Guidance: Using rebated fuels in vehicles and machines (Excise Notice 75) from 1 April 2022

1. Overview

1.1 What this notice is about

It tells you when you can use rebated diesel or biodiesel in vehicles and other machinery.

1.2 What is rebated fuel

Diesel (also known as gas oil or DERV) is normally liable to the full rate of excise duty.

There are circumstances where a particular vehicle or machine may be able to use fuel on which a reduced (rebated) rate of excise duty has been charged, because of the type of vehicle or machine, and the purpose it’s being used for.

Any diesel on which a rebate of excise duty has been allowed must be marked to show that a rebated rate of duty has been charged and paid.

A mix of chemicals is used to mark the diesel, and this includes a visible red dye. For this reason, diesel that has been subject to a rebated rate of excise duty is sometimes known as:

• red diesel
• marked diesel
• marked gas oil

The rebated rate of excise duty is shown in the rates and allowances list as ‘Marked gas oil’.

Biodiesel and hydrotreated vegetable oil (HVO) are diesel quality fuels derived from biomass. They’re treated the same as diesel under the Hydrocarbon Oil Duties Act 1979, and are liable to the same excise duty rates.

They can also be supplied at a reduced duty rate for the same uses as diesel, provided all the requirements that apply to diesel are applied. They must be marked and may only be supplied by a registered dealer in controlled oils (RDCO).

Kerosene is a heavy oil that may also benefit from a rebated rate. Rebated kerosene must also be marked and can be used only for heating.

1.3 Who should read this notice

Anyone who:

• uses or supplies rebated diesel, biodiesel or hydrotreated vegetable oil
• has a vehicle or machinery that may be allowed to use rebated diesel, biodiesel or hydrotreated vegetable oil

1.4 The law covering this notice

UK law:

• The Hydrocarbon Oil Duties Act 1979 (HODA)
• The Customs and Excise Management Act 1979
• The Hydrocarbon Oil Regulations 1973
• The Hydrocarbon Oil (Repayment of Rebates) Regulations 1996
• The Hydrocarbon Oil (Marking) Regulations 2002
• The Excepted Vehicles (Amendment of schedule 1 to the Hydrocarbon Duties Act 1979) Order 2013
• The Hydrocarbon Oil (Marking) (Amendment) Regulations 2007
• The Hydrocarbon Oil (Marking and Designated Markers)(Amendment) Regulations 2015
• The Vehicle Excise and Registration Act 1994
• Finance Act 2021
• Finance Act 2022
• The Hydrocarbon Oil Duties (Consequential Amendments and Transitional Provisions) Regulations 2022
• The Hydrocarbon Oil Duties (Miscellaneous Amendments) Regulations 2022

Nothing in this notice modifies the law.

2. When you can use rebated diesel

2.1 Excepted machines

Certain types of vehicle and machinery, when being used for a particular purpose, may use rebated (red) diesel. These are known as ‘excepted machines’.

Any vehicle or machine that is not an excepted machine must use fuel on which the full amount of duty has been paid regardless of what it is being used for.

2.2 Vehicles

The types of special vehicles that may use rebated diesel are:

• vehicles designed to operate on a railway
• agricultural vehicles
• special vehicles
• unlicensed, including SORN (Statutory Off Road Notification) vehicles

But only when they’re being used for qualifying purposes, for example:

• for agriculture, horticulture, aquatic farming or forestry
• on land maintained by a community amateur sports club (CASC)
• on a golf course or driving range
• on land occupied by a travelling fair or travelling circus

Not all the qualifying purposes apply to all the vehicle types.

You should check that your vehicle, when being used for a particular purpose, is entitled to use rebated diesel.

Specific details on the acceptable uses of each type of vehicle are given in section 3.

2.3 Vessels

All types of boats and marine transport may use rebated diesel except for private pleasure craft in Northern Ireland.

Private pleasure craft in Great Britain (England, Scotland and Wales) can use rebated (red) diesel but the user must make a declaration of the amount used for propulsion and pay full excise duty on that proportion.

For further details read Fuel used in private pleasure craft and for private pleasure flying (Excise Notice 554).

2.4 Heating and electricity

Rebated diesel may be used for non-commercial premises for:

• heating
• generating electricity

2.5 Other machinery

Other machinery, engines, or appliances may use rebated (red) diesel when being used:

• for purposes relating to agriculture, horticulture, aquatic farming or forestry
• on a golf course (including a driving range) or land maintained by a community amateur sports club
• to operate or maintain equipment in a travelling fair or travelling circus

3. Vehicles that may use rebated fuel

From 1 April 2022, the term ‘excepted vehicles’ in HODA is replaced by a definition of ‘excepted machines’ that describes vehicles and machinery that may use rebated fuel.

