Finance Act 2008

In section 13 (penalties for misuse of rebated heavy oil), omit subsection (7).

10

In section 13AA (restrictions on use of rebated kerosene), omit subsection (5).

11

In section 13AB (penalties for misuse of kerosene), omit subsections (3) and (4).

12

In section 14 (rebate on light oil for use as furnace fuel), omit subsection (9).

13

After that section insert—

(14A) (1) This section applies if, at the excise duty point, it is intended that biodiesel on which duty under section 6AA is charged will not be— (a) used as fuel for a road vehicle, or (b) used as an additive or extender in any substance so used. (2) A rebate of duty is to be allowed on the biodiesel at a rate of £0.0969 a litre less than the rate of duty under section 6AA. (3) In this section “the excise duty point” has the same meaning as in section 1 of the Finance (No.2) Act 1992. (14B) (1) This section applies if, on the delivery for home use of bioblend on which duty under section 6AB is charged— (a) it is intended that the bioblend will not be— (i) used as fuel for a road vehicle, or (ii) used as an additive or extender in any substance so used, and (b) if the heavy oil used to produce the bioblend was kerosene, it is intended that the bioblend will not be— (i) used as fuel for an engine within paragraph (a) or (b) of section 13AA(1), or (ii) used as an additive or extender in any substance so used. (2) A rebate of duty is to be allowed on the bioblend. (3) The rate per litre of the rebate is the sum of— (a) HO% of the relevant hydrocarbon rebate rate, and (b) BD% of the relevant biodiesel rebate rate. (4) “The relevant hydrocarbon rebate rate” is the rate specified in section 11(1) for the kind of heavy oil used to produce the bioblend. (5) “The relevant biodiesel rebate rate” is— (a) if the heavy oil used to produce the bioblend was kerosene, the rate of duty under section 6AA, and (b) otherwise, the rate of the rebate under section 14A. (6) Section 6AB(4) (meaning of “HO%” and “BD%”) applies for the purposes of subsection (3). (14C) (1) Rebated biodiesel or bioblend must not be— (a) used as fuel for a road vehicle, (b) used as an additive or extender in any substance so used, or (c) taken into a road vehicle as fuel or as an additive or extender in any substance used as fuel. (2) Rebated bioblend that was produced by mixing kerosene and biodiesel must not be— (a) used as fuel for an engine within paragraph (a) or (b) of section 13AA(1), (b) used as an additive or extender in any substance so used, or (c) taken into the fuel supply of such an engine. (3) Subsections (1) and (2) do not apply to a quantity of biodiesel or bioblend if the amount specified in subsection (4) has been paid to the Commissioners, in accordance with regulations, in respect of it. (4) The amount is— $$Q×R$where—Q is the quantity (in litres) of the biodiesel or bioblend, andR is the rate of the rebate under section 14A or 14B at the time of payment.$ (5) In subsection (3) “regulations” means regulations under section 24(1) made for the purposes of this section. (14D) (1) If biodiesel or bioblend is used or taken into a road vehicle in contravention of section 14C(1) or (2), the Commissioners may assess the amount specified in section 14C(4) as being excise duty due from any person who— (a) used the biodiesel or bioblend, or (b) was liable for it being taken into the vehicle, and may notify the person or the person's representative accordingly. (2) Conduct within any of the following paragraphs attracts a penalty under section 9 of the Finance Act 1994 (civil penalties)— (a) using biodiesel or bioblend in contravention of section 14C(1) or (2), (b) becoming liable for biodiesel or bioblend being taken into a vehicle or the fuel supply of an engine in contravention of section 14C(1) or (2), and (c) supplying biodiesel or bioblend, intending that it will be put to a particular use that is a prohibited use. (3) A person commits an offence if— (a) the person intentionally uses biodiesel or bioblend in contravention of section 14C(1) or (2), (b) the person is liable for biodiesel or bioblend being taken into a vehicle or the fuel supply of an engine in contravention of section 14C(1) or (2), and knows that the taking in is in contravention of that provision, or (c) the person supplies biodiesel or bioblend, intending that it will be put to a particular use that is a prohibited use. (4) “Prohibited use” means a use that would contravene section 14C(1) or (2) if no payment under section 14C(3) were made in respect of the biodiesel or bioblend. (5) A person guilty of an offence under this section is liable— (a) on summary conviction, to— (i) a fine not exceeding the statutory maximum or (if it is greater) 3 times the value of the biodiesel or bioblend in question, or (ii) imprisonment for a term not exceeding 12 months, or both, and (b) on conviction on indictment, to a fine or imprisonment for a term not exceeding 7 years or both. (6) Subsection (5)(a)(ii) has effect as if the reference there to 12 months were to 6 months— (a) in this section as it extends to England and Wales, in relation to offences committed before the commencement of section 282 of the Criminal Justice Act 2003 (increase in maximum term that may be imposed on summary conviction of offence triable either way), and (b) in this section as it extends to Northern Ireland.

