate. The fuel must be delivered: 

• for use as furnace fuel for burning in vaporised or atomised form 
• for use by an approved furnace operator 
• marked as set out in the Hydrocarbon Oil (Marking) Regulations 2002, unless we have given you a marking waiver.

If your fuel meets the conditions for the rebated fuel oil rate, you can pay duty only on the hydrocarbon oil content if you can separately identify it. You should treat as hydrocarbon oil any waste liquids used that you cannot identify have no hydrocarbon oil content. You must keep all this information and your calculations in your records. 

Find out more about ‘approved furnace operators’ in Excise Notice 184b.

Find out more about the requirements for marking fuel and how to apply for a marking waiver in section 8. 

Other heavy oil produced from mixed waste oils 

If the fuel does not meet the light oil definition and will be used as fuel for:

• heating
• the engine of an excepted machine

The fuel oil rate should be used, unless the waste oil meets the definitions of gas oil or kerosene, which have different rates. 

If you produce and deliver a fuel derived from a mixture of waste oils and other waste liquids intended to be used for: 

• heating 
• the engine of an excepted machine 

You must pay the rebated fuel oil rate on all of the mixture.

Disposing of waste oil and other waste liquids 

You do not have to pay duty on waste oil and other waste liquids that you burn in an incinerator, kiln or furnace only to dispose of them, rather than to produce useful heat. In this case, you are not using the waste as fuel. 

You must pay duty if you produce useful heat, intentionally or otherwise, while burning mixed waste in an incinerator, such as where the heat will be used for producing steam for generating electricity. You can pay the rebated fuel oil rate only on the hydrocarbon oil content of any waste liquids you use, if you can separately identify it. You should treat as hydrocarbon oil any waste liquids that you cannot identify have no hydrocarbon oil content. You must keep all this information and your calculations in your records.

Find the current Excise Duty — Hydrocarbon oils rates.

If you have made entry of premises or are approved as a motor and heating fuel warehouse you may defer excise duty and account for it on form HO10 Report excise duty on fuel removed from warehouse. Follow the procedures outlined in section 10 (deferment of duty).

Alternatively you can pay excise duty before fuel is delivered from your duty-suspended premises. You must complete form W50 and send it with immediate payment to:

National Warrant Processing Unit (NWPU)
HMRC
Excise Processing Team
BX9 1GL

A receipt will be issued as proof of payment. Keep this as part of your records.

If you are a supplier of petroleum fuels derived from waste oils without carrying out any production process on it, and you are not required to apply for warehouse approval or to enter your premises, you must still pay the excise duty due in advance of each supply made for use as heating fuel or for use as fuel in an engine.

Make payment, in advance of the supply, by completing form HO101 Pay duty on heavy oil supplied for heating or for an engine other than in a vehicle and sending it with payment to:

HMRC Payments Oils
HM Revenue and Customs
BX9 1XR

All cheques are to be made payable to ‘HM Revenue and Customs only’. If you would like to pay by either Bacs or CHAPS, you can get further information by contacting the HMRC accounting team on Telephone: 03000 583946. This number should be used for this purpose only.

Alternatively, notification with payment can be made on any other document provided it contains the following information, the:

• supplier’s name
• supplier’s address
• supplier’s VAT registration number (if applicable)
• dates on or after which the supply or supplies will be made
• quantity or quantities of relevant fuel in relation to which payment is made
• rate for rebated fuel at the time of payment
• total rebate amount (for each transaction included on the notification)

A receipt will be issued as proof of payment. Keep this as part of your records.

Use the online service or postal form HO101 ‘Pay duty on heavy oil supplied for heating or for an engine other than in a vehicle’ to account for excise duty on recovered waste oil used for heating or engine use.

You can also contact the HMRC excise and gambling duties helpline for a copy of the form.

As of May 2012, HMRC is no longer able to collect direct debits in excess of £20 million. If you have a payment to make which exceeds £20 million, you should make arrangements with your bank to make payment using an alternative means such as CHAPS.

12. Netting

12.1 What netting means

You must use the netting procedure if you:

• are approved for oils ex-warehouse duty deferment
• wish to claim drawback and certain other repayments of excise duty by set-off against the duty due from them under those duty deferment arrangements

This procedure allows oil companies to make supplies at duty-exclusive prices from non duty-suspended storage at locations nominated for the purpose. The range of duty relieved deliveries to which netting can apply is set out in the next paragraph. This procedure makes it possible for HMRC to allow repayment when they are satisfied that duty-paid fuel has been delivered to a person approved to receive duty-free fuel.

The scope of netting

Netting is only available to traders who are approved for Fuel Duty deferment. The range of deliveries eligible for netting is as follows:

Category 1

Exports of:

• duty-paid fuels
• fuel composites, including fixed-rate products

Foreign-going:

• ships’ bunkers and stores
• aircraft fuels and stores

Foreign service aircraft (not United States Air Force or NATO) fuels and stores.

Category 2

Deliveries to:

• approved Ministry of Defence (Navy) oil fuel depots
• US forces
• US AAFES/USNX
• NATO aircraft

Category 3

Heavy oil for use on board vessels on marine voyages

Category 3 netting is dependent upon the supplying oil company delivering directly to an entitled vessel at a duty exclusive price and the approved person accounting for the quantities of fuel so delivered. Delivery to the vessel can be made either by the approved person or by an intermediary supplied with fuel on which duty has been paid by the approved person, at a duty exclusive price.

Approval of netting for marine voyages deliveries may be withdrawn by giving reasonable notice to the approved supplier.

The supplying oil company must obtain a signed declaration from the ship’s owner or master on an HMRC copy of the delivery note, in the following terms:

The quantity of heavy oil specified hereon has been received on board the vessel: (name of vessel)

IMO identification number:

This quantity of heavy oil has been delivered by: (supplier oil company name) directly to the vessel at a price which is reduced by a sum equal to the duty on that oil, for use as fuel for the machinery of the said vessel while engaged on a marine voyage. No claim will be made to HMRC in respect of this oil under the Hydrocarbon Oil (Marine Voyages Reliefs) Regulations 1996 by or on behalf of: (name in block capitals of owner, charterer or hirer of the vessel)

In the event that the oil is not used on the said vessel while engaged on a marine voyage, a sum equal to the amount of duty-paid / set off on delivery of the oil will be paid to HM Revenue and Customs by or on behalf of the said owner, charterer or hirer.

Signed: (owner, charterer, hirer, master or authorised person) Date:

Category 4

a. Process oil or feedstock delivered as tied oil (read paragraph 7.2). b. Oil used as fuel in a producer’s boilers or for an approved power plant producing energy for mineral oil producers’ boilers (read Appendix J). c. Heavy fuel oil used in blast furnaces at steel-making plants.

12.2 How to apply for netting approval

If you wish to use the netting procedure you should make a written application to HMRC.

Applications must contain:

• the name and address of the company
• the category or type of delivery to be included in the netting
• a list of the terminals or locations, and the products to be included in netting arrangements (authorised marine and so on, bunkering agents and authorised distributors may be included if satisfactory standards of trader control can be assured)
• any existing drawback arrangements for fixed rate goods, indicating the extent to which these will be included in netting or will be the subject of separate claims
• the scheduling period to be adopted for netting (this may coincide with duty deferment accounting periods or commercial accounting periods)

When an application has been accepted, HMRC will send a letter of approval to your business. This letter will specify the category, or categories, of delivery approved for netting; confirm the locations and products which are authorised for inclusion in netting, and will require that any change in circumstances be advised as soon as it occurs.

If your approved businesses wishes to amend the terms of its approval to supply fuel under the netting provisions, in respect of altering locations or products, intermediaries or eligible categories of delivery, you should request approval from HMRC in advance of any change.

12.3 The netting procedure

Your approved business must compile schedules of deliveries for each entitled category described in paragraph 12.1 for which you are specifically approved; or provide the data to the central accounting point for the compilation of the company’s schedules.

Each consignment must be identified by a unique reference number, date of shipment or delivery, the eligible category of the delivery, the quantity and description of the oil or product delivered.

At the close of each scheduling period, each approved trader is to send original schedules to the central accounting point for aggregation. When complete and lodged with us, this is your formal claim and declaration supporting the appropriate set-off taken by calculating the net total of your deferred duty payable (or net sum repayable) on the next appropriate payment day.

It is essential that HMRC receives your forms before payment day. The duplicates of local schedules are to be retained at the originating installation, together with supporting commercial documentation, for at least 12 months after the date of delivery of scheduled consignments.

By agreement with HMRC, businesses with computer accounting systems may produce the schedules by computer, with the necessary declarations in an identical form to those normally required.

Scheduling periods should be agreed with HMRC. They may be aligned with commercial accounting periods, or duty deferment accounting periods. Suitable safeguards against duplicate claims must be incorporated.

When a delivery of marine fuel at a duty exclusive price is made by an intermediary supplied by a business approved for netting, it is the responsibility of that approved business to obtain evidence of how much fuel has gone on board the vessel before any set-off can take place.

We expect approved businesses and intermediaries to agree a means of providing HMRC with the necessary evidence of the amount of fuel delivered to a vessel to allow the set-off of duty on the deferment statement.

12.4 What happens if the duty rate changes

Drawback, or repayment of duty, is payable at the actual rate of duty borne by the fuel to which the claim relates (or the rate deemed to have been borne under an approved exhaustion arrangement). When a change in duty rate occurs, the rate of repayment is normally to the rate published on our website at the time at which the stock in each depot is exhausted.

Alternatively, you can make an application to HMRC for permission to operate central exhaustion arrangements for each revenue category of stock.

Where a netting business is also a supplier issuing invoices or certificates showing the duty-paid on fuel supplied, the rate certified must be the rate actually paid or the rate deemed to have been paid in accordance with the exhaustion arrangements which we have approved.

12.5 Export documentation which is required for netting

Traders should check whether they need to declare goods being brought into, or taken out of, the UK.

13. Accounts and records

13.1 What accounts you must keep

13.1.1 General

Warehousekeepers or fuel producers must keep revenue accounts of oil and gas received, produced, used or delivered from or into stock at their premises.

Deferred duty accounts and returns are to be kept and submitted as required in section 10.

13.1.2 Accounts of deliveries on payment of duty or where payment has been deferred

The revenue accounts of oil delivered on payment of duty must be subdivided under the following headings:

Type of fuel	Tax types for accounting purposes
Heavy oil
Unrebated heavy oil (including diesel but excluding kerosene)	541
Heavy oil (other than kerosene, gas oil or fuel oil) used for heating or in an engine	540
Kerosene as fuel for an excepted machine (but not an excepted machine used for heating)	542
Unrebated kerosene	546
Gas oil: rebated or under marking waver	556
Fuel oil: rebated	561
Other unmarked heavy oil	570

Type of fuel	Tax types for accounting purposes
Light oil
Unleaded petrol	522
Light oil (other than unleaded petrol)	520
Light oil for use as furnace fuel	521
Aviation gasoline	511

Type of fuel	Tax types for accounting purposes
c. Biofuels and other fuel substitutes
Biodiesel	589
Bioethanol	595
Biodiesel (unblended) for use in excepted machines	571
Biodiesel blended with kerosene	572
Aqua methanol	597

Type of fuel	Tax types for accounting purposes
Fully rebated or duty-free
Fully rebated kerosene	600
Fully rebated kerosene for jet fuel	601
Gas oil removed duty-free direct to vessel for marine use (marked)	602
Gas oil removed duty-free direct to vessel for marine use (unmarked)	603
Fuel oil removed duty-free direct to vessel for marine use	604

Fuel substitutes may be accounted for using tax codes 541, 540, 520, 522 or 511, depending on the fuel type they are to substitute.

Type of fuel	Tax types for accounting purposes
d. Road fuel gases — use form C&E930a Report excise duty on gas for use as fuel in a road vehicle	read Excise Notice 76: excise duty on gas for use as fuel in road vehicles
1. Natural gas (NG)	591
2. Road fuel gas other than natural gas, including LPG	592

13.1.3 Common storage

Separate accounts are required where common storage of duty-paid and duty-suspended fuel has been authorised, read paragraph 3.9. Fuel delivered from common storage is to be sub-divided under the headings at paragraph 13.1.2.

For more information on common storage read paragraphs 3.9 and 3.10.

13.1.4 Other accounts

Except where otherwise required, other accounts need only be sub-divided as:

a. Heavy oil

1. Kerosene
   
2. Gas oil
   
3. Other

b. Light oil

1. Motor spirit
   
2. Other

Crude oil may be accounted for under a heading of ‘Crude oil’ whether it is a heavy oil or a light oil.

c. Biofuels and other fuel substitutes

13.2 What units of quantity you must use

We normally expect accounts to be kept in metric units of volume (read paragraph 4.2), but exceptionally we may give approval for certain accounts to be kept in metric units of weight.

13.3 Records you require

A basic record must be made, without delay, of each operation as it takes place from which the accounts are to be prepared.