There are 2 elements to be considered when deciding if a vehicle is an excepted machine that can use rebated fuel. They are:

• what type of vehicle it is
• what it’s being used for

3.1 Types of vehicle

While many of the vehicles described in these paragraphs will be classed as ‘special’ or ‘agricultural’ vehicles by the DVLA, this does not confirm eligibility to use rebated fuel.

To use rebated fuel, a vehicle must meet the specifications in, and be used only as allowed by the excepted machine categories listed in schedule 1A to HODA.

3.2 Agricultural vehicles

To be an ‘agricultural vehicle’ and use rebated diesel, the vehicle must meet one of the following four definitions, and be used for a purpose defined in paragraph 3.3.

It must be one of the following:

1. A tractor.
2. A single-seat vehicle of less than 1,000kg that is designed and constructed primarily for use off-road.
3. A vehicle only used for agricultural, horticultural or forestry purposes, that is licensed by the DVLA to use public roads only when passing between 2 areas of land occupied by the same person, and that distance is less than 1.5 kilometres by road.
4. A vehicle with permanently attached or built-in machinery used for handling or processing agricultural, horticultural, aquatic farming, forestry produce or materials — this category includes vehicles such as combined harvesters, crop sprayers, forage harvesters, pea viners, mobile seed cleaning machines and feed milling machines.

Vehicles primarily designed for carrying goods, produce, and implements are trucks. They’re not agricultural vehicles even if the goods, produce, or implements being carried are for, or a result of, an agricultural activity.

3.3 When an agricultural vehicle can use rebated diesel

An agricultural vehicle defined at paragraph 3.2, may use rebated diesel only when being used for:

• purposes relating to agriculture (including aquatic farming), horticulture or forestry
• cutting verges, hedges or trees that border public roads
• clearing or otherwise dealing with frost, ice, snow or flooding
  including when the vehicle is going to or from the place where it’s used for these purposes, and for collecting and returning the necessary equipment and materials
• any use on the land where it’s kept and mainly used for purposes of agriculture, horticulture, aquatic farming or forestry — for example, a farmer who has an agricultural vehicle on their land for use in agriculture, can use the tractor for any other purposes on their land
• any use on a golf course, driving range, or land used by a community amateur sports club where it’s kept

Read section 12 for what we mean by activities falling within:

• agriculture
• horticulture
• aquatic farming
• forestry

3.4 Special vehicles

A special vehicle is a vehicle of any weight that is designed and constructed and used as mentioned in schedule 1 part IV to the Vehicle Excise and Registration Act 1994.

This covers such vehicles as:

• digging machines
• mobile cranes
• mobile pumping vehicles
• works trucks
• road rollers

Where a special vehicle is used for a purpose set out in paragraph 3.5, it may use rebated fuel for that purpose and to travel to and from the place where it’s used.

Other than weight, it must meet the specifications of, and be used in accordance with the restrictions described in the relevant part of the Vehicle Excise and Registration Act 1994.

For example, a digging machine, mobile crane or mobile pumping vehicle must not carry any load except that necessary for its propulsion or operating the vehicle’s equipment.

3.5 When a special vehicle can use rebated diesel

A special vehicle defined in paragraph 3.4, may use rebated diesel only where it will be used:

• for purposes relating to agriculture, horticulture, aquatic farming or forestry, including when it’s going to or from the place where it’s used for these purposes
• on a golf course (including a driving range) or on land maintained by a community amateur sports club (read paragraph 4.6), including when it’s going to and from one of these places where it is used

3.6 Unlicensed vehicles

A vehicle is ‘unlicensed’ if:

• you have submitted a SORN (Statutory Off Road Notification)
• it became untaxed before 1 February 1998
• it’s an unregistered vehicle that has never used the public road

3.7 When an unlicensed vehicle can use rebated diesel

An unlicensed vehicle can use rebated diesel, but only when being used:

• for purposes relating to agriculture, horticulture, aquatic farming or forestry
• on a golf course, driving range, or on land maintained by a community amateur sports club
• on land occupied by a travelling fair or travelling circus

3.8 Vehicles used between different parts of sports grounds

Where a vehicle is entitled to use rebated diesel because it’s being used on a golf course, driving range or community amateur sports club, it may also use rebated fuel when crossing a road that runs between 2 parts of the course or community amateur sports club land, by the shortest practicable route.

This does not apply to unlicensed or SORN vehicles if the road is a public road.

3.9 Trains

Any vehicle designed to be operated on a railway within the meaning of section 67(1) of the Transport and Works Act 1992.