14

Omit section 17A (repayment of part of duty where biodiesel used otherwise than as road fuel).

15

• (1) Section 20A (mixing: adjustment of duty) is amended as follows.

• (2) For subsections (1) to (4) substitute—

(1) Subsections (2) and (3) apply if— (a) a relevant substance upon which duty under this Act has been charged is mixed in a pipe-line with another kind of relevant substance upon which such duty has been charged, and (b) the mixing is approved mixing (see subsection (5)). (2) If the Commissioners are of the opinion that— (a) the amount of duty that would be charged on the mixture (if duty were charged at the time of mixing), is greater than (b) the total amount of duty charged as mentioned in subsection (1)(a), they may charge under this section a duty of excise on the mixture of an amount equal to the difference. (3) If the Commissioners are of the opinion that the amount mentioned in subsection (2)(a) is less than the amount mentioned in subsection (2)(b), they may make under this section an allowance of an amount equal to the difference. (4) Where a charge or allowance is made under this section, any relief or rebate which was permitted or allowed in respect of the charges mentioned in subsection (1)(a) is for the purposes of this Act to be disregarded. (4A) In this section “relevant substance” means biodiesel, bioethanol, bioblend, bioethanol blend or hydrocarbon oil. (4B) The cases that fall within subsection (1)(a) include cases where one kind of hydrocarbon oil is mixed with another kind of hydrocarbon oil.

• (3) In subsection (5)(a), for the words from “in a” to “only)” substitute “ relevant substances (or specified kinds of relevant substances) in a pipe-line ”.

16

• (1) Section 20AAA (mixing of rebated oil) is amended as follows.

• (2) Omit subsections (3) and (5).

• (3) In subsection (9), for “, (2)(a) or (3)” substitute “ or (2)(a) ”.

17

In section 20AA(1) (power to allow reliefs), after “12(2)” (in both places) insert “ or 14C(3) ”.

18

Before section 21 (but after the heading “Administration and enforcement”) insert—

(20AC) (1) The Commissioners may, for any prescribed purpose, determine in such way as they consider appropriate the proportion of any substance that is biodiesel or bioethanol. (2) In subsection (1) “prescribed purpose” means a purpose, prescribed by regulations made by the Commissioners, that relates to any duty under this Act.

19

In section 23 (prohibition on use etc of road fuel gas on which duty has not been paid), omit subsection (2).

20

• (1) Section 24 (control of duty-free and rebated oil) is amended as follows.

• (2) In subsection (1), for the words from “section 11,” to “section 14(1),” substitute “ any of sections 11 to 14C, ”.