Receipts and deliveries

You should usually include the:

• date and movement
• name and address of the consignor and consignee
• identifying particulars of the carrying ship or vehicle
• quantity and description of the fuel
• relative density (and temperature of the fuel where appropriate)
• distinguishing marks and numbers of the vessels or places where the fuel is stored (receipts only)

Oil delivered without payment of duty (for example, tied oil) and unmarked oil delivered at a rebated rate to authorised persons, must be recorded separately.

For production

You should usually include the:

• date of production
• quantity and description of the oil
• distinguishing marks and numbers of vessels or places in which the oil is stored

For use

You should usually include the:

• date of use
• purpose for which the oil is used
• quantity and description of the oil used

For incorporation of gas in oil

You should usually include the:

• date of operation
• particulars of gas
• description of oil
• quantity of oil before and after the operation

For oil destroyed

You should usually include the:

• date of destruction
• place and manner of destruction
• quantity and description of the oil
• whether the oil has been returned after delivery duty paid

For oil marked

The accounts required are detailed in section 8 and are:

• the quantities of marker, or composite solutions, received, and details of the suppliers
• the quantities of marker, or composite solutions, added each day to gas oil, kerosene, or light oil, and the quantities of each description of oil to which they have been added
• details of the actual stocks of marker or composite solution held at the premises at the end of each calendar month, and at any time that HMRC may require

13.4 Revenue records and returns HMRC requires

13.4.1 Normal requirements

a. Duty-suspended premises

You must keep calendar month records for:

• receipt of oil into the premises
• operations on motor and heating fuels
• deliveries of motor and heating fuels:
  a. without payment of excise duty to United States European Exchange System, United States Navy Exchange, or NATO forces, to lighthouse authorities, as fully-rebated oil, as samples, or for destruction
  b. to approved persons or premises as tied oil
  c. for exportation and stores on foreign going vessels; or use on board vessels on marine voyages
• a balanced stock account (showing total volume of motor and heating fuels in stock, plus receipts, less deliveries)

b. Registered remote marking premises

For each batch of oil marked at, or delivered unmarked under a marking waiver from, approved registered remote marking premises.

Form HO9 — oil marked at remote approved premises or delivery made under a marking waiver from such premises.

Instead of individual forms HO9, traders may render an omnibus HO9. Total quantities, and so on, declared are to be supported by a schedule of markings and marking waivers listing details appropriate to boxes 4 to 13 of the form.

c. Central accounting points

For record requirements read paragraph 10.16. For declarations of duty payable for oil delivered or taken for dutiable use in a period by approved persons under the duty deferment arrangements:

Form HO10 Report excise duty on fuel removed from warehouse — fuel delivered to home use or taken for dutiable use in a period by approved persons under the duty deferment arrangements.

Notes on completion of HO10 are at Appendix P.

d. Special energy products 

If you chose to voluntary warehouse as the owner of SEPs (goods) you must produce these records: 

• goods which are to be warehoused in an excise warehouse 
• goods which have been warehoused in an excise warehouse 
• goods which have been removed from an excise warehouse otherwise than for home use on payment of the duty chargeable, and all movements of such goods 
• stock of goods in each excise warehouse 
• operations performed 
• samples drawn, removed from warehouse and, where that removal is other than on payment of the duty chargeable, their use, location and disposal 
• the time and manner in which the duty chargeable on goods to which EWEPR regulation 21(2) relates is paid, secured or accounted for.

13.4.2 Modified requirements

You should agree with HMRC how these requirements may be met.

a. Motor and heating fuel producer’s entered premises

At a fuel producer’s premises, the following records are not normally required:

• receipt of crude oil from a class A producer, unless received as warehouse stock
• removal under duty suspension of crude oil from a class A producer to another fuel producer’s premises or duty-suspended warehouses
• stock account or oil that is in vessels and places at entered premises which are not included in a warehouse approval
• records of operations on fuel in respect of class A producers

b. Computer records

If you decide to maintain your records on a computer, you should follow the guidance in Revenue traders’ records (Excise Notice 206). As a fuel revenue trader you do not need our approval before using a computer for revenue accounting.

c. Accounting periods

If you wish to base your revenue accounts and records (other than for HO10 deferment purposes) on 12 accounting periods rather than on calendar months, you should notify HMRC. You should state the accounts affected and the dates and times on which the periods will end.

d. Skeleton records

Provided that other documents (for example, copy delivery documents) showing the essential particulars for each consignment are available, we may accept summary records of oil received and oil removed to approved premises or persons which show only the descriptions of the oil and the total quantity of each description received or delivered for each purpose during the month.

13.5 How long you must keep your records

Records required by this notice must be kept and preserved for 6 years at the premises to which they relate. However, HMRC may allow earlier disposal of certain records, or their removal to another place for storage (find out more information in Revenue traders’ records (Excise Notice 206)).

14. Deficiencies in warehoused oil

14.1 Your liability to duty in respect of deficiencies

The owner of the oil and the warehousekeeper are both liable under CEMA, sections 94 and 95, to pay duty on deficiencies in warehoused oil.

In addition, warehousekeepers and fuel producers are liable to pay duty on any chargeable deficiency which arises at their approved or entered premises or while the oil is in transit to other premises on duty suspension terms.

A deficiency arises when the quantity of oil found, in the warehouse or transported in duty suspension, falls short of the quantity expected.

Any deficiency not due to natural wastage, temperature variation or tolerance in accounting (that is, the monthly loss exceeds 1%; or the monthly loss exceeds the average for the previous 12 months by 0.5% or more) is an ‘excess deficiency’ and is chargeable with duty at the appropriate rate.

A loss is to be regarded as exceeding the average by 0.5% or more if for example it amounts to 0.39% and there was an average monthly gain of 0.12% for the previous 12 months.

Liability is not dependent on there being evidence that the deficient quantity or any part of it was disposed of in a particular way. However, any evidence concerning the deficiency brought to HMRC’s notice will be taken into account and mitigation applied if appropriate.

An assessment of duty on a deficiency will be issued to the person deemed responsible for the security of the oil at the time when the deficiency appears to have arisen.

It is from this person that evidence is expected as to any natural or other legitimate loss. This is without prejudice to the liability of any other person to pay the duty or to the acceptability of evidence or representation from any other person concerned.

It is the warehousekeeper, fuel producer or remote marker concerned who must make sure that proper account is taken of the oil and that other revenue requirements are complied with.

14.2 What happens if oil is lost through accident or theft

An immediate record must be made of any accident or abnormal circumstances that result in the loss or destruction of fuel upon which the duty has not been paid. Further action should be taken in accordance with procedures agreed with us.

If a warehousekeeper or fuel producer learns or suspects that any loss of duty-suspended fuel is due to theft we must be told immediately.

14.3 How deficiencies during removal under duty suspension in bulk sea movements are dealt with

A notifiable deficiency is treated by HMRC as any deficiency, which exceeds 0.5% of a consignment of more than 50,000 litres. If the deficiency is less than this allowance and there is no evidence of abnormal events or accidents such as spillage, then no further action need be taken beyond advising us of final outturn. However, you should be aware that all losses need to be recorded on EMCS (read paragraph 5.2).

Where the consigned quantity is less than 50,000 litres, any loss is notifiable.

However, should information come to light during any movement that indicates an irregularity has occurred, we will seek an explanation for the deficiency, even if it is within the allowances.

14.3.1 Action at place of receipt

On becoming aware of an excess deficiency, warehousekeepers or fuel producers must immediately investigate the cause, and re-check the basic data and calculations as far as possible. They should also notify the consignee using the certificate of receipt for the accompanying document and advise HMRC.

14.3.2 Action at place of despatch

On becoming aware of a transit loss, the warehousekeeper at the place of despatch must investigate the cause without delay and notify HMRC. We will ask for an explanation to be provided within 21 days (EWER regulation 15).

Each explanation of a deficiency must give all the relevant information. If supporting evidence is not available, the steps being taken to obtain it must be stated.

You must satisfy us that all reasonable steps are taken to:

• safeguard duty-suspended oil during loading, transportation and discharge
• measure accurately the quantities despatched and received
• pay duty and, if appropriate, VAT, forthwith on the deficiency or on that part not already satisfactorily accounted for, and you must ascertain and provide all relevant information concerning any incident, accident or error affecting the oil

We will not consider an explanation alleging an accidental loss, a diversion of oil, an incomplete discharge or an error in taking a despatch or receipt account, without evidence.

14.3.3 Statement as to deficiency

On receipt of an explanation, we will advise you that:

• the deficiency has been satisfactorily accounted for
• the case is under consideration and a decision will be advised as soon as possible
• duty and, if appropriate, VAT are to be paid forthwith on the deficiency or on that part not already satisfactorily accounted for

If we do not receive an explanation within the period specified or if we require payment at an earlier stage (for example, on evidence of diversion to dutiable use), we will assess for the full amount of duty (by form EX601) and, if appropriate, VAT, which you will then have to pay.

14.3.4 Payment of duty on deficiency

Businesses should not pay duty on a deficiency before receipt of accounting instructions from HMRC. An assessed amount must be paid without delay, unless a request for formal review of that assessment is made. Submission of an explanation or request for formal review does not justify delay in payment of that assessment unless the review officer specifically advises you to that effect.

Duty must be paid by either sending immediate payment either with form:

• EX601 (for excise duty on deficiencies of oil which is in free circulation)
• C88A to HMRC (for deficiencies of imported oil on which Customs Duty is due), this form is required for both Customs Duty and statistical purposes

The reference number of the assessment (shown on any correspondence from HMRC) must be quoted when payment is made.

VAT chargeable on deficiencies (check paragraph 15.11) must not normally be included in the duty deferment account; we will assess it separately.

14.3.5 Remission or repayment of duty paid on deficiency

If we accept an explanation in respect of the whole or part of the deficiency after the assessed duty has been paid, we will give immediate credit or make repayment of the duty involved. We will however need you to provide us with convincing evidence, especially if there are no supporting records.

14.4 How stock discrepancies in duty-suspended storage are treated

If discrepancies arise in stocks of warehoused oil, HMRC may call for the warehousekeeper’s explanation and evidence to account for the variation. We will charge duty on losses for which there is no satisfactory explanation.

14.5 How discrepancies due to errors in measurement are treated

14.5.1 Adjustment of accounts and returns

Where a deficiency is due to over-measurement on despatch or under-measurement on receipt, it will normally be necessary to include the quantity involved in the duty-suspended stocks at the premises where the error arose and to amend the records. In each case where such adjustment is necessary, HMRC will advise the trader as appropriate.

However, an apparent increase on removal may be accounted for by an under-measurement on despatch or an over-measurement on receipt. HMRC may, if satisfied by the evidence, allow amendment of the warehouse and removal accounts but will not initiate or require such adjustment.

14.5.2 Recurring measurement problems

At premises where accurate accounting for oil on receipt or delivery is made difficult by recurrent errors in measurement, the approved person will be required to provide improved facilities for measuring oil. Special temporary arrangements will be considered where these would allow better use to be made of existing facilities in periods before improved equipment can be installed or where satisfactory equipment is not available.

15. VAT on warehoused oil

15.1 General

For information about VAT, read the VAT guide (VAT Notice 700).

Information about the time of supply, that is, the tax point and the issue of VAT invoices, is in section 14 of VAT guide (VAT Notice 700). We normally require you to retain your VAT records for 6 years.

Fuel and power (VAT Notice 701/19) covers the liability of fuels to VAT.

Paying VAT on imports from outside the UK to Great Britain and from outside the EU to Northern Ireland and Pay less or no duty on goods you store, repair, process or temporarily use deal with the VAT procedures that apply to goods imported into the UK from non-EU countries and through EU member states, and with goods warehoused for customs purposes.

Receipts into Northern Ireland from EU member states which are of EU origin, or of non-EU origin on which Customs Duty has been paid, that is, EU goods, are not imports for VAT purposes. Such goods are dealt with under the acquisition tax arrangements, read paragraph 15.6.2. Import VAT is due on oils from third countries and certain other territories.

15.2 Use of forms VAT 908 and W50

For imported finished product (or home-produced oil which has been supplied in warehouse) a declaration on form VAT 908 or form W50 must be presented in triplicate to account for the VAT liability.

The method of payment will determine which form is appropriate (read paragraphs 15.2.2 and 15.2.3).

Businesses trading under the Northern Ireland protocol who acquire oils from EU member states, and where the declarant is VAT registered, acquisition VAT is accounted for on the VAT Return form VAT100, read paragraph 15.6.2.

Businesses who import oils into the UK from the rest of the world and where the declarant is VAT registered, import VAT can be accounted for through postponed VAT accounting. Further information can be found in paragraph 15.2.1

Forms VAT 908 or W50, whether for individual or aggregate transactions, are to include details of all home use deliveries, including tied oils.

Credits for overpayments may be taken on form VAT 908 only where they arise in the same accounting period as payment, and so long as the net total on any form results in a payment of VAT being made.

For overpayments made in other periods, credit can be given by direct repayment using form C285.

If you use deferred payment arrangements, repayment will not be made until the VAT has been paid by Direct Debit. However, in most cases, you will find it quicker to recover the money through the normal input tax deduction system using your VAT Return.