This does not include:

• trams
• cooling or heating units or other equipment mounted in or on railway carriages or freight wagons, except where these draw their power from the same engine that propels the vehicle

3.10 Vehicles that use gas as fuel

An agricultural vehicle or special vehicle that uses gas as fuel is an excepted machine for any purpose, and does not have to use gas taxed at the road fuel rate.

4. Other machines and appliances

Any other machine or appliance (that is not a vehicle or a vessel) may use rebated fuel only when it’s being used:

• for purposes relating to agriculture, horticulture, aquatic farming or forestry
• on a golf course, driving range or land maintained by a community amateur sports club
• to operate or maintain equipment in a travelling fair or travelling circus
• for heating, or to generate electricity for non-commercial premises, including caravans used for accommodation of those who travel with a travelling fair or travelling circus
• for any other heating use, provided it’s using kerosene

A machine or appliance should only contain rebated fuel if it’s being used, or was last used, for one of these purposes.

A machine or appliance found with rebated diesel in it, that it should not contain, is liable to seizure and financial sanction.

5. Vessels

All types of boats and marine transport may use rebated diesel except for private pleasure craft in Northern Ireland.

For further details read Fuel used in private pleasure craft and for private pleasure flying (Excise Notice 554).

Private pleasure craft

The definition of a private pleasure craft is given in section 11 of Fuel used in private pleasure craft and for private pleasure flying (Excise Notice 554).

A private pleasure craft is not entitled to a rebate on fuel used for propulsion.

To address this situation private pleasure craft in:

• Great Britain are allowed to fill up with rebated (red) diesel, but must make a declaration of the amount that will be used for propulsion, and pay full duty on that amount
• Northern Ireland that have only one fuel tank for propulsion and non-propulsion, must fill up with full duty-paid (white) diesel, but their supplier, if registered with us to do so, can allow and claim back a discount equal to the rebate, on 40% of the fuel supplied to allow for non-propulsion

6. Mowing machines

A mowing machine is a vehicle or machine designed only for mowing grass.

You may use red diesel in a mowing machine when it’s being used:

• for purposes relating to agriculture, horticulture, aquatic farming or forestry
• on a golf course or on land maintained by a community amateur sports club
• on land occupied by a travelling fair or travelling circus

7. Terminology used when describing excepted vehicles and machines, and allowed uses

Clarification on the terminology we have used in describing excepted vehicles and machines, and allowed uses in sections 3 to 6.

7.1 What we mean by ‘built in’ or permanently attached

Built in refers to equipment or features that are designed to be incorporated as an integral part of a vehicle, rather than being separate.

The equipment would be such that it performs the primary function of the vehicle, such as:

• lifting
• pumping
• digging
• processing

We would expect these features not to be easily or quickly detachable.

Separate equipment, supporting apparatus and optional accessories that were not designed to be an integral part of the vehicle, but are simply attached to it for security or ease of transport, are not considered to be built in.

7.2 What we mean by ‘when being used for’

The types of vehicles and machines detailed in sections 3 to 6 are only allowed to use rebated fuel when being used for certain purposes (such as agriculture).

This includes the times when the vehicle is not actually in use, for example, a vehicle which has been used for an agricultural purpose today may have rebated fuel in its tank after use.

A vehicle or machine that is not being used should not have rebated diesel in its tank unless it:

• is only used for allowed purposes
• was last used for an allowed purpose

If you hire out vehicles, machines or appliances that are used for both allowed and non-allowed purposes, you will need to either:

• flush out the fuel tank to remove all traces of rebated fuel when switching uses
• ensure your machines use full duty paid diesel or biofuels for all uses

It will be for you to manage how you control the type of fuel your customers use. If you allow customers using your vehicles, machines or appliances for qualifying purposes to use rebated fuel, you will need to make sure that the machinery is not using rebated fuel if it’s then used for a non-entitled use, to avoid it being liable to seizure.

7.3 What we mean by ‘necessary for propulsion or operation of equipment’

This means goods, material or equipment that the vehicle must carry because it could not reasonably be operated without it.

This may include fuel, lubricants, and tools necessary to make adjustments or to carry out any maintenance while the vehicle is being used.

It also includes any equipment required to comply with health and safety regulations, such as:

• cones to mark out a safe work zone
• operators’ personal protection equipment

Any other goods, materials or equipment not directly required for the propulsion of the vehicle or operation of the vehicle’s equipment may not be carried.