• (3) In subsection (2)—

• (a) for the words from the beginning to “above” substitute “ The regulations ”, and

• (b) for the words from “subsection (2)” to the end substitute “ section 12(2), 13AA(3) or 14C(3) are to be effective for the purposes of those provisions. ”

• (4) In subsection (3)—

• (a) after “hydrocarbon oil” insert “ , biodiesel or bioblend ”, and

• (b) in paragraph (b), for “or rebated light oil” substitute “ , rebated light oil, rebated biodiesel or rebated bioblend ”.

• (5) In subsection (4A)(a), after “oil” insert “ , biodiesel or bioblend ”.

• (6) In subsection (5), after “oil” insert “ , biodiesel or bioblend ”.

21

In section 24A (penalties for misuse of marked oil), omit subsection (4).

22

• (1) Section 27 (interpretation) is amended as follows.

• (2) In subsection (1)—

• (a) in the definition of “controlled oil”, after “13AA” insert “ or biodiesel or bioblend in respect of which a rebate has been allowed under section 14A or 14B ”,

• (b) after that definition insert—

• “excepted vehicle” means a vehicle that is an excepted vehicle within the meaning of Schedule 1;

,

• (c) after the definition of “hydrocarbon oil” insert—

“kerosene” has the meaning given by section 1(8);

,

• (d) in the definition of “rebate”, after “14” insert “ , 14A, 14B ”, and

• (e) in the definition of “road vehicle”, for the words from “vehicle which” to the end substitute “ excepted vehicle; ”.

• (3) After that subsection insert—

(1ZA) For the purposes of this Act, a substance is used as fuel for a vehicle if (and only if) it is used as fuel for— (a) the engine provided for propelling the vehicle, or (b) an engine which draws fuel from the same supply as that engine. (1ZB) For those purposes, a substance is taken into a vehicle as fuel, or as an additive or extender in any fuel, if (and only if) it is taken into the vehicle as part of the supply from which the engine provided for propelling the vehicle draws fuel. (1ZC) For those purposes, the following persons are liable for a substance being taken into a vehicle or into the fuel supply of an engine— (a) the person who has charge of the vehicle or engine at the time the substance is taken in, and (b) the owner of the vehicle or engine at that time (or, if another person is entitled to possession of it at that time, that other person). (1ZD) Subsection (1ZC) applies in relation to appliances and storage tanks as it applies in relation to vehicles.

23

In Schedule 4 (regulations under section 24), omit—

• (a) in paragraph 3, “17A,”, and

• (b) in paragraph 22, the words from “and section 12(3)(a)” to the end.

24

In Schedule 5 (sampling), in paragraph 3(1), omit “of oil”.

25

In consequence of the amendments of HODA 1979, omit—

• (a) section 1(2) of FA 1987,

• (b) section 5(5) of FA 1996,

• (c) in FA 1997—

• (i) section 7(7), and

• (ii) in Schedule 6, paragraph 6(5),

• (d) in FA 2002—

• (i) section 5(3), and

• (ii) in Schedule 2, paragraph 4, and

• (e) in FA 2004—

• (i) section 7(3), and

• (ii) section 10(2).

26

The amendments made by this Schedule are treated as having come into force—

• (a) so far as they confer a power to make regulations, on 19 March 2008, and

• (b) for all other purposes, on 1 April 2008.

SCHEDULE 6

Part 1 — Fuel used in aircraft and boats

Aviation gasoline

1

HODA 1979 is amended as follows.

2

In section 1 (hydrocarbon oil), after subsection (3C) insert—

(3D) “Aviation gasoline” means light oil which— (a) is specially produced as fuel for aircraft, (b) at 37.8oC, has a Reid Vapour Pressure of not less than 38kPa and not more than 49kPa, and (c) is delivered for use solely as fuel for aircraft.

3

In section 2A(1) (power to amend definitions), before paragraph (a) insert—

(za) aviation gasoline;

.

4

• (1) Section 6 (hydrocarbon oil: rates of duty) is amended as follows.

• (2) In subsection (1), for the words from the beginning to “below, there” substitute “ There ”.

• (3) Omit subsections (3) and (4).