After processing for payment, a receipted copy of the declaration will be sent to the warehousekeeper for retention.

15.2.1 Postponed VAT accounting

If you choose to use postponed VAT accounting to account for import VAT then you may postpone accounting for the import VAT until you complete the VAT Return relating to the date of the release of the goods from the warehouse.

More guidance on using postponed VAT accounting can be found in Check when you can account for import VAT on your VAT Return from 1 January 2021.

15.2.2 VAT deferment

If you are an approved person holding a VAT deferment account number, you may defer the payment of VAT. The deferment accounting period for VAT is the calendar month, and the payment day is the 15th of the following month.

If you wish to apply for a VAT deferment facility, all application forms are available at VAT forms. Before we can approve you, you will have to give financial security for your deferrable liabilities.

Once approved send form VAT908 to the address shown and the end of the form.

The form must be received by the last dates for late item input and adjustments to Customs Handling of Import and Export Freight. Late submission will result in a request for immediate payment of due liabilities, and may result in withdrawal of approval to use the duty deferment scheme.

Exceptionally, a copy of the form VAT908 may be faxed to the Central Deferment Office for processing, pending the production of the original form.

Separate forms are required for each VAT-registered proprietor and for each individual warehouse. You, or your authorised agent, must insert the VAT deferment approval number, warehouse code and all the other required information, in the appropriate boxes.

15.2.3 Immediate payment

If you are not approved for deferment, you must make payment in cash or by guaranteed cheque with form W50 to HMRC before delivery of the oil from warehouse.

Approved deferment traders may find it necessary from time to time to submit immediate payments on form W50 to avoid exceeding their guarantee level. If this becomes a regular occurrence, you may wish to consider increasing your amount of guarantee cover.

15.2.4 Declaring VAT other than on a form VAT908, for example, on a normal VAT invoice

There is no alternative to completing a form VAT908 where a VAT liability occurs and payment of that VAT is to be deferred. The form VAT908 is used only by businesses who are approved to operate duty deferment arrangements (read paragraph 15.2.2). This is how HMRC is advised of the ex-warehouse VAT liability to be charged to the 8 9 series deferment account.

The VAT declared on a form VAT908 (or W50 where payment is immediate) will automatically generate a certificate of VAT paid (C79) which then provides the evidence for input tax recovery (read paragraph 15.10).

The form VAT908 is important for VAT accounting because it provides the only mechanism for the operation of deferment where VAT liability is caused by removal from warehouse.

However, where goods are acquired into Northern Ireland from EU member states, acquisition VAT may be due, or where postponed VAT accounting has been notified on goods imported into UK.

This VAT must be accounted for on the recipient’s VAT Return and there is no requirement to complete a form VAT908. To support postponed VAT accounting or acquisition VAT declarations on the VAT Return, you will need to make sure that there is evidence of removal of those goods to home use. How you achieve this is a matter for you as a warehousekeeper to decide, discussing, as appropriate, with the owners of the goods.

Although not mandatory, one way to provide this information is to produce schedules each calendar month, containing the:

• community status of the goods
• name and address of warehousekeeper
• owner’s name, address and VAT number (must be the same owner when goods enter and leave the warehouse)
• stock accounts
• product description and quantity
• date removed from warehouse
• duty exclusive value of the goods
• excise duty paid or deferred
• VAT (on duty inclusive value)

You should keep schedules for your own goods and for each owner.

If you are not the owner of the goods, you should give one copy of the schedule to the owners before the 12th day of the month following the month of removal and keep one copy with your own records.

15.3 Owner’s obligations

The responsibilities of the owner of warehoused goods include:

• complying with all VAT requirements in respect of the goods, although the warehousekeeper can be authorised by the owner to complete and submit accounting documents as an agent acting on the owner’s authority — the person who removes the goods from warehouse is liable to pay any VAT due
• ensuring that imported fuel on which import VAT or acquisition VAT has not been paid (or payment has been deferred) or where acquisition VAT is due on fuel acquired into Northern Ireland is segregated in the accounts from UK produced fuel-owners of UK-produced fuel must also inform the warehousekeeper of all changes in its ownership while it remains warehoused

15.4 Warehousekeeper’s obligations

The warehousekeeper’s responsibilities include:

• ensuring that no fuel is removed from warehouse without the VAT and duties due being paid, secured, or otherwise accounted for (EWER regulation 15(c))
• recording the quantity of fuel warehoused, and details of the ownership of all imported, acquired or UK-produced fuel which is deposited in duty suspension — it is important that warehousekeepers are aware of changes of ownership of fuel in warehouse, so that forms VAT908 or W50 can be presented in the name of the correct owner — occupiers of independent warehouses, where customers renting tankage allow drawing rights or temporary use of the tanks to other persons, including their own associated companies, should exercise particular care in this area (EWER regulation 21)
• retaining the receipted copies of form VAT 908 or form W50 referred to in paragraph 15.2 in all cases for inspection by HMRC
• if it’s not possible to physically separate imported fuel (or fuel acquired into Northern Ireland) from UK-produced fuel, then the distinction must be made in the warehouse accounts (but read the alternative arrangements in paragraph 15.5)

15.5 Tax point: 14th day arrangements

The 14th day arrangement allows the option of paying the import VAT due on refined oil (finished products) or other fuel as if it had been removed 14 days after its arrival in the UK warehouse, instead of immediately before it actually leaves the warehouse.

Similar arrangements are in place for accounting for acquisition VAT, which is due on fuel arriving into Northern Ireland from the EU.

The 14th day arrangement does not apply if postponed VAT accounting is used.

This agreement avoids problems in identifying fuel which has been put into common storage along with home-produced fuel.

Any company that deals in fuel that is excise duty that is suspended in a UK warehouse is eligible to use the 14th day alternative procedures, if they obtain written authorisation from HMRC.

The arrangements may only be used:

• for fuel which either has arrived in an excise or tax warehouse from outside the UK, so that import VAT is due, or acquisition VAT is due
• if the fuel is to be mixed in a UK duty-suspended warehouse with other fuel of the same type with no resulting change in character
• if it is not possible to identify the original consignments of fuel when the resulting product is removed from the warehouse, either physically, or in the warehousekeeper’s documents and records

Fuel which is to be mixed or processed into a different product is not subject to these arrangements; the import or acquisition VAT is extinguished in such cases.

15.6 VAT treatment of fuel

For an outline of the VAT procedure to be applied in various circumstances, read paragraphs 15.6.1 and 15.6.2.

15.6.1 Imported fuel for warehousing

Import VAT applies to goods received into Great Britain from outside the UK or into Northern Ireland from outside the EU which are not in free circulation.

Import VAT is generally chargeable and payable as if it were a duty of customs. However, where the import declaration is for removal of the fuel to an excise warehouse, accounting for VAT payment may be delayed until the fuel is delivered to home use or the requirement to pay duty takes effect.

The import VAT is legally due before such removal by:

• selecting postponed VAT accounting (with suitable supporting evidence)
• form W50 for immediate payments — read paragraph 15.2.3
• form VAT 908 for payments using the duty deferment system — this is available for traders holding a VAT deferment approval number — read paragraph 15.2.2
• alternatively, those traders approved to use the special 14th day arrangements described at paragraph 15.5 may either present form W50 14 days after receipt of the fuel into warehouse, or enter the import VAT on form VAT 908 for the month in which the 14th day after receipt into warehouse falls

Supplies of imported oil that take place in warehouse before the excise duty point are disregarded for VAT purposes, as they are deemed to take place outside the UK.

Fuel that is essentially imported but which contains a small proportion of home produced components (for example, motor spirit containing additives) may be treated as wholly imported fuel.

15.6.2 Community status fuel acquired from EU member states into Northern Ireland for warehousing

Product not supplied in warehouse

Fuel acquired into Northern Ireland from EU member states (both of EU origin and non-EU origin but upon which Customs Duty has been paid), and which are not subsequently supplied while in warehouse, are liable to acquisition VAT unless they are refined in the UK to create a new product — read paragraph 15.6.3.

While the duty-suspended fuel remains warehoused there’s no need to account for tax on the acquisition. If the acquirer is required to pay the excise duty or delivers the fuel from warehousing to home use in the UK, the acquisition VAT must be declared on their VAT Return (form VAT 100):

• for the period covering the time of removal or requirement to pay excise duty
• with authority from HMRC, for the period in which the 14th day after the receipt in warehouse falls, under the special arrangements described in paragraph 15.5

The acquisition VAT should be entered in box 2 of the VAT Return and may be treated as input tax in box 4 on the same return, subject to the normal VAT rules.

Additionally, for completeness and to account for excise duty, warehousekeepers must submit separate forms W50 (in respect of immediate payments of duty) appropriate to the acquisitions. ‘ACQ VAT’ is to be inserted in the ‘VAT Deferred/Paid’ box.

The boxes for VAT registration and value for VAT should be completed, and where excise duty is to be deferred, there is no requirement to complete a VAT 908.

However, for acquisition VAT only, and to support declarations on VAT Returns, warehousekeepers will need to make arrangements to provide the necessary audit trail information linking the delivery of fuel into the warehouse to delivery for home use (unless the notional 14-day throughput arrangement has been authorised). How this is best achieved is a matter for individual warehousekeepers to decide in consultation with product owners, as appropriate.

If you need help, contact the HMRC excise and gambling duties helpline or the VAT general enquiries helpline.

Acquisition VAT is not due if there has been a supply of the goods in the warehouse.

15.6.3 Home-produced fuel

Fuel refined in the UK is regarded as UK-produced oils if they are from:

• crudes imported from third countries (or acquired from EU member states into Northern Ireland)
• semi-refined product imported from third countries (or acquired from EU member states into Northern Ireland)
• refinery feedstock imported from third countries (or acquired from EU member states into Northern Ireland)

Any import VAT or acquisition VAT otherwise due on the non-UK constituents are extinguished. This applies only if the refining process creates a product of a different character.

If UK-produced fuel, as defined in the previous paragraphs, is supplied while in warehouse, the supply is disregarded for VAT purposes, unless it is the last or the only supply of that finished product in warehouse.

The warehousekeeper, or the person who eventually buys the fuel and delivers it to home use in the UK upon payment of excise duty, must make sure that a removal declaration is completed and that the VAT is accounted for on form W50 or on form VAT 908, as appropriate.

When it is clearly agreed between a supplier and a buyer that ownership of the fuel passes to the buyer while it is still in a duty-suspended warehouse, that is, before it goes through the delivery meter, then supply VAT becomes payable to HMRC by that buyer and not by the supplier from whom they bought it. Equally, if a buyer is invoiced before the fuel is delivered then the buyer is responsible for the payment of the VAT.

The terms of the supply (for example, ex-warehouse duty-paid) are to be clearly established before the goods are delivered, so that no doubt whatsoever exists about who is responsible for payment of the VAT or about the accounting procedure to be used. For advice on evidence for input tax deduction read paragraph 15.10.

Provided that the refiner delivers UK-produced fuel to home use without being supplied (either by sale or exchange in warehouse), no VAT arises on the removal. Where the time of supply for VAT purposes is after delivery from duty-suspended warehouse, a VAT invoice must be issued and the VAT included in the supplier’s next VAT Return.

15.6.4 Fuel produced or manufactured in the UK and mixed with imported or acquired fuel or additives

If UK-produced oil is mixed or blended in warehouse with non-UK oil, resulting in a new product of a different character, the new product will be treated as home-produced and dealt with under paragraph 15.6.3. Any acquisition or supply that takes place before the change of character occurs can be disregarded for VAT purposes.

Where the fuel shares common storage and the mixing does not result in a new product being created, the VAT remains payable on the non-UK fuel within the tank when the goods are removed from duty suspension, unless the notional 14-day throughput arrangement has been authorised and applied.

Delivery documents for transactions in duty suspension must identify imported fuel and state whether or not it is liable to Customs Duty. Any Customs Duty due must be paid on form C88.

15.6.5 Fuel exchange arrangements

If the exchanged goods are in warehouse at the time of supply, these supplies are treated in the same way as other supplies made in warehouse.

Exchanges of fuel that take place outside a duty-suspended warehouse must have VAT invoices issued for supply VAT purposes on such deliveries.

15.6.6 Removals to EU member states under warehousing arrangements

Where goods are supplied under duty suspension from a warehouse in the UK Northern Ireland direct to a warehouse in an EU member state, the supply is treated for UK VAT purposes as taking place outside the UK.

15.7 VAT treatment of associated services in warehouse

Some services associated with goods held in warehouse can be relieved from VAT at the time they are supplied, under section 18C of the VAT Act 1994. The relief is achieved by zero rating the eligible services. VAT becomes due on such services when the goods concerned are subsequently removed to home use, or at the duty point.

15.7.1 Services which are eligible for zero rating

These are restricted to those services that are both:

• physical services that take place in the warehouse
• directly associated with the goods held in the warehouse — these include any processes that create a new product, and other services such as storage and secondary packaging

Services, such as brokerage, agents’ fees and transport between warehouses are not included.