7.4 Agriculture, horticulture, aquatic farming or forestry

HMRC applies the following definitions of agriculture, horticulture, aquatic farming and forestry:

• agriculture — the science and art of cultivating the soil, growing and gathering in crops, and rearing of livestock
• horticulture — the science and art of cultivating or managing gardens, including the growing of flowers, fruits and vegetables
• aquatic farming or pisciculture — the science and art of breeding fish or growing aquatic plants, usually for food, in fish ponds, tanks or other artificial enclosures
• forestry — the science and art of forming and cultivating forests and the management of growing timber

7.5 Activities relating to agriculture (including aquatic farming), horticulture or forestry

HMRC adheres to a code of practice in defining purposes relating to agriculture (including aquatic farming), horticulture and forestry.

Section 12 outlines ‘The Memorandum of Agreement’, agreed by:

• HMRC
• the DVLA
• the National Farmers Union
• the National Association of Agricultural Contractors
• the Confederation of Forest Industries

The definition of a community amateur sports club is at section 658 of the Corporation Taxes Act 2010.

To be a community amateur sports club it must:

7.7 What we mean by ‘premises not used for commercial purposes’

The term ‘commercial purposes’ means trading in goods or services with the intention of making a profit.

We do not consider commercial purposes to include delivery of a service, where it’s intended that any profit made will only ever be used to cover the costs of delivering that service.

Examples of premises which we anticipate will not be used for commercial purposes according to this definition, and for which electricity generation and heating using rebated fuel will therefore be permitted include:

• domestic homes
• premises used to deliver central and local government functions or acts of public administration, for example, NHS hospitals, state schools, town halls, public libraries
• places of worship
• premises used by registered charities for their primary purpose trading, for example, educational charity delivering education or training, museums, and independent schools.

The type of activity undertaken in these premises can include activities that directly relate to the provision of the service you provide, and activities that indirectly relate to the carrying out of your service.

For example, a café selling food and drink in a library is not a necessary part of providing the library service, but enhances the overall experience of the facility for the public and encourages them to make use of it, whilst contributing to its running costs.

You can use rebated fuel for electricity generation for, and to heat, premises even if commercial contractors work there, provided they contribute to the running of your service.

For example, provision of services such as school catering and cleaning by commercial contractors does not mean that the premises are used for ‘commercial purposes’.

If your premises have distinct parts used for commercial and non-commercial purposes, you can use rebated fuel for heating and electricity generation for the part of the premises not used for commercial purposes, providing you use a separate heating system or generator.

7.8 Dual tanks

We do not permit any ‘dual tank’ fuel system that allows a vehicle or other machine to swap between:

• rebated fuel
• unrebated fuel

8. Use of rebated fuel in exceptional circumstances

Situations can arise in which an individual or business, whose use of a vehicle or machine is essential, is unable to obtain or use full duty-paid (white) diesel but can get or use rebated (red) diesel.

In these circumstances, we may issue you with a ‘rebated fuel licence’ which will allow you to pay the duty on the red diesel and then use it. You will need to make an application to us for such a licence.

The primary use of rebated fuel licences is to enable the continued operation of vehicles or machines used for essential and critical purposes.

Using rebated fuel would be allowed only in response to exceptional circumstances, such as fuel supply issues.

This might be necessary if:

• the supply of full duty-paid fuel is interrupted
• you are an individual user like a GP or midwife, or a business such as a water supply company

8.1 When we might consider granting a licence

We will only grant a licence if we are satisfied that:

• there is no viable alternative to using rebated fuel
• it would be unreasonable in the circumstances not to allow you to use it

It’s unlikely that we’ll approve your application if:

• there is no obvious barrier to you using duty-paid white diesel
• the circumstances interrupting the supply of white diesel, if applicable, were not unforeseen

8.2 Essential and critical use

When deciding if use of a vehicle or machine is essential and critical we will consider factors such as whether, without that use, there would be a significant risk to:

• national security
• the continuity of emergency services and law enforcement
• people’s health
• the supply of essential goods and services, such as fuel, water and power
• the welfare of livestock and other animals

8.3 How to apply

You must get approval before you use rebated fuel in your vehicle or machine due to exceptional circumstances.

To apply for a licence you must send your request by email: LCmailbox.oilsapprovalteam@hmrc.gov.ukwrite.

You’ll need to include details of:

• the critical and essential service that the vehicle or machine is used for
• the vehicle or machine you wish to use rebated fuel in
• what the vehicle or machine is normally used for
• the circumstances in which the vehicle or machine will use rebated fuel
• the exceptional circumstance that prevents you using duty-paid fuel
• the consequences of not being able to use the vehicle or machine
• the journeys a vehicle is likely to make and the estimated on-road and off-road distances
• the vehicle’s DVLA tax classification
• where you’ll store the rebated fuel and the type of storage
• when you plan to start using rebated fuel in the vehicle or machine and how much you expect to use
• how long you expect to need to use rebated fuel

8.4 What we’ll do with your application

We’ll check to satisfy ourselves that:

1. The use of the vehicle or machine is essential and critical.

2. The circumstances are exceptional.

3. There is no alternative solution.

If we decide not to issue a rebated fuel licence, we’ll advise you of our decision in writing.