5

In section 24(1) (control of use of duty-free and rebated oil), omit “section 6(3),”.

6

In section 27(1) (interpretation), in the definition of “aviation gasoline”, for “section 6(4) above” substitute “ section 1(3D) ”.

7

In Schedule 3 (regulations under section 21), omit paragraph 10A.

8

In consequence of the amendments made by paragraphs 2 to 7, omit—

• (a) in FA 1982, section 4(2), (3) and (7),

• (b) in FA 1990, section 3(5), and

• (c) in FA 1998, section 6(1)(a).

Kerosene used for aviation (avtur)

9

HODA 1979 is amended as follows.

10

In the heading of section 13AB, for “misuse of kerosene” substitute “ contravention of section 13AA ”.

11

After that section insert—

(13AC) (1) This section applies in respect of kerosene upon which a rebate under section 11(1)(c) has been allowed. (2) The kerosene must not be used as fuel for private pleasure-flying. (3) If, on the supply of a quantity of the kerosene to a person, the person makes a relevant declaration to the supplier— (a) subsection (2) does not apply in relation to that kerosene, and (b) the person must pay, in accordance with regulations, the amount specified in subsection (4) to the Commissioners. (4) The amount is— $$Q×R$where—Q is the quantity (in litres) of the kerosene, andR is the rate of the rebate under section 11(1)(c) at the time of the declaration.$ (5) The amount referred to in subsection (3)(b) is to be treated, for the purposes of section 12 of the Finance Act 1994 (assessments to excise duty), as an amount of excise duty. (6) Regulations may provide, in cases where kerosene to which subsection (2) applies and other kerosene is taken into an aircraft as fuel, for the order in which the different kinds of kerosene are to be treated (for the purposes of this section and section 13AD) as used. (7) In this section— - “private pleasure-flying” has the same meaning as in Article 14(1)(b) of Council Directive 2003/96/EC (taxation of energy products etc), - “regulations” means regulations under section 24(1) made for the purposes of this section, and - “relevant declaration”, in relation to a quantity of kerosene, means a declaration, made in the way and form specified by or under regulations, that the kerosene is to be used for private pleasure-flying. (13AD) (1) This section applies if a person— (a) uses a quantity of kerosene in contravention of section 13AC(2), or (b) fails to comply with section 13AC(3)(b). (2) The Commissioners may assess the amount specified in section 13AC(4) as being excise duty due from the person, and may notify the person or the person's representative accordingly. (3) The use or failure attracts a penalty under section 9 of the Finance Act 1994 (civil penalties). (4) For the purposes of that section, if this section applies by virtue of subsection (1)(b)— (a) the amount referred to in section 13AC(3)(b) is to be treated as an amount of excise duty, (b) the penalty for the failure is to be calculated by reference to that amount, and (c) the failure also attracts daily penalties. (5) If this section applies by virtue of subsection (1)(a), for the purpose of subsection (2) the reference in section 13AC(4) to the time of the declaration is to be read as the time of use.

Fuel for private pleasure craft

12

HODA 1979 is amended as follows.

13

• (1) Section 14A (rebate on biodiesel used other than as fuel for road vehicles) is amended as follows.

• (2) In subsection (1)—

• (a) omit the “or” at the end of paragraph (a),

• (b) after that paragraph insert—

(aa) used as fuel for propelling private pleasure craft, or

, and

• (c) in paragraph (b), for “so used” substitute “ used as mentioned in paragraph (a) or (aa) ”.

• (3) After subsection (3) insert—

(4) In this section “private pleasure craft” has the same meaning as in section 14E.

• (4) Accordingly, in the heading, insert at the end “ etc ”.

14

• (1) Section 14C (restrictions on use of rebated biodiesel and bioblend) is amended as follows.

• (2) In subsection (1)—

• (a) omit the “or” at the end of paragraph (b), and

• (b) after paragraph (c) insert

, or (d) (in the case of rebated biodiesel) used as fuel for propelling private pleasure craft or as an additive or extender in any substance so used.

