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New Tax Recycled Fuel Oil Highlights Governments Contradictory Approach Towards

Friday, 03 October 2008

From November 1 2008 excise duty will now be due on recycled fuel oil derived from waste oils that is used as heating fuel and as fuel for off-road engines. Companies who produce recycled fuel oil will need to register as an oil producer with HM Revenue & Customs.

Bruce Wilson, Head of Tax at Campbell Dallas comments: “The Government is being extremely hypocritical towards trying to encourage environmentally responsible behaviour by levying the new duty on recycling fuel oil at a much higher rate than they need to.”

Campbell Dallas points out that the new duty will be charged at 9.29 pence per litre, which is almost seven times more than the EU minimum duty rate of around 1.2 pence per litre.

Research has shown that there is a very high recovery potential from waste heavy oil and that high quality recycled oil burns more efficiently and emits less sulphur than virgin fuel oil. Recycling waste oil also helps to solve the problem of disposing of waste oil.

Bruce Wilson said: “At the end of last year, the Rt Hon Alistair Darling MP said that “Ultimately there cannot be a trade-off between a strong economy and sustainable future,” However we are now at the stage where the government is intent on penalising rather than incentivising green behaviour. This is really just a cynical attempt at raising taxes but disguising it as saving the planet.

“It should be negotiating with the EU for an extension on the UK’s derogation. It’s a shame that the Government is not doing more to encourage the recycling of oil, particularly when the environmental benefits are so clear.”

According to EU figures the EU member states produce around 2.5 million tonnes of waste oil every year. The EU has said that it wants to improve the average collection rate of waste oil so that more recycled fuel oil can be produced. Previously the EU had granted the UK a derogation that allowed them waiver the duty on waste heavy oil.

Research carried out by Campbell Dallas has highlighted the Government’s failure to use tax breaks as a way of encouraging more environmentally responsible behaviour. Of the £29.44 billion the Government has raised in green taxes in the past year just 2% (£607 million) has been given back in green tax.
Bruce Wilson is Head of Tax at Campbell Dallas Chartered Accountants.