8.5 If we approve your licence

If we decide you may use rebated fuel, we’ll send you a licence which you must present when you buy rebated (red) diesel.

We recommend you carry a copy of the licence with all vehicles or machines covered by it.

The licence will also tell you:

• what your accounting period dates will be
• any terms and conditions attached to your licence
• if applicable, when we expect to withdraw it

You must use:

8.6 Records you must keep

The law requires you to keep a daily record of all the rebated oil you use in your vehicle or machine under the terms of the licence.

You must keep them at the same place as the vehicle or machine, or at any other premises agreed with our officer, for at least 12 months from the date of the last entry in them.

On the day the fuel is used you must record the identifying marks of the vehicle or machine using rebated fuel, such as the registration number of a vehicle or serial number of a machine, showing:

• the volume and description of rebated fuel used in the vehicle or machine
• for vehicles, the date of, and number of miles travelled in, any journey on or off public roads, and whether the vehicle was using rebated or duty-paid diesel
• the volume of rebated fuel used in a vehicle other than for propulsion, for example, to drive machinery or pumps, providing this equipment is not powered by the engine that propels the vehicle

8.7 Accounting period declaration

Your licence confirmation letter will explain how to estimate your fuel use and pay the duty due.

We will repay any duty paid for fuel that was subsequently not used.

8.8 Withdrawal

A ‘rebated fuel licence’ remains in force until we cancel it.

You must tell us of any changes to the information contained in your application for the licence, including when the exceptional circumstance that required the licence no longer applies.

We may periodically visit you or write to you to confirm that the details on the application remain correct and that the reason for needing to use rebated fuel still applies.

We will also cancel your licence if we are no longer satisfied that you should be approved to use rebated fuel, for instance, if you:

• fail to meet the obligations that arise from the licence
• use rebated fuel outside the terms allowed by the licence
• misuse rebated fuel, or facilitate its misuse

We will write to tell you the date your licence ceases, explain why, and give you an opportunity to respond. We will also tell you how to provide a final return.

9. HMRC powers to check, sample and test fuel

The law gives HMRC officers the power to establish that the correct fuel is being used and stored by checking, sampling and testing the fuel in:

• vehicles
• machines
• vessels
• appliances
• storage tanks

For further information on what HMRC officers are allowed to do by law read paragraph 9.4.

9.1 Making fuel available for testing

As the owner or operator of a vehicle or machine, you must make your fuel available for testing if one of our officers asks you to.

If our officers are unable to take a sample, for instance, because you cannot remove an anti-theft device, or you refuse to allow it, they may seize and remove the vehicle, machine, appliance or vessel until a sample can be obtained. We may also impose a penalty for your failure to comply with this legal requirement.

We may prosecute you if you obstruct, hinder or assault one of our officers.

9.2 Fuel tested in your absence

Your fuel can be tested in your absence. You will be told about the test and the result in writing.

9.3 Testing for marked fuel

HMRC will take action against those responsible for the presence of marked oils containing any UK or EU chemical marker. These include:

• Accutrace S10 — a marker used in the UK and Republic of Ireland
• Coumarin — a UK marker
• Quinizarin — a UK marker
• the ‘Euromarker’ — Solvent Yellow 124, a marker used in the UK and the EU

9.4 Powers of HMRC officers

Our officers are allowed by law to:

• examine any vehicle or machine, and any oil in or on it and to inspect, test or sample any oil in the fuel supply
• require vehicle or machine owners, or anyone in charge of a vehicle or machine, to open or cause to be opened the fuel tank or other source of the fuel supply so that the fuel can be located and inspected, tested or sampled — if there is anything in the supply which might hinder this, it must be removed
• require anyone in charge of a vehicle or machine, to produce any books or documents relating to the vehicle or to oil carried on it and which are carried by that person or on the vehicle or machine
• enter any premises (except private dwelling houses) and inspect, test and sample any oil on the premises, whether in a vehicle, machine or elsewhere — in entering the premises, an officer may bring with them any vehicle used for carrying out official duties
• require the occupier of the premises or the person in charge of them to facilitate the inspection, testing or sampling of oil on their premises or oil in the fuel supply of vehicles or machines on the premises, irrespective of whether the oil or the vehicle or machine belongs to that person or someone else — this includes attending normally unmanned premises when our officers require access to fuel
• require anyone concerned with the sale, purchase or disposal of any oil to produce on demand any relevant books or documents
• require you to provide satisfactory evidence that any fuel in your possession (including in your running tank) is fully UK duty paid

10. Other rebated fuel matters

10.1 Mixing rebated fuels with fully duty-paid fuel

You must not mix these fuels in any tank or fuel system. We may seize the fuel and vehicle or machine if you do.