• (3) After subsection (4) insert—

(4A) In subsection (1) “private pleasure craft” has the same meaning as in section 14E.

15

After section 14D insert—

(14E) (1) This section applies in respect of rebated heavy oil or bioblend. (2) The heavy oil or bioblend must not be used as fuel for propelling private pleasure craft. (3) If, on the supply by a person (“the supplier”) of a quantity of the heavy oil or bioblend to another person, the other person makes a relevant declaration to the supplier— (a) subsection (2) does not apply in relation to that heavy oil or bioblend, and (b) the supplier must pay, in accordance with regulations, the amount specified in subsection (4) to the Commissioners. (4) The amount is— $$Q×R$where—Q is the quantity (in litres) of the heavy oil or bioblend, andR is the rate of the relevant rebate at the time of supply.$ (5) The “relevant rebate” is— (a) in the case of heavy oil upon which rebate was allowed under section 13ZA or 13AA(1), the rebate under that provision, (b) in the case of heavy oil to which paragraph (a) does not apply, the rebate under section 11 for that kind of heavy oil, and (c) in the case of bioblend, the rebate under section 11(1)(b). (6) The amount referred to in subsection (3)(b) is to be treated, for the purposes of section 12 of the Finance Act 1994 (assessments to excise duty), as an amount of excise duty. (7) Regulations may provide, in cases where heavy oil or bioblend to which subsection (2) applies and other heavy oil or bioblend is taken into a craft as fuel, for the order in which the different substances are to be treated (for the purposes of this section and section 14F) as used. (8) In this section— - “private pleasure craft” has the same meaning as in Article 14(1)(c) of Council Directive 2003/96/EC (taxation of energy products etc), - “regulations” means regulations under section 24(1) made for the purposes of this section, and - “relevant declaration”, in relation to a quantity of heavy oil or bioblend, means a declaration, made in the way and form specified by or under regulations, that the heavy oil or bioblend is to be used as fuel for propelling private pleasure craft. (14F) (1) This section applies if a person— (a) uses a quantity of rebated heavy oil or bioblend in contravention of section 14E(2), or (b) fails to comply with section 14E(3)(b). (2) The Commissioners may assess the amount specified in section 14E(4) as being excise duty due from the person, and may notify the person or the person's representative accordingly. (3) The use or failure attracts a penalty under section 9 of the Finance Act 1994 (civil penalties). (4) For the purposes of that section, if this section applies by virtue of subsection (1)(b)— (a) the amount referred to in section 14E(3)(b) is to be treated as an amount of excise duty, (b) the penalty for the failure is to be calculated by reference to that amount, and (c) the failure also attracts daily penalties. (5) If this section applies by virtue of subsection (1)(a), for the purpose of subsection (2) the reference in section 14E(4) to the time of supply is to be read as the time of use.

16

In section 24(1) (control of use of duty-free and rebated oil), for “14C” substitute “ 14E ”.

Consequential amendments

17

FA 1994 is amended as follows.

18

In section 12A(3)(c) (other assessment relating to excise duty matters)—

• (a) after “13AB,” insert “ 13AD, ”, and

• (b) after “14,” insert “ 14F, ”.

19

In section 12B(2)(f) (section 12A: supplementary provisions)—

• (a) after “13AB,” insert “ 13AD, ”, and

• (b) after “14” insert “ , 14F ”.

20

In section 14(1)(ba) (requirement for review of a decision)—

• (a) after “13AB,” insert “ 13AD, ”, and

• (b) after “14,” insert “ 14F, ”.

Commencement etc

21

The amendments made by this Part of this Schedule come into force on 1 November 2008.

22

But section 13AC(2) of HODA 1979 does not apply to kerosene upon which a rebate under section 11(1)(c) of that Act was allowed before that date if it was supplied for use as fuel for an aircraft before that date.

