CPA Bulletin

26 CPA Bulletin > November 2021 www.cpa.uk.net The construction industry, led by the CPA, has made concerted efforts over the course of the last 18 months to outline why the rebate must be retained, as well as showcasing the changes companies have made and the improvements to, air quality and vehicle emissions over the course of the last 30 years. This has included highlighting concerns around rising fuel costs and slim profit margins; the need for pragmatism and realism from inspectors in looking at trace elements of red diesel in tanks; the impact on security and vehicle theft; and the need to recognise that vehicles can be used for both agricultural purposes (agriculture will retain the right to use red diesel and keep the rebate) and construction purposes. At the time of writing, and with the publication of the official Interim Guidance from HMRC in October, we now know what is expected of the industry post 1st April 2022. The question for CPA members, is, what can they expect and how should they plan ahead? Preparing for 1st April 2022 - Red Diesel Fuel Users From 1st April, you must not put any red diesel into the fuel tank - HMRC advise users to run down the fuel in vehicles to as ‘close to nil as reasonably practicable’ before 1st April. Users may use red diesel as a fuel other than for an excepted vehicle after 1st April if: • The fuel was taken into the vehicle legally in the UK before 1st April (this means if the vehicle was allowed to use red diesel before the April deadline - you can continue to use it if the red diesel was in the tank before 1st April) • No red diesel has been put into the vehicle on or after 1st April. What about Red Diesel in Fuel Tanks? HMRC advise companies who have red diesel in storage tanks, either in depots or on sites, to plan ahead and use up any stocks they have in storage, by the end of March. Users will not be expected to flush out red diesel from storage tanks. However, they do advise users to review their monthly use from now until the end of March 2022 and make plans on how they can use up surplus stock. Any advanced deliveries of red diesel between now and 1st April should be based on the amount a user would be expected to get through in that time. HMRC are keen to stress that companies should not over order supplies. Should there be any surplus red diesel in storage tanks after 31st March, companies will be expected to: • Sell the red diesel or give it to a user who is allowed to use it • Sell or give it to any Registered Dealer in Controlled Oil (RDCO) • Dispose of surplus fuel via an approved waste oil recycling or disposal company. Companies will be expected to keep full records of how they have disposed the fuel - i.e., who the fuel was sold to, how it was disposed, and when. HMRC are calling for companies to make sure that any disposal of fuel should take place correctly through an approved waste oil recycling or disposal company. If companies have a large volume of red diesel in reserve and do not think they will be able to use it up or dispose of it before 1st April, they should contact oils @policymail@hmrc.gov.uk - ideally before 30th November 2021. Can I Still Use Red Diesel on Construction Sites if the Vehicle has also been used for Agricultural Purposes? In short, no. We recognise that for many companies, this will be disappointing news. HMRC are very clear in the guidance that users must not put red diesel into the vehicle after the rules have changed. As an example, if the machinery has been used for agricultural purposes, cutting verges or borders, or snow clearance and gritting, then it can use red diesel. However, if the following day or when it is next hired out, it is going on to a construction site, then the tanks must be flushed out and white diesel put into the machine. We highlighted how inconvenient and often, unrealistic this procedure would be for many companies who have dual use machinery, especially in terms of emptying and then storing different types of fuel in depots. Not to mention the danger in doing so. Unfortunately, HMRC chose not to act in this area, they want to ensure compliance with the new rules and avoid any potential misuse of red diesel. Next Steps We remain in open dialogue with HMRC and officials within the Treasury, on making sure the processes and switch to white diesel, is as seamless as possible, with the impact on members as limited as it can be. We recognise the disappointment many will share in terms of how HMRC have approached this and the failure to recognise POLICY: 1 POLICY HMRC Red Diesel Guidance - What Does it Mean for the Industry? In my last article for the CPA Bulletin, I talked about the process the Treasury and HMRC were following on the development of guidance for the industries affected once the rebate for red diesel is removed from 1st April 2022.