10.2 Vintage vehicles

Some vintage tractors (in production before 1960) and cars (in production before 1956) need to run on a mixture of kerosene and petrol.

Kerosene is a heating fuel and the excise duty on it is fully rebated (reducing the excise duty to nil). For this reason, it is illegal to use kerosene in any vehicle or to mix it with road fuels unless you have a permit from us allowing you to do so.

To apply for a permit email: oils.policymail@hmrc.gov.uk with details of:

• the vehicle you want to use kerosene in, including year of production
• what the vehicle is normally used for, the frequency of use, and the anticipated annual mileage
• why kerosene needs to be used
• how much kerosene you expect to use

If we decide to allow you to add kerosene to your vehicle’s fuel, we’ll send you a permit stating the circumstances in which you may use kerosene.

11. HMRC response to illegal fuel use

11.1 What will happen if you misuse rebated fuel

Where we find rebated fuel being used in a vehicle, vessel or machine, or for a purpose, that is not allowed we will seize the vehicle, vessel or machine.

We may also issue an assessment of fuel duty payable, and a wrongdoing penalty based on the extent of your illegal fuel use.

We may offer to restore your vehicle, vessel or machine to you for a fee and subject to any conditions we consider appropriate.

In the more serious cases involving assault, repeated offending or dishonesty, criminal action may be taken.

The offender can be fined an unlimited amount or imprisoned for up to 7 years, or both.

11.2 Offences and penalties

The following table lists the action we may take in respect of different offences involving fuel.

Offences	Sanctions and assessments
If you: take in oil (other than fully duty-paid fuel) for use as fuel in a vehicle, machine, vessel or appliance misuse oil (other than fully duty-paid fuel) for a use that is not allowed supply oil (other than fully duty-paid fuel) for a use that is not allowed	£250 civil penalty under section 9 of the Finance Act 1994
misuse or supply rebated kerosene for a use that is not allowed mix any rebated or duty free oil with any oil on which no rebate has been allowed, or, fail to provide records, or to allow HMRC officers to obtain, a sample of fuel	£250 civil penalty under section 9 of the Finance Act 1994 if your conduct involves dishonesty, a penalty of up to 100% of the duty evaded may be imposed your vehicle, vessel or machine and, or oil may be seized, or detained and we may issue a £250 civil penalty under section 9 of the Finance Act 1994, or an excise wrongdoing penalty under schedule 41 of Finance Act 2008 we may also raise an assessment, requiring you to pay additional fuel duty for a period going back up to 4 years if your conduct involves dishonesty, a penalty of up to 100% of the duty evaded may be imposed
remove any designated chemical marker or dye from any fuel, or add any substance to the fuel to prevent the chemical marker from being identified	an excise wrongdoing penalty under schedule 41 of Finance Act 2008 the oil and any associated containers and equipment may be seized and forfeited
knowingly or recklessly make a false declaration in a document or statement	an inaccuracy penalty under schedule 24 of Finance Act 2007. Prosecution and, or seizure of goods under section 167 of the Customs and Excise Management Act 1979. If you think you have made a mistake in your declaration you should tell us immediately. We may then reduce or waive the penalty.

11.3 If you disagree with HMRC’s decision

The Finance Act 1994 contains the appeal and review procedures for challenging the following excise decisions:

• the terms offered for restoration of a vehicle, vessel or machine we have seized
• our decision not to restore any vehicle, vessel or machine we have seized
• a civil penalty or civil evasion penalty
• tax assessment of excise duty

The procedures are different depending on what decision or decisions you’re challenging. We’ll give you a decision letter, and tell you what your rights are, if you want to challenge our decision.

Information about challenging HMRC restoration decisions and linked decisions can be found in Notice 12A: what you can do if things are seized.

Further information is available on HMRC’s review and appeal procedures.

11.4 Appeals against the seizure of your machine

The arrangements for challenging the seizure of things liable for forfeiture (rather than HMRC’s decision about whether or not to return them to you) are different from the arrangements on HMRC’s review and appeal procedures.

If you disagree with our decision to seize your vehicle, machine, vessel or appliance, you can appeal in writing to the seizing officer within one month of the seizure date. We must receive your appeal by this deadline.

We must then bring civil (‘condemnation’) proceedings in the courts to determine the matter, and you can challenge the seizure and forfeiture there.

More information on how to challenge the seizure of goods by HMRC can be found in Notice 12A: what you can do if things are seized.

