UK authorities provide red diesel tax update

By Euan Youdale15 February 2022

The International Powered Access Federation (IPAF) has secured additional guidance for the UK powered access industry on the upcoming end to the rebate on red diesel for plant machinery, in the form of a FAQ sheet prepared specially by HM Revenue & Customs in response to a recent meeting of the IPAF UK Country Council.

The frequently asked questions were answered by HMRC officials and offered to IPAF members in supplement to existing guidance from HMRC about the planned end to tax relief on red diesel for construction plant machinery in the UK from 1 April 2022.

Specific information 

Richard Whiting, IPAF’s UK & Ireland market general manager, says, “Our members expressed multiple concerns around the negative consequences of this change, from increasing costs to end-users and stifling green investment, to confusion over hire of machines between different sectors and creating a £100 million ($135.6 million)black market in white diesel.

Richard Whiting Richard Whiting, IPAF UK & Ireland market general manager

“Many of our members felt the HMRC guidance issued last year was not specific enough, so we requested a presentation from HMRC to IPAF’s UK Country Council, with questions supplied in advance to the officials who joined the meeting. We are grateful to HMRC for attending that meeting, and for drawing up the questions and responses into a handy document that we are pleased to now share.

“The key message was that HMRC will allow existing stocks of red diesel to be used up, as long as machines are fuelled before the 1 April 2022 deadline, and that all efforts to comply are properly documented. HMRC also suggests the onus be placed on rental customers to return hired machines with the correct fuel in the tank after 1 April, or additional costs are likely to be incurred to recover the fuel and dispose of it.

“The answers to the questions our members raised provide welcome clarification on a number of areas that weren’t explicitly covered in the previously published guidance. However, IPAF reminds members that this industry-specific FAQ sheet is purely supplementary to the legislation as of 1 April 2022 and HMRC’s own guidance. IPAF urges all members to familiarise themselves fully with the upcoming changes to the law, and the HMRC guidance, if they have not already done so. If any part of the changes remains unclear, IPAF recommends members to contact HMRC directly to seek guidance or clarification.”

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