What to do with Rebated Fuel in Tanks After 1st April 2022

The rules and regulations surrounding red diesel usage have historically been tricky to understand, but the changes implemented in April 2022 have added an additional layer of complexity. As a UK leading fuel supplier, Crown Oil is here to help you untangle the red tape. We’ve summarised the latest information from HMRC to help you understand what to do if you have leftover rebated fuel and how to manage the changes.

If your business falls in the below categories, you can continue to use red diesel:

• Rail transport
• Community amateur sports clubs and golf courses
• Sailing, boating and marine transport (excluding private pleasure craft in Northern Ireland)
• Travelling fairs and circuses
• Fuel used for non-commercial purposes – electricity generation and heating
• Agriculture, horticulture, fish farming and forestry

The following industries and applications lose access to rebated fuels from 1 April 2022:

Some important points to consider:

• From the 1^st of April, you must no longer use rebated fuel if your sector or application is no longer permitted to use it
• If you only use fuel for non-permitted uses, you must plan to use up your stocks by this date
• You are not required to flush out any residue of rebated fuel from your tanks once it’s been used up
• If you order rebated fuel between now and the 1^st of April, you must only order the amount you anticipate using up by this date

If after the 31^st of March 2022, you have rebated fuel in your storage tanks that you are no longer eligible to use, you will need to:

• sell or give it to someone who’s allowed to use it
• sell or give it to any Registered Dealer in Controlled Oil (RDCO)
• dispose of it using an approved waste oil recycling or disposal company

You can sell or dispose of the fuel without needing to be approved by HMRC as an RDCO, however you must keep records to demonstrate how this was done. It’s essential that you dispose of rebated fuel safely and correctly by using an approved waste oil recycling or disposal company like Crown Oil.

Stand-by electricity generation and critical equipment

From the 1^st of April, you can only use rebated fuel in a machine that’s used for generating power in non-commercial premises.

You can also use rebated fuel for:

• agriculture, horticulture, fish farming and forestry
• community amateur sports clubs that are registered with HMRC
• golf courses and driving ranges
• travelling fairs and circuses

After this date, you can use up any rebated fuel you obtained before the 11^th of June 2021, for the following uses:

• stand-by electricity generation in premises used for commercial purposes
• critical equipment used for commercial purposes

If you anticipate that you’ll have rebated fuel which was acquired for either of these uses on or after the 11^th of June 2021, you should contact HMRC at oils.policymail@hmrc.gov.uk.

HMRC will decide if a licence may be given to help you:

• pay the difference in duty between the rebated and non-rebated rates
• use up the rebated fuel on hand on the 1^st of April for a non-accepted use

Stand-by electricity generation refers to using generators to ensure continuity of power for an essential or critical service, including:

• protecting national security
• health services such as medical and life support equipment
• emergency services and law enforcement
• water, fuel and power supply
• protecting the welfare of livestock and other animals

This does not include generators that are used every day as the main source of electricity.

Rebated fuel can also be used for:

• commercial electricity generators that help manage pressures on the national grid
• in instances where a volume of back-up fuel is needed for security and regulatory purposes to sustain vital electricity supply

Please note:

• A licence will not allow you to continue using rebated fuel indefinitely and will be reviewed
• You will only be permitted to use rebated fuel that you have until the 1^st of April 2022 and then it will be withdrawn
• After this date, you must only order and take supply of diesel where full duty has been applied

You are not expected to flush out rebated fuel from storage or running tanks that are used for:

• stand-by generators
• critical equipment

Rebated fuel in unique circumstances after the 1^st of April 2022

If you can demonstrate exceptional circumstances as to why you can’t use full duty paid diesel, you may be granted a licence.

For example, you may need to use rebated fuel for technical or safety purposes because using full duty diesel fuel isn’t compatible with your vehicles, vessels, machines or appliances.

To receive a licence, you need to apply to HMRC. If they approve the licence, you can pay the difference in duty between the rebated and non-rebated fuels. The licence will be regularly reviewed and will not be issued indefinitely.

The consequences of unlawfully using rebated fuel after the 1^st of April

It’s likely that there will be a transition period between the rule changes and rebated fuel being used up in a storage tank. The extent of this will depend on the:

• type of vehicle, vessel, machine or appliance
• size of fuel tank
• rate of fuel consumption

HMRC recognises that due to maintaining minimal stock levels for safety and operational reasons, full duty paid fuel may be blended with existing stocks of rebated fuel. This may lead to a red indicator being left in the tank after the rule changes.

HMRC will check receipts and invoice records and only target those who wilfully and unlawfully use rebated fuel. If you have taken reasonable action to change to using full duty fuels, they will work with you to ensure you’re compliant.

They will establish if the rebated fuel was put in the tank before the rule changes by checking if testing and records of the stocks are consistent.

If reasonable circumstances cannot be determined, any vehicles, machines, vessels or appliances found to be illegally running on rebated fuel will be seized until a licence has been granted and the duty paid.

If you have rebated diesel or biodiesel leftover in your tanks after the 1^st of April 2022, we can uplift the surplus fuel stock, clean the tank, flush the lines and deliver non-rebated fuel quickly. Call our fuel experts today on 0330 123 1444 to ensure you’re operating within the law.