11.5 How to report misuse of rebated fuel

Find out how to report the misuse of rebated fuel.

12. Memorandum of Agreement

Memorandum of Agreement in respect of purposes relating to agriculture (including aquatic farming), horticulture and forestry.

Parties to the agreement

In order to establish clearly understood and easily applied guidelines on the use of machines and vehicles in agriculture (including aquatic farming), horticulture or forestry, the following government departments and agencies, and industry associations, have reached a common position on how legislation shall be interpreted and applied:

• HM Revenue and Customs
• Driver Vehicle Licensing Agency
• National Farmers Union
• National Association of Agricultural Contractors
• Confederation of Forest Industries

The purpose of this Memorandum of Agreement is to provide guidance to those engaged in agriculture, horticulture or forestry, and to agencies enforcing compliance with the legislation.

Where disputes arise, these will continue to be considered on an individual basis with regard to the relevant legislation and any definitive interpretation of the law would remain to be given by the courts.

Scope of agreement

This Memorandum of Agreement is restricted to the use of agricultural and special vehicles and machines by:

• the occupier of the land or the owner of the crop
• a contractor or other person engaged to perform an agricultural, horticultural or forestry operation

The definitions of vehicles and machines covered by this agreement for hydrocarbon oils duty purposes can be found in schedule 1A to the Hydrocarbon Oil Duties Act 1979 (HODA), as amended.

Definitions of agricultural vehicles covered by this agreement for vehicle excise duty purposes can be found in schedule 2 to the Vehicle Excise Registration Act 1994 (VERA), as amended.

When vehicles covered by this agreement are not used on public roads other than for purposes relating to agriculture, horticulture or forestry they are exempt from Vehicle Excise Duty. Other classes of vehicles that are exempt from Vehicle Excise Duty are not covered by this agreement.

Vehicles, machines and appliances covered by this agreement that are being used for purposes relating to agriculture, horticulture or forestry may use rebated gas oil (red diesel).

Meaning of ‘purposes relating to agriculture’

In our view, agriculture is the growing and harvesting of crops, for food, beverages, fodder, fuel, or industrial purposes; or the rearing of animals of any kind for the production of food, wool, leather or other substances. Using a vehicle for ‘purposes relating to agriculture’ includes using it to:

• transport agricultural ‘inputs; such as feed, fertilizer, fence posts, and so on for use on your farm (by ‘your farm’, we mean the farm that you own or manage, but also the farm where you work)
• take your produce and livestock to market or for processing (including slaughter)
• move produce and livestock between your farm and an associated storage facility
• transport material to be used for maintaining or improving your farmland (including drainage pipes)
• transport materials to repair and maintain your farm buildings (other than the farmhouse itself)
• deliver agricultural waste from your farm to a waste tip
• transport vehicles and equipment for use on your farm

Meaning of ‘purposes relating to horticulture’

In our view, horticulture is the cultivation and management of gardens (including vegetable plots, allotments and market gardens, but also flowerbeds, trees, shrubberies and ornamental lawns in public parks). By cultivation and management, we mean growing and tending flowers, lawns, shrubs and trees, and harvesting flowers, fruits and vegetables for food (or animal fodder) and for ornament, as well as treating and enriching the soil and controlling weeds and pests. But, we do not regard as horticulture the landscaping and maintenance of grassy recreational areas, such as playing fields and golf courses, or the grassed areas of parks that are made available for walks, picnics and general recreation. Using a vehicle for purposes relating to horticulture includes using it to:

• travel to and from a place where it will be used for horticulture
• transport trailed or mounted implements to be used for horticulture
• take your horticultural produce to a market or to a place where it is to be sold or processed
• move your horticultural produce between the place where it is grown and an associated storage facility
• deliver horticultural waste from the place of production to a waste tip
• transport horticultural inputs such as seed, fertiliser, pesticides and so on for use in your own garden or in land set aside for horticulture

Meaning of ‘purposes relating to forestry’

In our view, forestry is the upkeep and management of forests including the growing and harvesting of timber and other forestry products. Using a vehicle for purposes relating to forestry includes using it to:

• travel to and from a place where it will be used for forestry
• transport trailed or mounted forestry implements and machinery to and from the place they will be used for forestry
• move timber that you (or your co-worker) have harvested from where it was harvested to the place where it is to be stored, sold or processed

‘Aquatic farming’

The breeding or rearing of creatures and the growing and harvesting of crops or plants are accepted activities whether they take place on land or in water. Therefore, activities accepted as being purposes relating to agriculture and horticulture include equivalent water-based activities involved in pisciculture and aquaculture. This includes the breeding and rearing of fish and other aquatic creatures and the growing of aquatic plants in artificial enclosures such as tanks, ponds, or reservoirs, for food.