15.7.2 How supplies of services may be relieved

For the owner of the goods

If, as owner of the goods, eligible services are supplied to you by a third party, you may have the service zero-rated by the supplier.

To do this you should issue a certificate, stating that the goods are under duty-suspension arrangements when you order the services to be carried out. An example of such a certificate is at Appendix R.

You may create your own version, but all the information shown in the example certificate must be provided. A certificate is not required for warehouse storage charges.

For the supplier of the service

If you receive a certificate, you should issue a VAT invoice to your customer in the usual way, and at the usual time, but VAT should be shown as zero-rated ‘in accordance with section 18C(1) VAT Act 1994’ and no VAT should be charged.

You should keep the certificate with your records as evidence to support the zero rating of your supplies. If you do not receive a certificate, you should issue your invoice and charge VAT (if applicable) in the usual way.

Warehouse storage charges

A certificate is not required to zero rate a warehousekeeper’s storage charges. The warehousekeeper’s invoice should include the words ‘in accordance with section 18C(1) VAT Act 1994’ and no VAT should be charged. If, as owner of the goods, you decide you want the storage charges standard-rated, you should notify the warehousekeeper in writing.

15.7.3 Subsequent taxation of previously zero-rated services

Services which, at the time of supply, are zero-rated, will subsequently be taxed when the goods to which they are associated are removed from the warehouse to home use, or at the duty point, except in the following circumstances when:

• services create a new product
• there is a supply of the goods after the service was provided
• the goods are exported under duty suspension arrangements directly from the warehouse to a third country
• goods are sent from Northern Ireland under duty-suspension arrangements to a customs or tax warehouse in an EU member state

Any VAT due in respect of previously zero-rated services is to be accounted for, together with the VAT due on the relevant goods, using form W50 or VAT 908 as appropriate. There is no requirement to separate VAT due on the goods, and VAT due on the supply of services; only a total is required.

However, a separate record will have to be kept by the person that removes the goods, detailing all zero-rated services received.

15.8 How fuel is valued for VAT purposes

The value for VAT purposes of fuel removed from warehouse is determined as follows.

15.8.1 Imported fuel or fuel acquired into Northern Ireland from EU member states

The value is normally the delivered price paid at the time of entry for warehousing, plus certain other incidental costs if not already included in the price. In addition the value must include the excise duty payable on removal to home use and any Customs Duty paid.

Read the following for further details:

• Paying VAT on imports from outside the UK to Great Britain and from outside the EU to Northern Ireland
• VAT on movements of goods between Northern Ireland and the EU

The requirements governing the conversion to sterling of any elements of the VAT value, which are expressed in non-sterling currencies, are given in Working out the customs value of your imported goods.

15.8.2 Home-produced fuel

The value is based on the last supply and is normally the price paid by the current owner, plus the excise duty payable.

15.8.3 Standard Average Values (SAVs)

The use of SAV was withdrawn from April 2011. From that date all VAT due on removals of fuel from warehouse must be accounted for using an accurate valuation of the product.

As in paragraph 15.3, it is the responsibility of the owner of goods at the time of removal from warehouse to comply with all VAT requirements. To allow owners to do this, warehousekeepers must provide them with details of the total amounts removed so VAT can be accounted for.

15.9 Unrebated fuel marked at approved premises

Heavy oil which is marked, or delivered under a marking waiver, from registered remote marking premises after removal from warehouse) and which is supplied in loads of 2,300 litres or less, becomes entitled to excise duty rebate and, at the same time, the VAT liability changes from the standard rate to the reduced rate of 5%.

More information on the reduced rate is available in Fuel and power (VAT Notice 701/19).

15.10 Evidence you need for input tax deduction

VAT-registered businesses may normally deduct as input tax the VAT due on the goods they remove from warehouse for the purpose of their business. To reclaim the tax as input tax on their next return, they should hold a centrally-produced VAT certificate on form C79 as acceptable evidence for input tax deduction.

If a VAT certificate is not available, copies of forms W50 or VAT 908 certified by HMRC would be an acceptable alternative.

If using postponed VAT accounting a clear audit trail should be provided to show the amount of import VAT to be declared in box 1 of the VAT Return and to demonstrate the entitlement to deduct that import VAT as input tax in box 4 of the same return.

Agents, warehousekeepers and others responsible for clearing another person’s goods to home use from an excise warehouse must not deduct input tax on their own VAT Return, but are to make sure the documents are sent to their principals as soon as possible.

15.11 When VAT is chargeable on deficiencies

VAT is chargeable when excise duty is charged on a deficiency of fuel which:

• has been imported, acquired from the EU or supplied while warehoused
• arises in storage or in transit

Where excise duty is charged on a deficiency, import VAT, acquisition VAT or supply VAT becomes due as described in paragraph 15.6.

The VAT is to be paid immediately unless the deficiency occurred during the current calendar month, and payment is to be made by an approved person under the duty deferment arrangements.

When VAT on chargeable deficiencies is paid by, or on behalf of, the owner of the oil, then the owner may, if registered, deduct it as input tax subject to the normal rules. Where someone other than the owner pays the VAT, such as an agent, tax may not be deducted by that payer as input tax. This is because it is not tax on a supply or importation of goods which is for the purpose of the agent’s own business.

15.12 VAT implications for warehoused LPG

Where LPG sites are authorised as tax warehouses, LPG will be treated normally as supplies and acquisitions of warehoused excise goods. This means that any supply VAT due is not accounted for until the product is removed from the site, even when traded within the site. Where the LPG site is authorised as a tax warehouse, any import VAT due on incoming LPG is not payable until this LPG is removed from the warehouse for home use in the UK.

When LPG is moved between approved tax warehouses within the UK, we treat it as we treat fuel in general.

Where a movement between 2 tax warehouses in Great Britain or within Northern Ireland is made under duty suspension it is treated as a movement in the warehousing regime, and no VAT becomes payable until the LPG finally leaves warehouse control.

If the movement is not made under duty-suspension terms, any VAT due (either on the importation, acquisition into Northern Ireland or supply) on removal of the LPG to home use must be paid or accounted for on removal from the first warehouse. Any supplies made after that are treated under the normal VAT supply rules.

Only certain movements of LPG between UK warehouses are to be regarded as under duty suspension.

15.13 VAT treatment of supplies made ‘at the marine flange’

It is common for fuel to be traded at the point at which it is loaded on to a ship. This is usually referred to as trading ‘at the flange’. The VAT treatment of such supplies will depend on whether the flange is in or out of the warehouse. This will be apparent from the terms of the warehouse approval agreed with HMRC. The following table provides examples as to how certain supplies should be treated.

Fuel supplied at the flange before:	Flange is:	VAT treatment
removal to home use	in warehouse	Supplies made at the flange are outside the scope of VAT. VAT is due when the goods are removed from the warehouse and is based on the value of the last supply made in warehouse.
removal to home use	outside warehouse	All supplies made at the flange are subject to VAT at the standard rate. Previous supplies may be outside the scope of VAT depending on where the precincts of the warehouse ends. This will be apparent from the terms of the warehouse approval agreed with HMRC.
export outside Great Britain or the EU, from Northern Ireland	in warehouse	Supplies made at the flange are outside the scope of VAT. VAT would normally be due on the last supply made in warehouse but as the goods are to exported the supply is eligible for zero rating provided the conditions in VAT on goods exported from the UK (VAT Notice 703) are met.
export outside Great Britain or the EU, from Northern Ireland	outside warehouse	Supplies made at the flange are subject to VAT apart from the final supply which is eligible for zero rating provided the conditions in VAT on goods exported from the UK (VAT Notice 703) are met.
dispatch other than to a tax warehouse, from Northern Ireland to a customer in an EU member state	in warehouse	Supplies made at the flange are outside the scope of VAT. VAT would normally be due on the last supply made in warehouse but as the goods are to be removed to an EU member state the supply may be eligible for zero rating provided the conditions in VAT on movements of goods between Northern Ireland and the EU are met.
dispatch other than to a tax warehouse, from Northern Ireland to a customer in an EU member state	outside warehouse	Supplies made at the flange are subject to VAT apart from the final supply which may be eligible for zero rating provided the conditions in VAT on movements of goods between Northern Ireland and the EU are met.
removal to a tax warehouse in an EU member state from Northern Ireland	in warehouse	Supplies made at the flange are outside the scope of VAT. Goods removed under duty suspension to a warehouse in an EU member state are deemed to remain within a warehousing regime for VAT purposes. Therefore, the final supply made in the UK warehouse is also treated as outside the scope of VAT.
removal to a tax warehouse in an EU member state from Northern Ireland	outside warehouse	If the flange is outside the warehouse then VAT will normally be due on supplies made at this point. However, in Northern Ireland, where the goods are removed under duty-suspension arrangements to an approved warehouse in an EU member state the supply is outside the scope of VAT. In such cases the goods remain within a warehousing regime for VAT purposes provided they are covered by a valid eAD — find guidance in Receive goods into and remove goods from an excise warehouse (Excise Notice 197)
removal to another tax warehouse in Great Britain or within Northern Ireland	—	Goods remain in warehousing regime, similar to Northern Ireland movements to EU warehouses, goods removed under duty suspension to another warehouse are deemed to remain within a warehousing regime for VAT purposes. Find more guidance in Receive goods into and remove goods from an excise warehouse (Excise Notice 197).

16. Dealing with HMRC

16.1 What you can expect from HMRC

We will normally make an appointment to see you, and we will try to make our visit with as little disruption to your business as is possible.

When we make our appointment we will tell you:

• who we want to see
• what records we want to see
• how long we think the visit will take

You can find out more detailed information about how we visit businesses in:

• VAT visits and inspections
• general information about compliance checks

You may, from time to time, be visited by a mobile enforcement team (MET). HMRC will want to sample and test fuel in storage.

16.2 What records you must keep

As a revenue trader you must maintain records relating to your business affairs. These will be your normal business, management, and accounting records. We will not normally require you to keep any additional records for excise audit purposes. However, if additional records exist (for example, stock accounts) we have the right to see them.

Find more information in Revenue traders’ records (Excise Notice 206).

There are specific records you must keep if you have been approved as:

• the operator of a duty-suspended installation
• the operator of registered remote marking premises
• a registered remote marker

These records are:

• the quantities of marker, or composite solutions, received, and details of the suppliers
• the quantities of marker, or composite solutions, added each day to gas oil, kerosene, or light oil, and the quantities of each description of oil to which they have been added
• details of the actual stocks of marker or composite solution held at the premises at the end of each calendar month, and at any time that HMRC may require

You must balance the stock account for each marker or composite solution at the end of each month, as a check that the rate of use is consistent with the quantity of oil marked. It is good practice to make such a check more frequently than monthly.

If you are a registered remote marker and you mark only periodically, then it is best for a check to be made by a depot supervisor after each batch is marked and for the check to be evidenced. This reduces the risk that under-marked product is delivered to customers.

Registered remote markers must balance their stock accounts even though they mark at premises other than their own.

16.3 How long you must keep your records

You must keep your records for 6 years. If this causes you problems, you should ask HMRC to allow you to keep your records for a shorter period.

16.4 Alternatives to keeping paper records

You can keep your records on microfilm or microfiche, provided that the records are legible and you provide the necessary facilities to read the records. You can also keep your records on a computer. Our officers will need to see the appropriate technical documentation as part of their visit.

Find more information in Revenue traders’ records (Excise Notice 206).

16.5 Complying with health and safety

You must comply with all the legal provisions relating to health and safety, such as the Health and Safety at Work Act 1974. These provisions may include the need to display warning notices, and to issue health and safety instructions, to both staff and visitors.

If you issue special equipment, or protective clothing, to your staff when they are doing things such as handling, inspecting, or sampling oils, then you must provide similar clothing and equipment to our staff when they do the same things.

