HMRC: UK Aviation Fuel Excise Notice 179a Updated, Includes SAF

• HMRC's updated Excise Notice 179a provides comprehensive rules for the production, supply, and use of aviation turbine fuels (avtur), including Sustainable Aviation Fuel (SAF), for all supply chain participants.
• Avtur qualifies for a full fuel duty rebate (tax code 601) when used in aircraft engines, with the exception of private pleasure flying, and benefits from a general marking waiver.
• The notice clarifies Registered Dealers in Controlled Oils (RDCO) scheme obligations, requiring customer checks and record-keeping, even if specific returns are not mandated for avtur-only dealers.
• Supplies of avtur for commercial flights within the UK and all private flights are typically subject to the standard rate of VAT.
• Strict adherence to proper usage, storage, and compliance requirements is essential to maintain rebate eligibility and avoid penalties, particularly in light of post-Brexit regulatory adjustments.

Compliance with these updated guidelines is paramount for all entities involved in the UK aviation fuel supply chain, as failure to adhere to the specified conditions can lead to the loss of duty rebates and potential penalties.

His Majesty's Revenue and Customs (HMRC) has issued updated guidance, known as Excise Notice 179a, which details the regulations governing the production, supply, and use of aviation turbine fuels (avtur) within the United Kingdom. This comprehensive notice is essential reading for any entity involved in the import, manufacturing, sale, storage, movement, or end-use of avtur, providing clarity on critical compliance requirements. Notably, this revision reflects changes stemming from the UK's departure from the European Union, impacting the regulatory landscape for `UK aviation fuel excise notice 179a`.

Unlike aviation gasoline (avgas), which falls under different classifications as a light hydrocarbon oil, this notice specifically addresses avtur. For excise purposes, avtur is categorized as a heavy hydrocarbon oil, akin to kerosene, and is designated as a controlled oil under Section 27(1) of the Hydrocarbon Oil Duties Act (HODA) when intended for aircraft engines. A significant update within the notice confirms that `Sustainable Aviation Fuel excise duty` considerations are now explicitly covered, with Sustainable Aviation Fuel (SAF), including synthetic kerosene, whether blended or not, being treated as avtur provided it is certified for use in aircraft engines.

This inclusion of SAF under the existing avtur framework simplifies some aspects of compliance for emerging fuel types. All forms of avtur, regardless of their specific composition (e.g., kerosene, hydrotreated vegetable oil refined to kerosene specification, or other fuel substitutes), share the same tax code, 601, and are subject to the same regulatory provisions outlined in this `HMRC Excise Notice 179a`.

A key provision of the `Avtur duty rebate rules UK` is the entitlement to a full rebate of fuel duty for avtur. This rebate is contingent upon the fuel being used exclusively as an engine fuel for aircraft, with a specific exclusion for private pleasure flying. To ensure quality and safety, avtur benefits from a general marking waiver, meaning it is not required to be physically marked, unlike other fully rebated kerosene products. This waiver, however, is strictly tied to its intended use as aircraft fuel.

Maintaining eligibility for this full duty rebate requires stringent adherence to the notice's requirements by all parties in the supply chain, from initial suppliers to final users. Given that all avtur types share the same tax code (601) and are fully rebated and unmarked, they can be mixed after the duty point without requiring specific approval from HMRC. The `RDCO scheme avtur compliance` is also a critical component; while HMRC does not currently mandate returns from Registered Dealers in Controlled Oils (RDCO) who exclusively supply avtur, these dealers must still fulfill their legal obligations under the scheme. This includes conducting necessary customer checks and maintaining meticulous records, measures designed to prevent the misuse of rebated avtur.

These obligations underscore the importance of robust internal processes for any business handling avtur. The framework is designed to balance the economic benefit of the rebate with the need to prevent diversion of the fuel for non-eligible uses, ensuring that the `Brexit impact aviation fuel tax` adjustments are clearly communicated and understood by all stakeholders.

Beyond excise duty, `UK aviation fuel VAT liability` is another crucial aspect addressed by the notice. Generally, supplies of avtur for commercial flights within the UK, as well as all private flights, are subject to the standard rate of Value Added Tax (VAT). Further details on VAT liability can be found in Section 6 of VAT Notice 701/19, and additional information regarding aircraft stores is available in VAT Notice 703. Understanding these VAT implications is vital for accurate invoicing and financial reporting across the supply chain.

Regarding storage, avtur can be held in an excise or tax warehouse, where it is subject to the same regulations and rules as other oils stored under such conditions. Reference to Excise Notice 179 provides more comprehensive information on general fuel storage and accounting for excise duty and VAT. The notice also provides explicit guidance on the proper use of avtur: it must be used solely as aircraft fuel to qualify for both the marking waiver and the full duty rebate. It is not permitted for purposes that do not involve combustion, such as the calibration of fuel systems. If avtur is temporarily used for meter calibration, it must be returned to avtur stock for eventual delivery and use in aircraft.

Compliance with these updated guidelines is paramount for all entities involved in the UK aviation fuel supply chain, as failure to adhere to the specified conditions can lead to the loss of duty rebates and potential penalties. The detailed requirements for usage, storage, and record-keeping are designed to uphold the integrity of the excise system and ensure fair application of tax rules.

Lawyers and compliance officers advising clients involved in the UK aviation fuel supply chain (import, production, sale, use) must review this updated HMRC guidance to ensure full compliance with excise duty, VAT, and RDCO scheme obligations, particularly concerning Sustainable Aviation Fuel (SAF) and post-Brexit changes. Failure to adhere to these rules could result in penalties or loss of duty rebates.

Source: Original reporting via GOV.UK