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The illegal trade of fuel laundering is set to be abolished next year, as a new diesel dye is to be introduced by HM Revenue & Customs (HMRC). The illegal use of red diesel costs the UK £80 million in unpaid duty.

The dye is removed from red diesel by fuel launderers, so that it can’t be easily traced in roadside checks. Red diesel is only intended to be used for agricultural vehicles, like tractors. However, it is often used illegally for regular vehicles in place of standard diesel, as it is cheaper. The new dye is virtually impossible to remove from red diesel, and will drastically reduce the levels of fuel laundering.

The problem is particularly prevalent in Northern Ireland, which accounted for around a third of the UK’s illegal fuel trade in 2012-13, according to data released by HMRC. In addition to cheating the chancellor’s purse, red diesel is also a problem for the environment, as the toxic waste is often discovered in rural areas after being dumped. The waste then has to be collected by local authorities and disposed of safely, leaving them with a large bill. In April next year, the new dye will be introduced in the Republic of Ireland and the UK.

What happens if a roadside check reveals red diesel in your vehicle?

The vehicle may be seized by HMRC, but there’s a chance you’ll be offered certain terms to get it back. You might also be charged a penalty up to 100 per cent of the evaded duty, in addition to any terms offered. It’s likewise possible that HMRC will take criminal action against you, although this is usually for cases of a more serious nature.

What should you do if you disagree with the decision?

There’s a process in place for appealing against Excise decisions, although the process will differ according to the type of decision. When a letter is issued by Excise, you will be informed of the appeals and reviews process available to you.

If you want to appeal against the terms offered for restoration of your vehicle, or the refusal by HMRC to restore your vehicle, you may request a review by an independent officer. However, take note: this has to be done within 45 days of the decision letter being issued. Once the review has been completed, you can appeal to the First-tier Tribunal if you still disagree with the decision.

The rules surrounding fuel laundering are complex. If you have any questions at all, contact us or leave your queries using the comments box.

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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