16.6 Officers’ powers

Our officers may:

• enter and inspect any entered or approved premises and any vehicle or machine on those premises (HOR s47)
• inspect, sample, examine, and, test fuels. (Hydrocarbon Oil Regulations 1973)
• require the production of your business records, and remove or take copies of those records (Revenue Trader (Accounts and Records) Regulations 1992)

16.7 Penalties

If you make or sign, or cause to be made or signed, a declaration relating to the revenue or stock accounting of oils, which is untrue in any significant way, then you could be liable to the following:

• financial penalties
• imprisonment

17. Terminology used in this notice

Term	Description
AAD	Accompanying administrative document — replaced by the eAD, April 2010
Approved mixing	mixing of oil in accordance with permission under the Hydrocarbon Oil (Mixing of Oils) Regulations 1985
Authorised person	a person authorised by HMRC
Aviation gasoline (avgas)	light oil which is specially produced as fuel for aircraft, at 37.8°C has a Reid Vapour Pressure of not less than 38kPa and not more than 49kPa, and is delivered for use solely as fuel for aircraft
Aviation turbine fuel (avtur)	unmarked kerosene or kerosene blended with other fuels for use as fuel for aircraft engines and delivered under a marking waiver
Biodiesel	diesel quality liquid fuel that is produced from biomass or waste cooking oil, the ester content of which is not less than 96.5% by weight, and the sulphur content of which does not exceed 0.005% by weight or is nil
Bioethanol	a liquid fuel consisting of ethanol produced from biomass and is capable of being used for the same purposes as light oil. The liquid does not include any substance that is gaseous at a temperature of 15°C and under a pressure of 1,013.25 millibars.
Cycle	the sequence in which oils of different types are shipped by pipeline
DAN	Deferment Approval Number, consisting of 15 digits from April 2018
Dark oil	heavy oil that is darker than ASTM colour 3.0 in the Table of Glass Colour Standards etc, as defined in the Hydrocarbon Oil (Marking) Regulations 2002
Deferment trader	a trader who is approved to defer the payment of excise duty and who is entitled to account for it on the deferment return, form HO10 Report excise duty on fuel removed from warehouse
DERV	Diesel-Engined Road Vehicle, also the name given to the fuel for these vehicles. Sometimes called white diesel.
Drawback	the process of reclaiming excise duty after providing evidence that duty-paid oils have been exported or destroyed
Duty-paid terminal	an oils terminal where all of the oils in storage have borne excise duty
Duty-suspended premises	a warehouse, where oils are stored without payment of duty before delivery to home use. These are normally attached to the producer’s premises, or are import warehouses.
Duty suspension	the process that allows oils to be stored without paying excise duty, until the oils are delivered to home use
eAD	Electronic Administrative Document, created by an entry on EMCS.
EMCS	Excise Movement and Control System, for recording movements under duty suspension.
Egress	the point at which oil is delivered out of a pipeline.
Excepted machines	machines, as defined under schedule 1a of HODA, which may use rebated heavy oil. More information is available in Using rebated fuels in vehicles and machines (Excise Notice 75).
Excise duty	the UK revenue duty chargeable on both imported and home-produced motor and heating fuels. It is charged at a specific rate on the quantity and description of oil delivered to home use
Excise duty point	the time when the requirement to pay any duty with which the goods become chargeable is to take effect — section 1 of Finance (No 2) Act 1992
Excise goods	goods that are liable to excise duty
Excise warehouse	a place of security approved by HMRC under CEMA, section 92
Fuel oil	means heavy oil which contains in solution an amount of asphaltenes of not less than 0.5% or which contains less than 0.5% but not less than 0.1% of asphaltenes and has a closed flash point not exceeding 150°C
Gas oil	heavy oil of which not more than 50% by volume distils at a temperature not exceeding 240°C and of which more than 50% by volume distils at a temperature not exceeding 340°C. If it has been marked, it is also known as ‘red’, or ‘red diesel’.
Heavy oil	hydrocarbon oil other than light oil (for the definition read ‘Other heavy oil’)
High flash	oil where the flash point is >32°C
Home use	delivery to the UK market
Ingress	the point at which oil enters a pipeline
Interface	the boundary between 2 parcels in a pipeline
Kerosene	heavy oil of which more than 50% by volume distils at a temperature not exceeding 240°C. Kerosene is also known as paraffin or burning oil.
Light oil	oil of which not less than 90% by volume distils at a temperature not exceeding 210°C, or which gives off an inflammable vapour at a temperature of less than 23°C when tested in the manner prescribed in the Acts relating to petroleum.
Low flash	oil where the flash point is <=32°C.
Marked oils	those oils that have been marked to claim a rebate of excise duty. The oils affected are gas oil, kerosene, biodiesel and bioblend containing gas oil, kerosene or other heavy oil. These oils are also known as controlled oils.
Marking	adding certain chemicals and dyes to oils in order to deter or detect misuse of rebated fuel
Fuels	hydrocarbons that are liquid at 15°C. The terms ‘hydrocarbon oils’ and ‘fuels’ mean the same thing.
Motor and heating fuels	The title of this notice refers to the main liquid and gas energy products, but the notice also covers related subjects such as biofuel, bioblend, fuel additives, extenders and tied oils.
Other heavy oil	oil which does not meet the fiscal definition of kerosene, gas oil or fuel oil (including waste oils or petroleum fuels derived from waste oil)
Pipeline	pipelines approved by HMRC for the importation or exportation of oil or gas; or for the movement of uncleared imported oil or gas, or for the movement of dutiable gas from a warehouse without payment of duty — also read cross-country oil pipeline.
Rebate	the difference between the full rate of duty and the reduced rate allowed on some certain types of oils or fuel when put to certain uses
Registered consignee	registered revenue traders who have been approved and registered by HMRC or their UK or EU member state tax authority to receive duty-suspended excise goods from EU member states (which will only apply to warehouses in Northern Ireland) and account for duty on them. UK registered consignees must account for duty when the goods are received in the UK. Read paragraph 5.3.
Registered consignor	registered revenue traders who have been authorised by HMRC to dispatch excise goods in duty suspension to other warehouses or countries.
Registered remote marking premises (RRMP)	a duty-paid terminal that has been registered and approved to mark oils.
Remission	a decision not to collect any revenue owed. If revenue has already been paid, we will repay it.
Revenue trader	a person carrying on a trade or business subject to any of the revenue trade provisions of the Customs and Excise Acts, including importing, exporting, producing, handling, processing, packaging, transporting or dealing in goods chargeable with excise duty. Read CEMA section 1.
Mobile enforcement team	a mobile unit which tests fuels in vehicles and terminals, to make sure that rebated fuel is not misused and that the revenue is protected.
Temporary registered consignee	The updated equivalent of the occasional importer — someone who has to account for the duty before importing excise goods. Read paragraph 5.3.1.
Tied oils	oils delivered to customers fully relieved of excise duty because of the specific use to which they are put — for further information read Get relief for mineral oil put to certain uses (Excise Notice 184A)
Unleaded petrol	petrol which contains not more than 0.013 grams of lead per litre of petrol.

Appendix A — rates of duty

(referred to in paragraph 2.1)

Rates of excise duty on motor and heating fuel

Before accounting for excise duty you must make sure that you use the correct rates for products, and that those rates are still current. This is particularly important in the period leading up to, and immediately after, a Budget. You are responsible for ensuring that you use current rates of duty when calculating your duty liability.

Current and historic rates of excise duty can be found in Check if you need to pay Fuel Duty. You can also phone the HMRC excise and customs helpline on Telephone: 0300 200 3700.

Appendix B — methods of testing fuel

(referred to in paragraph 2.4)

Methods of testing motor and heating fuels

The authority for the department to prescribe methods for testing the nature of fuels is contained in HODA 2(1), which affords the power to direct the means by which the descriptions of oil defined in HODA 1 are to be ascertained.

The methods of testing or determining whether any fuel substances are solid or semi-solid at a temperature of 15°C, and the distillation characteristics of oil are as follows:

a. Tests for solidity

a. Material not containing bituminous or asphaltic substances
The method recommended by the Institute of Petroleum for ‘Cone Penetration of Lubricating Grease’ (BS 2000 Part 5C; IP50) for the unworked penetration procedure, but the measurements shall be carried out at 15°C. The material shall not be regarded as solid or semi-solid unless it has a penetration number of less than 200 units.

b. Coal tar, whether or not refined
The method recommended by the Standardisation of Tar Products Test Committee (Serial No RT3-62, Part 1). The material shall not be regarded as solid or semi-solid unless the Equi-Viscous Temperature (EVT) is 25°C or over.

c. Bituminous or asphaltic substances, having an asphaltene (hard asphalt) content of not less than 5%
The method recommended by the Institute of Petroleum for ‘Viscosity of Cutback Bitumen and Road Oil’ (BS 2000 Part 72, IP72) uses the Standard Tar Viscometer with a 10mm cup. The material shall not be regarded as solid or semi-solid unless the efflux time at 15°C is 300 seconds or more. The method is not suitable for material contaminated with water, for which the appropriate method is that described in the next paragraph d.

d. Other bituminous or asphaltic substances
The method recommended by the Institute of Petroleum for ‘Penetration of Bituminous Material’ (BS 2000 Part 49; IP49), but the thermometer used should conform to specification IP8C and the penetration should be determined at 15°C with a load of 100 grams for 5 seconds. The material shall not be regarded as solid or semi-solid unless it has a penetration number of less than 200 units.

b. Distillation tests

The method of determining the distillation characteristics of oil shall be as follows:

a. petroleum products: the relevant method recommended by the Institute of Petroleum b. coal tar products: the relevant method recommended by the Standardisation of Tar Products Test Committee.

For the purpose of distinguishing between light and heavy oil for excise purposes, distillation shall be carried out by methods BS2000 Part 123; IP123.

c. Details of test methods

The previous methods bearing the prefix IP are published on behalf of the Institute of Petroleum in ‘Standard Methods for Analysis and Testing of Petroleum and Related Products’.

These methods have been adopted by the British Standards Institution and are issued in a series under the general prefix BS 2000 followed by the IP number.

The methods of test of the Standardisation of Tar Products Test Committee are those published in the ‘Standard Methods for Testing Tar and its Products’.

d. Testing unleaded petrol for octane number

The method of testing unleaded petrol to ascertain its:

• research octane number (RON) shall be ASTM 2699 specified in BS EN 25164
• motor octane number (MON) shall be ASTM 2700 specified in BS EN 25163

BS EN means, in relation to each of the numbers specified in the previous bulleted list, the British Standard published by the British Standards Institution under each of those numbers and in force at the time of the test, and ASTM means the method of test published by the American Society for Testing and Materials (under each of the numbers specified in the previous bulleted list) and respectively referred to in those British Standards.

In all cases the method current at the time of test shall be used.

Appendix C — warning notices

(referred to in paragraph 2.7)

Warning notices to be displayed at duty-suspended fuel installations and remote marking premises

1. Duty-suspended premises

HMRC previously referred to duty-suspended installations as Bonded Installations. Existing warning notices, which refer to ‘Bonded Installations’ will continue to fulfil the requirements of this notice. Any replacements of existing notices should comply with the following revised wording.

Warehousekeepers and producers must make sure that sufficient warning notices in bold format are prominently displayed in such a way that all employees, carriers or visitors cannot fail to see them. The following notice is acceptable:

Warning

Duty-suspended installation

Duty has not been paid on oil kept here.

Removal without authority of any oil

or

Removal without marking or colouring of oil which ought to be marked or coloured may incur severe customs penalties:

Fines

Imprisonment

Forfeiture of oil

Forfeiture of vehicle

2. Registered remote marking premises

Operators should display warning notices in such a manner that all employees, carriers or visitors cannot fail to see them. The notices are to be in bold format and in the following text:

Removal without marking of oil which ought to be marked may incur severe customs penalties:

Fines

Imprisonment

Forfeiture of oil

Forfeiture of vehicle

Appendix D — production of oil

(referred to in paragraph 3.3)

‘Production’ of oil for excise duty purposes

1. Refining

The term ‘refining’ is not defined in UK excise law, but for Fuel Duty purposes it includes treatment of oil which results in a chemical change of its characteristics.

2. Examples of specific processes which constitute refining

The following processes constitute refining, and must be conducted in an entered fuel producer’s premises:

• fractionation — separation of a complex liquid into its constituents, or groups of constituents, which are called ‘fractions’ — separation depends upon differences in the densities or viscosities or temperatures of boiling, solidifying or crystallising of the constituents
• distillation — the most common form of fractionation used is distillation, which produces fractions boiling at different temperatures
• cracking — related to reforming
• reforming — a general term for the process where the chemical structure of oil is changed by the application of heat, possibly in the presence of a catalyst or accompanied by increased pressure or blending or a vacuum — it is loosely distinguished from cracking in that the change produced is less extreme
• blending — mixing of various components in the preparation of a product of specified properties
• conversion of oil into any substance which is not a fuel
• incorporating any gaseous or solid hydrocarbon substance into any fuel

However, persons (individually or class) approved under Get relief for mineral oil put to certain uses (Excise Notice 184A) as users, repayment users, or furnace operators may, while using oil under the terms of their approval, conduct a process which amounts to refining or production of oil.

3. Examples of processes which do not constitute refining

The following are examples of production processes which do not constitute refining (although they may be conducted in a fuel producer’s premises):

• application of heat or pressure to oil as a result of which the characteristics of the oil are unchanged when it is restored to its previous temperature and pressure
• operations permitted in warehouses generally (for example, removing water from oil, filtering, and so on)
• mixing of oil with non-hydrocarbon substances to produce composite goods in which the oil is not changed chemically)
• use of oil as a solvent or extractant in the treatment of substances which are not fuels

4. Production

‘Production’ of oil (HODA s2(4)) includes:

• obtaining oil from any substance or natural source
• obtaining one description of oil from another
• subjecting oil to any process of purification or blending

‘Production’ also includes all activities under ‘2. Examples of specific processes which constitute refining’.

Appendix E — approval of warehouses

(referred to in paragraph 3.7.4)

Approval of a motor and heating fuel warehouse — standard conditions

1. The provisions of the law and regulations relating to the duties on motor and heating fuel are complied with.
2. Warehousekeepers follow the requirements of this notice relating to the storage, measurement and marking of fuel, the procedures to be operated, the records to be maintained and the vessels, plant, equipment and accommodation to be provided.
3. The working conditions on the premises are safe and free of risk to the health and safety of all of our staff on those premises, and any requirements concerning health and safety laid down by any competent authority are complied with.