23

And section 14E(2) of that Act does not apply to heavy oil or bioblend upon which a rebate was allowed before that date if it was supplied for use as fuel for a craft before that date.

Part 2 — Heavy oil used for heating or as fuel for certain engines

Amendments of HODA 1979

24

HODA 1979 is amended as follows.

25

In section 11(1) (rebate on heavy oil), for “13, 13AA and 13AB below” substitute “ 12(1), 13ZA and 13AA(1) ”.

26

In section 12(2) (rebated heavy oil not to be used as fuel for road vehicles), after “above or” insert “ section 13ZA or ”.

27

In the heading of section 13 (penalties for misuse of rebated heavy oil), for “misuse of rebated heavy oil” substitute “ contravention of section 12 ”.

28

After that section insert—

(13ZA) (1) This section applies if, on the delivery of heavy oil (other than kerosene) upon which rebate at the rate mentioned in section 11(1)(c) would otherwise be allowed, it is intended to use the heavy oil— (a) for heating, or (b) as fuel for an engine. (2) Rebate is to be allowed on the heavy oil at the rate mentioned in section 11(1)(a) (rather than at the rate mentioned in section 11(1)(c)). (3) Nothing in this section applies in relation to heavy oil to which section 12(1) applies. (13ZB) (1) If a person supplies relevant heavy oil, having reason to believe that it will be put to a particular use that is a prohibited use— (a) the Commissioners may assess the amount specified in subsection (3) as being excise duty due from the person (and may notify the person or the person's representative accordingly), and (b) the supply of the heavy oil is conduct that attracts a penalty under section 9 of the Finance Act 1994 (civil penalties). (2) Subsection (1) does not apply in relation to a quantity of relevant heavy oil if (before the time of supply) the amount specified in subsection (3) has been paid to the Commissioners, in accordance with regulations, in respect of it. (3) The amount is— $$Q×RRFO$where—Q is the quantity (in litres) of the relevant heavy oil, andRRFO is the rate for rebated fuel oil at the time of payment.$ (4) For the purposes of subsection (3) the rate for rebated fuel oil at any time is— (a) the rate of duty under section 6(1A)(c) at that time, minus (b) the rate of rebate allowable under section 11(1)(a) at that time. (5) In this section— - “prohibited use” means— 1. use for heating, or 2. use as fuel for an engine (except where such use would amount to use as fuel for a road vehicle), - “regulations” means regulations under section 24(1) made for the purposes of this section, and - “relevant heavy oil” means heavy oil, other than kerosene, upon which rebate at the rate mentioned in section 11(1)(c) has been allowed. (6) Nothing in this section applies to a person who supplies relevant heavy oil for re-processing.

29

In section 20AAA(6)(b) (mixing of rebated oil), before “13AA” insert “ 13ZA or ”.

30

In section 20AA(1) (power to allow reliefs), after “12(2)” (in both places) insert “ , 13ZB(2) ”.

31

In section 24(2) (control of use of duty-free and rebated oil), after “12(2),” insert “ 13ZB(2), ”.

32

In section 27(1) (interpretation), in the definition of “rebate”, after “11,” insert “ 13ZA, ”.

Amendments of FA 1994

33

FA 1994 is amended as follows.

34

In section 12A(3)(c) (other assessment relating to excise duty matters), after “13,” insert “ 13ZB, ”.

35

In section 12B(2)(f) (section 12A: supplementary provisions), after “13,” insert “ 13ZB, ”.

36

In section 14(1)(ba) (requirement for review of a decision), after “13,” insert “ 13ZB, ”.

Commencement

37

The amendments made by this Part of this Schedule come into force on 1 November 2008.

SCHEDULE 7

Part 1 — Main provisions

Remittance basis_general

1

In Part 14 of ITA 2007 (income tax liability: miscellaneous rules), before Chapter 1 insert—