Diesel Fuel used in the Plant and Equipment we Hire

Diesel Fuel used in the Plant and Equipment we Hire

30 January 2018

Red diesel makes up over 15% of total diesel use in the UK (1), the cost of standard road going diesel engine oil intended for road use has a duty rate of 57.9p per litre (ppl). Gas oil or standard diesel available on the forecourt is entitled to a rebate of 46.8ppl giving the total taxable rate of 11.14ppl. If the reduced rate costs around £2.4 billion a year in revenue. Spend any time with the figures you get an understanding of the size of the marketplace for fuel in the UK and why it is important to prevent illegal use of diesel. The cheaper fuel is designed to make construction and agriculture less expensive and the treasury is helpling keep the UK’s wheels turning.

On current pricing about 58 ppl goes to the treasury the actual cost of standard diesel fuel is 65ppl and Red Diesel can cost as low as 45.00 ppl (exc VAT)(5). Any deeper analysis and you can just marvel at the overall figures paid to the treasury in fuel duty.

What vehicles are allowed to use Red Diesel?

HM Revenue & Customs Excise Notice 75 (2) provides the information needed about fuel for road vehicles. It is intended for suppliers and users of rebated fuels and owners of ‘excepted vehicles’ that are eligible to use rebate worthy fuels. Excepted vehicles are vehicles which are excluded from the legal definition of ‘road vehicle’ and include:

  • Mobile Cranes
  • Mobile Pumping Vehicles
  • Digging Machines
  • Road Rollers
  • Road Surfacing Vehicles
  • Tar Sprayers

Each one of these has conditions as per Excise Notice 75 (2).

How does the HMRC detect illegal use of Red Diesel?

Dipping is the traditional technique used to identify illegal use of red diesel. However, as with every regulated process, there is always a criminal element in society who run the gauntlet and attempt to benefit from the reduced purchase cost of red diesel and profit from sales to vehicles drivers who would illegally use the product on the road. The fraud is large enough in the UK to warrant spot checks of diesel vehicles where investigations suspect that fuel fraud has occurred. The dip is a visual identification of the crime. Different fuels have different colours to help identify their correct excise use.

  • Diesel For Agriculture, Construction and off road applications (vehicles which are not for use on public road or engines that have no road going use such as Generators) RED
  • Household Heating Fuel YELLOW
  • Kerosene BLUE

The dip process can be as simple as inserting a clear tube into the fuel tank and sealing the top so as to trap fuel in the tube for viewing. Over the years fuel fraud has developed into fuel laundering. Where red diesel is processed by criminals to remove the red dye. This lead to health and safety issues not to mention the illegal dumping of hazardous by-products from the process. The dye process has evolved sufficiently from a simple inert powder being added to the fuel, to more sophisticated dyes which leave chemical markers if removed (3). This should make it clear to the criminal fraternity that attempting to carry out such actions is detectable and the HMRC has made it clear that a new measure to combat fuel laundering has meant that illegal trade being “virtually Eliminated” in the UK (4).

Fuel Services by PAL Hire

Fuels services available from PAL Hire include bulk orders (minimum 500 litres) and this can become a managed service. Where we manage all of your fuel requirements on site. This makes it easier and is more convenient for you to concentrate on the task in hand. Bulk buying ensures that the cost is as low as we can get it for you and reducing your working expenditure. We can provide smaller amounts of fuel and even fuel for road going vehicles however volume and excise will factor into the monthly invoice.

Fuel Management

Our fuel management service is the complete provision of uninterrupted fuel supply for your mission critical plant / generators. Be it for all your plant, generators at your event or on site, our fuel management service uses remote monitoring of fuel levels, fuels consumption to build a picture of what frequency your deliveries need to be. You will benefit from peace of mind that fuel is take care off. The other aspect to bear in mind that fuel management and purchases are added to the same invoice as any plant you have on hire from us (6).

It is important to bear in mind that fuel is billed in arrears, so you can still find an invoice being issued for fuel once an item of equipment is off hired.

For more information about the fuel services PAL Hire has on offer call our team on 0844 288 7265

(1) (Red Diesel Call for Evidence, 2017)

(2) (Excise Notice 57, 2015)

(3)(Detection of discoloration in diesel fuel based on gas chromatographic fingerprints, 2014)

(4)(New Diesel Dye ‘should eliminate fuel laundering’, 2014)

(5)(Subject to appropriate bulk purchase)

(6)(Fuel Management can be subject to additional management charges depending on the level of management.)