Appendix F — approval of floating storage as a warehouse

(referred to in paragraph 3.8.4)

Warehouse approval of floating storage for bunkering ships

1. Details required

To apply for HMRC approval of floating storage as a warehouse for bunkering ships, you should provide us with the following information:

• name of the operator of the craft and description of the operational procedures
• the identifying particulars of the craft, and the marks and numbers and capacities of each tank to be approved
• location of the craft or, if applicable, the limits of its movement
• the descriptions of fuel to be carried, and whether it is for bunkering foreign-going vessels or ships or hovercraft (but not pleasure craft) engaged on marine voyages (read paragraph 7.5)
• plan or plans showing the layout and interconnections on the craft of the tanks to be approved and other tanks
• proposals for providing safe means of access to the craft
• the means to be adopted for taking account of the fuel on board that craft

2. Conditions of approval

Approvals of floating storage will be subject to the same conditions as apply to onshore base warehouse approval.

In addition the following will apply for all craft

• facilities are to be provided and maintained to allow our officer at any time, without danger to health and safety, to take account of the fuel in the approved tanks or to examine any other tanks on the craft
• the accuracy and continuing accuracy of all measuring equipment is in line with the requirements detailed in section 4
• receipts into the approved craft tanks are to be restricted to heavy oil on which duty has not been paid, either from other approved tanks in the base warehouse or from another approved warehouse, refinery or entered premises
• deliveries from the tanks of the approved craft are to be restricted to:
  a. delivery without payment of excise duty (heavy oil only) for use on board vessels, including hovercraft but not pleasure craft, engaged on marine voyages (read paragraph 7.5)
  b. shipment without payment of either Customs Duty or excise duty as stores or bunkers on entitled foreign-going ships
  c. duty-suspended deposit in other approved tanks in the warehouse
• a running stock account of the duty-suspended oil in each approved craft tank is to be kept on board and is to be available to our officer at any time
• all duty-suspended oil in the approved craft tanks, and all receipts and all deliveries are to be accounted for as stock receipts and deliveries of the associated onshore warehouse
• proper evidence of shipment is to be obtained for each delivery of oil for ships’ or hovercraft bunkers, and retained at the base warehouse
• the approval of the craft tanks may be withdrawn or varied if it appears to our officer that the craft is mainly used otherwise than for bunkering ships or hovercraft

For permanently moored craft:

Advise our officer if you intend to move the craft from its specified mooring.

In addition the following will apply for mobile craft. Keep a record showing:

• the dates of arrival and departure of the craft
• details of all journeys
• particulars of all duty-suspended receipts into and deliveries from each craft tank
• the place or vessel whence that oil was received
• the place or vessel and purpose of each disposal

As a vessel engaged on a marine voyage such mobile craft are entitled to bunker fuel themselves from the warehouse stock of duty-suspended oil on board.

At the end of each accounting period you must balance this craft account and pay duty on any unexplained loss of duty-suspended oil.

Appendix G — common storage stocks (losses and gains)

(referred to in paragraph 3.9)

Common storage stocks: accounting for storage loss and gain

1. Method of calculation

1. Calculate the storage loss percentage for the stock as a whole using the formula: loss multiply 100 opening stock plus receipts.
2. Apply this percentage to the opening stock plus receipts of duty-paid oil, disregarding the period of time that duty-paid stock has been in storage.

De minimis losses may be ignored — you should agree a figure locally with us.

2. Accounting for losses and gains

Where duty-paid stock remains in duty-suspended storage at the end of a calendar month, you must take account of the notional loss or gain.

If duty-paid stock is exhausted at the end of the calendar month and a notional loss has occurred, duty must be paid on the loss by including the amount on the next duty deferment liability schedule. Where a gain has occurred, credit of duty should be taken in the next deferment period by adjusting the account of dutiable deliveries.

3. Example of calculation

The following is a calculation to work out losses and gains.

1,000,000 litres duty-paid premium motor spirit received into duty-suspended stock on 25 July and deliveries exhausted 9 August.
PMS storage loss for July = 0.04%, August = 0.05%.

July calculation

1,000,000 × 0.04% = 400 litres to be deducted from duty-paid stock remaining at 31 July.

August calculation

Duty-paid book stock remaining at 31 July — 650,000 litres

Less July storage loss — 400

Opening stock at 1 August — 649,600 litres

Duty-paid stock exhausted on 9 August, so no duty-paid stock on hand at 31 August.

649,600 × 0.05% = 324 litres

Duty to be paid on 324 litres in deferment period 15 August to 14 September.

Appendix H — Standard Temperature Accounting (STA)

(referred to in paragraph 4.3)

STA for excise duty purposes

1. Introduction

The Energy Products Directive 2003/96/EC Article 12(2) requires Northern Ireland and all EU member states to charge excise duty on litres measured at a standard temperature of 15°C.

The method of conversion of ambient temperatures to 15°C preferred is by the use of Automatic Temperature Compensating (ATC) meters. (These meters are fitted with temperature sensing and compensating equipment. This equipment automatically and continuously applies corrections to the meter in order to give a read-out in litres at 15°C.)

However we accept that it is impractical for the oil industry to replace its measurement equipment with ATC meters solely to comply with the Directive’s requirements, and so HMRC accepts the operation of STA by ‘best practicable means’.

The aim in producing these guidelines has been to specify minimum standards. Businesses whose measurement systems are superior to those specified in these guidelines will be expected to use the superior systems. Any system should be based on the minimum requirements specified in these guidelines.

2. De minimis conversion levels

Companies will be expected, wherever practicable, to convert bulk litre measurements to standard litres for excise duty accounting purposes. In some instances it may be impractical, or unreasonable, to convert measurements to standard litres. It has been agreed, therefore, that a de minimis limit may apply to certain transactions.

Examples of these transactions are given in the next 2 bullet points.

The de minimis limit has been set in litres and applies to each transaction. To reflect differing duty rates 2 limits have been set.

These are products for use:

• as fuel for a machine or vehicle that is not an excepted machine, or as aviation gasoline (Avgas) — 4,000 litres
• in an excepted machine — 80,000 litres

These limits are not automatic entitlements. We must agree that conversion to standard litres is either impractical or unreasonable, but our involvement will be limited to agreeing the system for application of the de minimis levels at individual installations, including the definition of ‘transaction’, and to subsequent audit of the system.

There is no requirement to consult us on a ‘per transaction’ basis, but any proposal to change a system must be discussed with us before it is introduced.

For de minimis transactions bulk litre figures should be entered on payment or claim forms as if they were standard litre figures. Authority to use the de minimis conversion levels may be withdrawn if abuse of the concession is established.

The submission of multiple bulk litre claim forms to avoid the requirement to convert to standard litres would be considered to be such abuse.

Where the quantity is below the de minimis limits previously shown, the de minimis conversion levels may apply to:

• any duty-paid delivery
• chargeable deficiency
• repayment claim
• contamination claim
• netting claim

These may be declared, claimed or otherwise dealt with in bulk litres. Claims on form H09 for volumes below the de minimis figure of 4,000 litres may also be in bulk litres.

3. Measurement procedures

Procedures for measuring temperature, density and volume of fuel and oil products are to be based on those specified by the Energy Institute in their Measurement Manual.

The measurement of temperature is to be made as close as possible to the point at which volume is measured. A record is to be made of all steps taken in converting ambient temperature to 15°C.

4. Conversion procedures

Adjustments for STA shall be calculated on the basis of the tables published by the International Organisation for Standardisation (ISO) under the reference ISO 91-1 (Petroleum Measurement Tables — Part 1: Tables based on reference temperatures of 15°C and 60°F). ISO 91-1 has been adopted by the British Standards Institution as BS 6441.

Adjustments for products other than those covered by ISO 91-1 shall be calculated on the basis of appropriate internationally recognised tables (for example, ASTM D 1555: Standard Method for Calculation of Volume and Weight of Industrial Aromatic Hydrocarbons).

Companies using tables referenced as ASTM D 1250/80 should note that these tables are still current, but their title is incomplete. They are more properly known as API 2540/IP200/ASTM D 1250/ANSI-ASTM D 1250, and are a collection of tables and associated documents. This complete set of printed tables, their implementation procedures (which are the true standard), and various errata notes and Guidelines for Users, have all been adopted as ISO 91-1.

5. Density

For all receipts and deliveries density is to be measured either by the use of pipeline densitometers or by laboratory testing of samples drawn from the appropriate storage tank or receiving vessel.

The frequency of density measurement is to be not less than once per batch of fuel received into the receipt or delivery tanks.

6. Receipts

6.1 Into storage tanks

Temperatures are to be taken in the receipt tanks and the volume received in standard litres determined by:

• the calculation of standard volumes in the receipt tanks before and after the movement and taking the difference
• for small quantities (relative to the receipt tank), by determining the volume, temperature and density in the delivery vessel by an appropriate method for example, by weighing or dipping and sampling a road tank wagon (tanker lorry)

6.2 Drums

Receipts to be taken as advised. Stocks to be accounted for in whole drums.

7. Deliveries

7.1 Road

Using non-ATC meters, temperature measurement should be taken by either:

• measuring the temperature of the fuel in the delivery line as near to the meter as possible
• temperature measurement in the delivery tank, at frequent intervals, for example, 08.00, 12.00, 16.00, 20.00 or as appropriate during the period of deliveries — each temperature taken to be used for the following period, or at least twice during the delivery period and averaged

7.2 Rail

7.2.1 Using non-ATC meters

Temperature measurement should be taken by one of the following methods:

• by measuring the temperature of the fuel in the delivery line as near to the meter as possible
• by temperature measurement in the delivery tank, at suitable intervals, for example, 08.00, 12.00, 16.00, 20.00 or as appropriate during the period of deliveries — each temperature taken to be used for the following period, or at least twice during the delivery period and averaged

7.2.2 Volume account taken in delivery tanks

Temperature should be taken in the delivery tank before and after each train parcel and the volume in standard litres calculated as the difference between the opening and closing standard volumes.

7.2.3 Volume account taken by ullaging rail cars

Temperature should be taken in each rail car and the standard volume calculated in each one or, in at least the first and last car in the train and averaged. In this case the average temperature should be used to calculate the standard volume loaded on the whole train.

7.3 Sea

7.3.1 Using non-ATC meters

Temperature measurement should be by one of the following methods, by:

• measuring the temperature of the fuel in the delivery line as near to the meter as possible at least twice during the delivery period and averaging the temperatures
• temperature measurement in the delivery tank or receiving vessel at least twice and averaging the temperatures

7.3.2 Non-metered

The temperature should be measured in the delivery tank in which the volume is measured, and the standard volume delivered is to be calculated as the difference between the standard volumes in the tank at the start and end of the movement.

When the delivered volume is based on ship’s figures the temperature may be taken at intervals in the shore tank and averaged, or in the ship’s tanks.

7.4 Pipeline

7.4.1 Using non-ATC meters

Temperatures should be taken in the delivery tank at intervals during the delivery and averaged.

7.4.2 Non-metered

The standard quantity delivered should be determined as the difference between the opening and closing standard volumes in the delivery tanks.

7.5 Drums

7.5.1 Filled by weight

Standard litres should be calculated from gross weight and tare using the delivery tank temperature and density.

7.5.2 Filled by volume

Use ATC meters or measure temperature in the delivery tank if such meters are not available.

8. Marking at a registered remote marking premises

Temperature is to be taken in marked product storage tank.

9. Chargeable deficiencies

Any chargeable deficiencies exceeding the de minimis limits at paragraph 2 must be calculated in standard litres.

Chargeable deficiencies not exceeding the de minimis limits may be presented in standard litres or bulk litres.

10. Tied oils users and distributors, including class approved

Receipt, stock and delivery accounts may be in bulk litres. Common storage of duty-paid and tied oils may be allowed provided that any loss is apportioned between the duty-paid and tied oil stocks.

Any chargeable deficiencies exceeding the de minimis limits at paragraph 2 De minimis conversion levels, must be calculated in standard litres using the temperature and density of the oil remaining in the tank.

In the event of a total loss where the quantity exceeds the de minimis limits the supplier should be asked for temperature and density of the last delivery and this should be used to calculate the standard litres lost.

For more information on tied oils, read Get relief for mineral oil put to certain uses (Excise Notice 184A).

11. Repayment users

Each claim for repayment of duty on quantities not exceeding the de minimis limits set out in paragraph 2 may be submitted in bulk litres.

All other claims are to be submitted in standard litres.

The submission of multiple claims in bulk litres to avoid the requirement to convert to standard litres would be an abuse of the concession and would not be acceptable.

12. Netting

Duty-paid deliveries to be netted off the deferment schedule should be advised to the central accounting point in standard litres or with sufficient information to allow the standard quantity to be calculated, if the bulk quantities exceed the de minimis limits set out in paragraph 2 De minimis conversion levels.

