White diesel may replace red at UK marinas following the ruling by the European Court of Justice

A ruling by the European Court of Justice has thrown into doubt the use of red diesel to solely power UK pleasure boats.

Under EU rules, fuel must be marked with a dye if it is sold at less than the full tax rate. In the UK, most marinas sell red diesel on a 60/40 split of full and lower tax rates for propulsion, and heating or power generation

The EU argued that this practice meant the UK was failing to fulfil its obligations under Council Directive 95/60/EC of 27 November 1995 on fiscal marking of gas oils and kerosene (OJ 1995 L 291, p. 46).

It took the UK to court, and now the European Court of Justice has ruled in favour of the EU, despite Her Majesty’s Revenue and Customs (HMRC) arguing that ending the use of red diesel would be impracticable.

HMRC is currently examining the ruling, and is expected to announce any changes in due course.

The Cruising Association (CA) president, Judith Grimwade said given the uncertainties of Brexit, it is unclear what the impact will actually be.

‘Whatever the outcome, we will continue to campaign for cruising yachtsmen to be able to travel between countries without being penalised for buying a fuel which is very often the only option available,’ she stressed.

The CA said no deadline is specified in the judgment and member states are usually given a reasonable period to make the adjustments necessary – which in this case could mean white diesel going on sale in UK marinas.

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Red diesel can continue to be used for heating onboard as it is taxed at a lower rate.

The RYA said the European Commission indicated its intention to commence infraction proceedings against the UK in July 2011.

In May 2013 the European Commission formally requested that the UK amend its legislation “to ensure that private pleasure boats such as luxury yachts can no longer buy lower taxed fuel intended for fishing boats” and issued a reasoned opinion to the UK Government, which HMRC indicated its intention to challenge in July 2013.

As a result, in July 2014, the European Commission indicated that it had decided to refer the UK to the Court of Justice of the European Union.

A spokesman for the RYA said: ‘Today’s judgment means that, while the UK remains subject to the Fuel Marker Directive, the UK must bring its practices into line with this ruling.’

The association said it will be looking to ensure diesel would continue to be available for the UK leisure boat community.

The RYA’s Cruising, Legal and Government Affairs team is now analysing the full impact for our 112,000 members and the recreational boating community – and plans to meet with HMRC to discuss the next steps.