HMRC: Issues Updated Excise Notice 184A Mineral Oil Relief Guidance

• HMRC Excise Notice 184A provides updated guidance on obtaining relief from excise duty on mineral oil used for specific industrial purposes.
• The relief, known as the Industrial Relief Scheme or Tied Oils Scheme, has been updated following the UK's departure from the European Union.
• Eligibility for relief is governed by the Hydrocarbon Oil Duties Act 1979 and supporting 2002 regulations, with specific approval requirements varying by oil category and container size.
• Individual approval is often required for Category E oils, bulk deliveries, or repayment of duty-paid oil, but not for small container deliveries unless for import/export.
• Recovered oil that previously received relief becomes liable for duty again unless properly accounted for and disposed of, with environmental regulations requiring local authority notification for destruction.

This comprehensive mineral oil excise duty guidance clarifies how businesses can navigate the complexities of duty relief, ensuring that oils used for eligible industrial purposes are not subject to standard excise duties.

His Majesty's Revenue and Customs (HMRC) has issued updated guidance, detailed in Excise Notice 184A, concerning relief from excise duty on mineral oil designated for specific applications. This crucial update, which has been revised following the United Kingdom's departure from the European Union, outlines the procedures for obtaining relief under what is commonly known as the Industrial Relief Scheme or the Tied Oils Scheme. The guidance is specifically tailored for traders involved in either the supply or industrial use of oils, providing essential information on compliance with UK hydrocarbon oil regulations.

This comprehensive mineral oil excise duty guidance clarifies how businesses can navigate the complexities of duty relief, ensuring that oils used for eligible industrial purposes are not subject to standard excise duties. The document serves as HMRC's interpretation of the relevant statutes and regulations, though it explicitly states it is not a substitute for the law itself. For a broader understanding of statutory provisions related to mineral oils, traders are directed to Excise Notice 179, which covers general information on motor and heating fuels, as well as accounting for excise duty and VAT.

The foundational legal authority for this relief is enshrined in Section 9 of the Hydrocarbon Oil Duties Act 1979, as amended. This primary legislation is supported by The Hydrocarbon Oil (Industrial Relief) Regulations 2002, which became effective in July and September of that year, providing the regulatory framework for the scheme. Full definitions pertinent to these regulations can be found in Section 2 of the Hydrocarbon Oil Regulations 1973, offering a detailed understanding of the terms used within the guidance.

Generally, all uses of oil are eligible for relief under the Industrial Relief Scheme UK, unless the oil is specifically designated for use as road fuel, heating fuel in private dwellings, or fuel for pleasure craft. The notice provides a definition of 'use' in Section 17. An exception exists for light oil employed as furnace fuel in a vaporised or atomised state, which may qualify for a rebated rate, as detailed in Excise Notice 184B. Additionally, certain lubricating oils and hydraulic fluids may be subject to excise duty if they meet the definitions for gas oil, kerosene, or fuel oil; however, relief can be granted if these are used for an eligible purpose. Many such oils do not meet these definitions and are therefore subject to a nil rate of excise duty, falling outside the scope of this particular scheme.

The process for obtaining relief varies significantly based on the type of oil and its delivery method, necessitating careful review by compliance officers and legal advisors. For instance, individual approval is generally required for traders dealing in Category E oils, unless they meet the criteria for class approval, as outlined in Section 5.6. Similarly, individual approval is mandatory for Tied Oils delivered in bulk or in containers exceeding 210 litres, including supplies from owners of oil stored in a warehouse, with further details available in Section 5. Conversely, for Tied Oils supplied in containers of 210 litres or less, individual approval is typically not required, except in cases of import or export, where it becomes necessary; this is elaborated in Section 15.

Where duty-paid oil is subsequently used for an eligible purpose, a repayment mechanism exists, which also necessitates individual approval, as specified in Section 16. HMRC aims to grant relief at the earliest possible stage, either at the point of use or during the manufacturing process, wherever feasible. However, it is crucial to note that oil used for bench testing engines in the research of fuels and lubricants, where the oil is combusted, is explicitly excluded from receiving tied oils relief. Warehouse keepers are also provided with specific instructions in Section 4.2 regarding the submission of HO34 returns.

Traders must also be aware of their obligations concerning oil that has already received relief. Any such oil that is subsequently recovered becomes liable for duty once more, unless it is properly accounted for and disposed of to the satisfaction of HMRC, such as through eligible use or other officially sanctioned arrangements. This provision underscores the ongoing responsibility of businesses to track and manage relieved oils throughout their lifecycle.

Furthermore, environmental considerations play a significant role in the handling of recovered oils. Strict legal restrictions are in place regarding the incineration and deposit of substances on land that could pose an environmental hazard. Consequently, any business intending to destroy recovered oil is legally obligated to inform their local authority, ensuring adherence to environmental protection regulations. For any uncertainties regarding relief eligibility, businesses are encouraged to contact the Mineral Oils Reliefs Centre directly via email at sbimorcapprovalsteam@hmrc.gov.uk for expert assistance and clarification.

Compliance officers and legal advisors must review this updated HMRC guidance to ensure clients correctly apply for and receive mineral oil excise duty relief under the Industrial or Tied Oils Schemes, especially considering post-Brexit changes and specific approval requirements for different oil categories and uses.

Source: Original reporting via GOV.UK