13. Fuel Duty returns and records

Form HO10 ‘Report excise duty on fuel removed from warehouse’ must be completed in standard litres (but read paragraph 2, De minimis conversion levels).

Form HO65 Claim duty drawback on hydrocarbon oil must be completed in standard litres unless the quantity involved is less than the de minimis limits.

Form HO9 must be completed in standard litres unless the quantity involved is less than the 4,000 litre de minimis limit.

We would prefer the records specified at paragraph 13.4.1, section a. and 13.4.2 a. to c. to be completed in standard litres, but bulk litres will be acceptable provided an adequate audit trail to the balanced stock account is available.

Records which contain bulk and standard litres may be acceptable provided there is an adequate audit trail to the balanced stock account.

14. Health and safety

Some procedures specified in these guidelines may raise health and safety issues.

However, health and safety concerns override everything contained in these guidelines. No procedure contained in these guidelines should be followed if there is any health and safety risk.

Appendix I — energy products subject to the movements procedures of EU Directive 2008/118/EC

Referred to in paragraph 5.2.

Energy products which are subject to the movements procedures of EU Directive 2008/118/EC (will apply to businesses operating in Northern Ireland only)

Article 2 paragraph 1 of Directive 2003/96/EEC sets out the coverage of ‘energy products’ by reference to products falling within certain CN (Combined Nomenclature) codes in the Tariff.

By Article 20 of Directive 2003/96/EEC, the control and movement provisions of Directive 92/12/EEC (now to be read as Directive 2008/118/EC) are limited to the following energy products.

The CN codes given in a. to i. are subject to change, and so always consult the Tariff itself, or the Trade Tariff for the latest codes and other import and export information:

a. products falling within CN codes 1507 to 1518, if these are intended for use as heating or motor fuel;

b. products falling within CN codes 2707 10, 2707 20, 2707 30 and 2707 50 — that is, Benzole, Toluole, Xylole and other aromatic hydrocarbon mixtures of which 65% or more by volume (including losses) distils at 250°C by the ASTM D 86 method

c. products falling within CN codes 2710 11 to 2710 19 69

However, for products falling within CN codes 2710 11 21, 2710 11 25 and 2710 19 29, the control and movement provisions shall only apply to bulk commercial movements**

d. products falling within CN codes 2711 (except 2711 11, 2711 21 and 2711 29)

e. products falling within CN codes 2901 10

f. products falling within CN codes 2902 20, 2902 30, 2902 41, 2902 42, 2902 43 and 2902 44

g. products falling within CN code 2905 11 00, which are not of synthetic origin, if these are intended for use as heating fuel or motor fuel

h. products falling within CN code 3811, except for lubricant additives under CN codes 3811 21 00 and 3811 29 00.

i. products falling within CN code 3824 90 99 if these are intended for use as heating fuel or motor fuel.

**Bulk commercial movements’ have been defined by the Commission as applying to anything carried in a road tanker, rail wagon or similar that is, it does not apply to drums whatever the number of drums in a consignment.

Simplified procedures may be used for intra-EU movements of tied oil (read Get relief for mineral oil put to certain uses (Excise Notice 184A)) between certain countries under bilateral arrangements entered into by the UK.

Further information about those arrangements can be obtained from the Mineral Oil Reliefs Centre at morc.exciseenquiries@hmrc.gov.uk.

Appendix J — relief for oil used in oil production

Referred to in paragraph 6.2.2.

Relief from excise duty — oil used as a fuel to produce energy for use in the treatment or production of oil at an approved producer’s premises

1. What relief is available

Full relief

A power plant supplying more than one third of its total energy output for qualifying use may be designated either as part of the entered fuel producer’s premises to which that energy is supplied, or be approved in its own right as a separate fuel producers premises, so permitting removal of oil to that power plant without payment of excise duty.

An excise warehouse supplying fuel to a fuel producer for the purpose of creating energy for the treatment or production of oil (read paragraphs 6.2.2 and 7.9) may send that supply using a duty-free invoice (read paragraph 7.9), and by paying the duty and then netting it off (read section 12) on their HO10 Report excise duty on fuel removed from warehouse, provided they hold sufficient evidence that it will be put to that specific use.

You cannot net off the Fuel Duty or send fuel in duty suspension if it is used for heating or other non-production uses at the customer’s premises.

Partial repayment

An operator of a power plant supplying between one sixth and one third of its total energy output for qualifying use (read paragraph 2 — What ‘qualifying use’ means in this instance) may be approved to claim repayment of one third of the rebated rate of excise duty charged on oil used to fuel that power plant.

Applications for approval must be accompanied by an energy balance assessment (read paragraph 3 — Energy balance). The application procedure is explained at paragraph 4 How to apply for approval for relief.

This relief does not extend to Customs Duty which must be paid.

2. What ‘qualifying use’ means in this instance

Qualifying use is defined in section 19A of HODA as ‘use in the treatment … or in the production of hydrocarbon oil’, although this may by regulations also be applied to biodiesel and bioblend. This means that only the use in approved plant and vessels which are actually engaged in the processing and production of oil as defined in law is to be included as part of the qualifying energy balance for the partial relief for power plants, or as fuel which qualifies for the full relief.

You could not use either of these reliefs if you already account for this oil under the tied oil relief scheme (find more information in Get relief for mineral oil put to certain uses (Excise Notice 184A)).

2.1 Qualifying uses

The following uses, which are not exhaustive, qualify:

• heating the feedstock oil in tanks before treatment, or in stills, reformers or reactors during treatment
• pumping feedstock oil for treatment, and recycling oil during treatment
• heating or pumping other non-oil materials which are used to react with or treat oil
• maintaining temperature, pressure or vacuum, where necessary, for the treatment of oil

2.2 Uses not qualifying

Some uses do not qualify, such as:

• heating, pumping or other operations on non-oil substances, including the removal from the process of non-oil products, except if they are to be re-used in the treatment of oil or if the removal is part of such treatment
• heating fuel oil before transfer to refinery boilers
• space heating, whether of offices or production buildings
• producing other non-oil materials for use in refining (for example producing oxygen by electrolysis of water or by liquefying air)

This list is not exhaustive.

3. Energy balance

Applications for partial or full relief by power plants must be supported by an energy balance assessment which establishes that the qualifying use of energy meets the terms of the relief scheme. The assessment should include the total energy generated from all fuel sources. It should preferably cover a period of 12-months operations, but must, in any case, cover not less than the minimum repayment claim period of 2 months (read paragraph 9 Reclaiming duty).

Where the energy is applied directly the assessment must be based on a separate balance for each point of fuel consumption. If a number of energy sources are linked (for example by a common steam main), entitlement at each source is determined according to the use of the aggregated energy.

If there is a mixed power source (for example gas and oil-fired boilers supplying steam as energy for the treatment of oil and non-oil) the calculation must be based on the total energy usage.

In each case the total energy generated is to be sub-divided into:

A. energy used in the treatment or production of oil (including losses directly attributable to such use)

B. energy used for other purposes (including losses directly attributable to those purposes)

C. energy used within the power source or fed back into sources or lost in distribution.

The following is a calculation to work out the qualifying use percentage.

A multiply 100A + B

Whenever possible the calculation should be in units of energy such as tonnes of oil equivalent, but if such data is not readily available other units (for example kg of steam or kilowatt hours) are acceptable. The basis of conversion of data to units of energy is to be shown in the calculation.

3.1 Principles applying to energy balance assessments

Reaction energy

In a reactor where oil is reacted with other material (such as water) to give a combined product, all the energy supplied is considered to be used in the treatment of oil. However when oil and other material (for example natural gas) are reacted at the same time without reacting with one another, the energy used in the treatment of oil is to be calculated by reference to the proportion of the weight of the oil to the weight of the total goods reacted

Electricity

Electrical energy generated is to be apportioned according to the uses of the electricity.

Steam

Fuel used to raise steam is to be apportioned as for electricity according to the thermal energy of the steam produced, after deducting the steam condensed to preheat the feed water or to operate a water pump or other boiler ancillary.

Energy losses

Normally energy losses are to be ignored. However, a high loss related to a particular use of energy is to be included in that use.

Waste energy recovery

If energy is recovered after use it is to be ignored, unless there is clear intention to apply more energy than is necessary to the first use and put recovered energy to another use.

4. How to apply for approval for relief

4.1 Full relief

You should apply in writing to HMRC at the time of application for entry or approval of the production premises concerned. Your application should be supported by an energy balance assessment which establishes that the qualifying use of energy exceeds or is likely to exceed one third of the power plant output.

You must also provide the following information:

• amounts of different types of fuel consumed
• details of furnaces, boiler houses, etc and isolated fuel consumption units (for example generators)
• details of energy — imported (electricity received from outside sources, such as, private power companies) — production by the furnaces, and so on, referred to in the second bullet — use and distribution (including steam pressures when steam at more than one pressure is provided and percentages when appropriate), and disposal for outside use (for example electricity to the grid system) supported by flow diagrams of the energy sources and distribution to uses
• brief details of the processes carried out in plant drawing energy from the furnaces, and so on, and from ‘imported’ energy

When the qualifying use of the power generated is intermittent, separate details are to be given for periods in which there is no qualifying use. We will allow the use of duty-free fuel for new plant (or existing plant on a substantial change in use) if there is satisfactory evidence that the power unit percentage is likely to exceed 33.3 over a 12-month period. We will review the position at the end of 12-months working or earlier if any doubts about entitlement exist.

For new plant we do not allow use of oil without prior payment of duty if the criteria in the previous paragraph is not satisfied. However, if there is a reasonable prospect that the qualifying use percentage will exceed 33.3 we will defer the final decision until there is data of actual operations. In these circumstances we will review the position after 6 to 12-months working.

Duty-paid oil must be used in that initial period, but we will refund any duty paid from the date the written application for approval is received by us if entitlement to the relief is established at the end of the initial period.

We cannot grant approval for any period before receipt by us of the written application for approval of the power source.

4.2 Partial relief (repayment by HMRC)

You should complete application form HO53 and send it to the Mineral Oil Reliefs Centre at morcapprovalsteam@hmrc.gov.uk. Use a separate form for each set of premises where oil is used for a qualifying purpose.

Your applications should be supported by an energy balance assessment establishing that the qualifying use of energy is not less than one-sixth and not more than one-third of total energy output from the power plant, and you should quote the approval number of the oil production site (if not the same site as the power plant) to which the energy is supplied.

If the production premises to which the energy is supplied is not already designated by us as a fuel producer’s premises, the production site operator should immediately make entry of that premises in accordance with section 3.

5. How HMRC grants approval to claim relief

5.1 Full relief

We will issue an approval letter. That letter will confirm that the power plant is part of the fuel producers premises, or that it has been designated as a fuel producer’s premises in its own right. The letter will also confirm the effective date, from which supplies of oil will be made without charge of excise duty.

5.2 Partial relief (repayment by HMRC)

We will issue a formal certificate of approval (form HO54) containing the:

• address or description of the premises to which it applies
• effective date, from which duty-paid oil put to qualifying use may be included in claims for repayment of duty

6. Amending an approval

You should notify the office which issued the approval of any changes to the information supplied in the original application, preferably before any changes take effect.

You should submit a fresh application for approval when:

• you wish to apply for approval of an additional set of premises
• you transfer the production of energy to other premises
• there is a change in legal ownership of the approved premises
• there is a reduction in the qualifying percentage meaning full or partial relief is no longer valid

7. How to store and take account of oil on which you intend to claim repayment of duty

Unless the terms of approval show otherwise, you must store duty-paid oil on which you intend to claim repayment of duty in places or vessels approved by us. For each description of oil you must take account of the quantities received, used and in stock at the end of each month.

8. What records you must keep

Your existing commercial records should suffice, provided that they show the quantities of each description of oil:

• for use as fuel which ought to be in stock
• received from each supplier and used as fuel

9. Reclaiming duty

You may complete form HO55 for any time-period of between 2 months and 3 years, provided that the amount reclaimed is £50 or more. Your claim should be submitted to the Mineral Oil Reliefs Centre at morcrepaymentclaimsteam@hmrc.gov.uk within 3 months after the end of each claim period. Before claiming you must be satisfied that:

• the oil is duty paid (and has not been repaid) and has been used as fuel to produce energy at the premises to which the approval applies
• at least 16.6% of that energy has been used for qualifying purposes at the premises named in the certificate of approval

With the claim you should enclose the oil suppliers’ invoices noted with the rate of duty-paid, or other evidence of duty payment acceptable to us — you may wish to discuss this with HMRC.

10. Review of entitlement to relief

You must review the qualifying use percentage whenever there is any doubt as to entitlement. You must contact our office which issued the approval you have if the ‘qualifying’ use percentage indicates that a change in, or ending of, relief is likely, or significant changes in circumstances occur that are likely to affect your relief entitlement.

Appendix K — delivery note requirements

Referred to in paragraphs 7.12 and 7.14.4.

