The final announcement on red diesel has been greeted with confusion from some boaters but the authorities are hoping owners will act responsibly to ensure the new system runs without hitches.
The system requires private boat owners to declare, every time they fill up, what percentage of fuel they will be using for propulsion and what for domestic purposes, such as heating.
The retailer will calculate the duty according to each declaration.
The system is clearly open to abuse but confirming the new rules at the PSP Southampton Boat Show the British Marine Federation (BMF), RYA (Royal Yachting Association) and Inland Waterways Association (IWA) warned HM Customs & Excise do have powers of investigation if they hear of dubious claims.
The authorities also said the system might be tweaked after the first few months if necessary.
The new system comes into being on 1 November 2008, after the European Commission decided last year that private leisure boaters in the UK could no longer use low-duty diesel.
Ironically, since that decision was made, the price of waterside diesel has rocketed at many marinas to a point where the new full-duty prices will be barely noticeable for some.
However the change in price could force some owners to seriously restrict or change their boating habits, as a litre of red diesel for propulsion purposes will now cost at least the same as a a litre of roadside diesel.
Red diesel for non-propulsion purposes will be sold at the current lower-duty rate.
The statement released by the BMF, RYA and IWA reads as follows: "Following extensive cooperation with Her Majesty's Revenue and Customs (HMRC), private pleasure craft owners will be able to continue to use red diesel for propulsion use, but at a modified duty rate.
Red diesel at a rebated rate will still be available for domestic purposes, such as heating and lighting. Recreational boaters will declare the percentage of fuel to be used for propulsion and domestic use respectively.
HMRC have provided advice on calculating this percentage spilt which includes the following: 'It is for the purchaser to declare the percentage of fuel used for propulsion. However, analysis by both the industry and HMRC suggests that a split of 60% for propulsion and 40% for domestic use (heating, cooking etc) probably reflects most people's use and it is therefore likely that many users will declare such an apportionment.'
Registered Dealers in Controlled Oils (RCDO) will need to account to HMRC for any additional duty they receive from recreational boaters. RCDOs already owe a general duty of care to ensure that they only make supplies of controlled oil for legitimate uses.
Howard Pridding, Executive Director of the BMF said: "While no-one is going to pretend that the duty increase on red diesel is a good thing, we are pleased that HMRC has provided a simple and user friendly framework for suppliers and boaters. Availability was a key concern so we are particularly pleased that recreational craft users and fuel suppliers can continue to use red diesel.
"HMRC has listened to the concerns of industry and boaters and has produced a manageable solution to an unwelcome but unavoidable change in the law."
Gus Lewis, Legal and Government Affairs Manager at the RYA added: "The UK Government and HMRC have consistently supported us on the red diesel issue, including seeking (albeit unsuccessfully) an extension of the UK's derogation for the use of red diesel that expired on 31 December 2006.
"We hope the framework will reduce disruption for boaters and suppliers and help mitigate the impact of the change in duty."
Chaos for Moderator.