Delivery notes and alternative delivery documents: statements and particulars required

1. Delivery notes and copies for oil delivered for the following purposes must bear the statements shown:

Purpose	Statement
1.1 Oil removed under duty suspension if not liable to Customs Duty if liable to both Customs Duty and excise duty if kerosene	‘This oil has not borne excise duty’ ‘This oil is liable to both Customs Duty and excise duty’ ‘This oil has/has not been marked’ (as appropriate)
1.2 Oil removed for use on board vessels on marine voyages	‘This oil has not borne excise duty and must be used only on board vessels on marine voyages. HMRC’s permission must be obtained before diversion to alternative use’
1.3 Oil delivered as tied oil	‘This oil has not borne excise duty and must not be used as heating fuel, motor fuel or additive or extender to motor fuel’
1.4 A quantity exceeding 250 litres of rebated kerosene or any quantity of rebated gas oil whether or not marked. (This requirement applies also to deliveries from remote marking premises.)	‘This oil is not to be used as fuel other than for an excepted machine
1.5 All kerosene and kerosene-based bioblend delivered as aviation turbine fuel (avtur)	‘Delivered duty-free as fuel for aircraft engines only. HMRC’s permission must be obtained before diversion to alternative use’
1.6 Consignments exceeding 50 litres delivered for home use as tied oil where the statement is not given on the invoice	‘This oil may not be used as heating fuel, motor fuel or additive or extender to motor fuel’
1.7 Rebated light oil delivered for use as furnace fuel	‘This oil is to be used only as furnace oil in accordance with an approval granted by HMRC’
1.8 Waste or defective oil removed from duty-suspended premises for destruction elsewhere under the directions of paragraph 7.14	‘This oil has not borne excise duty. It must be destroyed without production of useful heat. Not for use as furnace fuel, fuel or lubricant’
1.9 All deliveries of aviation gasoline	‘Delivered solely for use as aircraft fuel’
1.10 Oil delivered duty-free to United States Air Force	‘This oil has not borne excise duty’

2. Delivery notes and copies for oil delivered for the following purposes must include the particulars indicated:

Purpose	Particulars
2.1 All kerosene (other than avtur) or gas oil, delivered for home use unmarked at the rebated rate	Particulars of the authorised brand or description of oil and marking waiver authority concerned
All unrebated kerosene delivered duty-free	Particulars indicating the authority for its delivery duty-free

Appendix L — marking of oil — approval requirements

(referred to in paragraph 8.8)

Applications for approval to mark oil in duty-suspended warehouse or at a registered remote marking premises

Details required are:

• methods to be adopted and full details of the equipment to be used
• vessels and places proposed for segregated storage of the marking substances or composite solution
• arrangements for security of the marking equipment and marking substances or solutions
• products to be marked
• plant and equipment in which marking is to take place
• tanks in which marked and unmarked products are to be stored
• details of marking waivers (names of customers, description of product and authorisation numbers)
• name and status of persons authorised to sign forms HO9 (for registered remote marking premises applications only)

Appendix M — marking of oil — conditions

(referred to in paragraph 8.10)

Conditions of approval to mark oil

1. Marking substances and solutions containing them must be kept either in a suitable tank or in marked containers in a secure area, and apart from all other substances (HOMR reg 10).

2. Tanks or areas for preparing or storing solutions made with oil that has not borne duty must be approved for duty suspension.

3. Solutions of different compositions or concentrations must be kept separate (HOMR reg 10). Marked oil must be stored separately from unmarked oil (HOR reg 11).

4. Marking substances and composite solutions may be used to mark oil only in approved duty-suspended warehouses or remote marking premises.

5. Warehousekeepers and persons approved for remote marking must make sure that product is properly marked by regular testing with a Lovibond Comparator or Fluorimeter, supported, where possible, by laboratory analysis.

6. The respective quantities of composite solutions used and of oil marked each day must be separately ascertained by actual measurement. It must be possible to measure accurately the usage of small quantities of composite solution.

7. Oil to be marked must be stored in approved tanks, pipelines or in containers stored in approved areas. Composite solution must be mixed with the oil in the correct proportions (HOMR reg 3)

8. Solutions of the prescribed substances in oil on which duty has not been paid, or on which duty credit is to be claimed, must be stored in vessels or places included in the approval. The marker or the composite solution must be added to oil only in pipes, vessels or places included in the approval.

9. The requirements and provisions of the law and Notice 179: motor and heating fuels — general information and accounting for excise duty and VAT relating to the duties on motor and heating fuels and all regulations made under the law must be complied with and, in particular, oil on which a rebate is to be claimed must not be delivered for use as fuel other than for excepted machines. The full duty (and VAT) applicable to oil on the date duty became due or was deemed to have become due will be payable on demand if this condition is not met.

10. The working conditions must be safe and free from risk to the health and safety of all official staff on the premises and any health and safety requirements laid down by any authority must be complied with.

11. Accurate records of all receipts and deliveries must be kept in accordance with the Revenue Traders (Accounts and Records) Regulations (as amended).

12. Facilities must be made available to sample and measure the marked product, and an acceptable method of reconciliation of the markers used must be applied.

Additional conditions for registered remote marking premises

1. If required by our officer, advance notice must be given of your intention to mark oil.

2. For each batch of heavy oil marked on the premises and for each batch subject to a marking waiver a declaration/claim form identified by batch number, must be submitted to our officer.

3. Our officer must be informed if at any time there is no longer a need for the approval or if the approval has not been used in the previous 12 months.

4. Measurement accuracy and record keeping must comply with the requirements specified in section 4 and section 13, respectively, of this notice (Hydrocarbon Oil (Registered Remote Markers) Regulations 2005, regulation 8(2)).

Appendix N — specimen application to mix oil in pipeline

Referred to in paragraph 9.4.

Specimen application for approval to mix oil in pipeline

I apply for approval as a mixer of oil in respect of the pipeline system in respect of which I am the operator/I am a shipper, under the provisions of section 20A of the Hydrocarbon Oil Duties Act 1979 and the Hydrocarbon Oil (Mixing of Oils) Regulations 1985 (Delete as appropriate).

In support of this application, I attach a schematic drawing showing the ingress and egress points of the pipeline system through which I ship oil and the means of measurement of oil at each point. The descriptions of oil shipped by me through these points are as follows: (insert details).

Appendix O — conditions for mixing oil in pipelines

(referred to in paragraph 9.4)

Conditions of approval to mix oil in pipelines

1. The amount of additional duty due or credit of duty allowable as a result of mixing in the pipeline system is to be calculated in accordance with the method outlined in section 9.
   
   
2. The returns required by section 9 must contain the information specified in that notice and must show the additional duty due or credit of duty allowable for each approved mixer. The returns may be prepared manually or by computer subject to there being an adequate audit trail from the basic information to the returns.
   
   
3. The pipeline operator must prepare 2 returns for each calendar month. Return A is for the pipeline system as a whole. Return B is for each shipper on the pipeline system. In single shipper pipeline system where the operating company is also the shipping company, only return A is required.
   
   
4. The pipeline operator must complete the returns for each calendar month and must distribute them as required by section 9.
   
   
5. Shippers must enter the debit or credit adjustment of quantity and duty for each description of oil as shown on return B (or A in the case of single shipper pipeline) in the duty deferment account at the central accounting point in the period in which the last day of the return falls. Where a shipper is authorised to use another person’s deferment account, the details may be entered in that account.
   
   
6. Security in such amount and in such form as HMRC may require shall be provided for keeping to the conditions of this approval and submitting returns.
   
   
7. Any changes to the pipeline system affecting any condition of this approval must be advised in writing to HMRC at the address at the head of this letter by the operator or shipper concerned. The operator may advise on behalf of the shipper.
   
   
8. The pipeline operator must provide written guidance on the pipeline system, preferably in the form of a ‘user manual’, to all shippers and to HMRC. Shippers must make sure that they obtain this information.
   
   
9. HMRC has the right to vary, amend or cancel this approval at any time for reasonable cause.

Appendix P — how to complete the form HO10Report excise duty on fuel removed from warehouse

Referred to in paragraph 13.4.1(c) — Central accounting points.

How to complete the HO10 Report excise duty on fuel removed from warehouse

You should submit forms HO10 Report excise duty on fuel removed from warehouse online using the Government Gateway.

Do not use outdated copies of the form.

A Top line (boxes)

Business name

Enter the name of your business.

DAN

Enter the 15 digit Fuel Duty DAN.

VAT registration number

Enter your VAT number.

Period ending on (date)

Enter the date as ‘Day/Month/Year’, and the time of the period end as ‘Hours/Minutes’ (24 hour clock).

This will generally be midnight, on the 14th of the relevant month, unless there was a Budget during the current period, when you should use the exact time of the rate change or changes as the end of one period and the start of another.

If you are not sure about how to complete the form HO10 Report excise duty on fuel removed from warehouse at the time of a Budget change, contact the HMRC excise and gambling duties helpline, or your usual HMRC contact if you have one.

B Sections

1. Duty due

All entries are positive.

You can read the current Fuel Duty rates.

In this section, enter any goods released from warehouse in this period, on the appropriate line, according to the description and tax type. You should record the quantity in standard litres.

The current duty rate should be applied to the litres figure to arrive at the duty due for that product. Repeat this process for all the types of product named on the form that you have released into the UK market in this period. Then total the duty due in this section in the total box at the bottom of the section.

2. Duty claimed

All entries are negative. Square brackets are not required.

In this section, enter any claims, again according to the product description and tax type code to which each claim relates. Claims may include netting for marine use, drawback for export or destruction, or authorised returns to the duty-suspended warehouse (including credits for recovered petrol vapour).

Enter the standard litres figure for each product and apply the current duty rate to it. Then total the duty claimed in this section in the total box at the bottom of the section.

3. Total duty due or claimed

Enter the total duty due or claimed following the completion of the first 2 sections.

4. Fully rebated or duty-free

This section, introduced in 2016, allows us to monitor the release of fuel types that, because of their end use, do not incur a duty payment or claim.

Enter the quantity in standard litres for each of these products and tax types, which vary according to their end use. There are no duty due or claimed boxes in this section, and so the total figure at section 3 Total duty due or claimed is not affected by the completion of this section.

5. Declaration

Complete as requested.

Signatories

For acceptable signatories read paragraph 11.5.

Appendix Q — certificate for VAT zero rating of services in warehouse

(referred to in paragraph 15.7.2 How supplies of services may be relieved)

Certificate required to secure zero rating of services (other than the supply of warehousing) performed in warehouse

Information to be indicated:

I: (insert full name) (status in company) of: (name and address of company) declare that the goods shown below are subject to a warehousing regime at the place indicated below:

• description of the goods
• quantity of the goods
• warehouse stock number
• name and address of warehouse
• authorisation number of the relevant warehousekeeper and warehouse

and that the following services are to be performed on the goods in the warehouse: (insert details).

I certify that the supply of services is eligible to be zero rated for VAT purposes under section 18C(1) of the VAT Act 1994. (signature) (date)

You should be aware that there are severe penalties for making a false declaration. If there is any doubt about a supply being zero-rated you should contact the HMRC excise and gambling duties helpline before signing and giving the certificate.

If you need help with :

• a VAT return, contact the VAT general enquiries helpline

• form W50 contact the HMRC excise and gambling duties helpline

A copy of this certificate should be filed with the supplier’s invoice.

Your rights and obligations

Read the HMRC Charter to find out what you can expect from us and what we expect from you.

Help us improve this notice

If you have any feedback about this notice write to: 

HM Revenue and Customs 
Excise Fuel Duty Policy 
4th Floor East 
Trinity Bridge House 
2 Dearmans Place 
Salford 
M3 5BS 

Email: oils.policymail@hmrc.gov.uk

This address is not for general enquiries. 

You’ll need to include the full title of this notice. Do not include any personal or financial information like your VAT number. 

If you need general help with this notice or have another question contact the HMRC Excise Helpline on 0300 200 3700. You can also email the Mineral Oil Reliefs Centre at morc.exciseenquiries@hmrc.gov.uk.

Putting things right

If you’re unhappy with HMRC’s service, contact the person or office you’ve been dealing with and they’ll try to put things right.

If you’re still unhappy, find out how to complain to HMRC.

How HMRC uses your information

Find out how HMRC uses the information we hold about you.

Published 6 November 2014
Last updated 7 August 2024 + show all updates

1. 7 August 2024

   Sections 11.1 and 11.8 have been updated with an amended address. Section 11.8 has also been updated with an amended telephone number.

2. 18 January 2024

   Guidance on revenue records required by HMRC, oils needed to be marked, as well as contact details have been updated.

3. 13 September 2023

   Section 10.8 and Appendix Q have been updated with guidance on how and when to apply for a reduction in the amount of security you need to provide and gain a guarantee waiver.

4. 7 September 2022

   The addresses for the National Registration Unit at sections 3.2 and 3.7.3 and the National Warrant Processing Unit (NWPU) at sections 11.1, 11.7 and 11.8 have been updated.

5. 1 April 2022

   This guidance has been updated to include biodiesel as part of the requirements and obligations from 1 April 2022.

6. 26 January 2021

   This guidance has been updated as the Brexit transition period is over.

7. 6 November 2014

   First published.