Activities accepted as ‘purposes relating to agriculture, horticulture and forestry’

Activities we accept as falling within the definition of agriculture, horticulture or forestry include:

• breeding or rearing of any creature kept for the production of food, wool, skin or for the purpose of its use in the farming of land
• slaughtering any creature reared for the production of food, leather or other substances
• growing or harvesting of crops including cereals, combinable crops, roots, tubers, vegetables, pulses, fruit, nuts, grasses, oilseeds and fungi for food, beverages, fodder, fuel or industrial purposes
• growing or harvesting of flowering or ornamental plants
• growing or harvesting of timber or other forestry products
• upkeep of land used for agriculture, horticulture or forestry, such as using agricultural science, practices and technologies to ensure soil is prepared and conserved for sustainable food production
• renewal, restoration and maintenance of ecosystems and habitats impacted by agriculture, horticulture and forestry, and areas of agricultural land under environmental management schemes
• running or participating in events which provide information and education that benefit agriculture, horticulture or forestry, including taking part in charitable activities that promote these industries

Activities not accepted as falling within the definition of agriculture, horticulture or forestry include:

• the breeding, rearing or keeping of any creature solely for purposes relating to sport or recreation.
• dealing in agricultural, horticultural or forestry products
• the further processing and preparation of agricultural, horticultural or forestry produce, or slaughtered animals, except where this is a necessary part of the agricultural, horticultural or forestry operation to facilitate the handling, storage and transport of them, for example hay baling
• landscaping
• the maintenance of recreational facilities, such as tennis courts, parks, or beaches (but see section 3 of this notice for the rules regarding the use of rebated fuel on golf courses, driving ranges, and on land used by community amateur sports clubs)
• flood protection
• peat or loam extraction
• exploitation of wild animal or plant stocks
• construction of buildings or other structures used for purposes relating to agriculture, horticulture or forestry
• transportation of agricultural, horticultural, or forestry produce, livestock, implements, inputs or waste, other than where this is incidental to an agricultural, horticultural or forestry operation being performed on the land — accepted transportation uses are as set out under this agreement

Subject to restrictions in the definition of the particular type of vehicle in HODA and VERA, vehicles exempt from vehicle excise duty or entitled to use red diesel when used for purposes relating to agriculture, horticulture or forestry may engage in the following activities:

Movement of vehicles and other machinery

This includes:

• travel to and from a place where the vehicle is to be used or has been used for agricultural, horticultural, or forestry purposes
• transport of trailed or mounted agricultural, horticultural or forestry implements, and of equipment or inputs required for the operation of such an implement, as part of an agricultural, horticultural, or forestry operation — this does not include transportation or towing of personal accommodation
• taking agricultural vehicles and trailed or mounted implements, machines or appliances to and from where they are serviced, repaired, inspected or tested, including collection, servicing and return of vehicles and machines by garage operators
• delivery or collection of an agricultural vehicle or machine that has been bought, sold, loaned or hired and is or will be used for agricultural, horticultural or forestry purposes

Movement of vehicles and machines by dealers and others not engaged in agricultural, horticultural or forestry operations in circumstances other than those listed in the previous paragraph, is not covered by this agreement.

Movement of produce and livestock

This includes:

• transportation of agricultural, horticultural or forestry produce within or between different areas of land occupied by the same person
• transportation of livestock within or between different areas of land occupied by the same person
• transport of agricultural, horticultural or forestry produce from the place of production or temporary storage
• transport of livestock to a place where the produce is to be sold or slaughtered

The transportation of produce must be incidental to an agricultural, horticultural or forestry operation. The responsibility is on the person transporting the load to demonstrate that this is the case.

Transportation of produce which requires an operator’s licence may not be accepted as being incidental.

Transportation of produce or livestock by a contractor who was not involved in the agricultural, horticultural or forestry operation, employed by a buyer or any other person solely for that purpose, is not included within this agreement.

Movement of agricultural, horticultural or forestry inputs

Collection of inputs and equipment to be used as part of an agricultural, horticultural or forestry operation, and transport within or between different areas of land occupied by the same person of inputs and equipment to be used as part of an agricultural, horticultural or forestry operation.

This includes:

• hand tools
• fertilisers (including farm produced manures and slurries)
• pesticides
• seed
• animal bedding, feed and water
• fencing materials
• road plans for the repair of unsealed tracks

This does not include:

• household furniture or fittings
• supplies required for domestic use
• organic waste for disposal on agricultural land

Movement of waste

This includes:

• movement of agricultural, horticultural or forestry waste, within and between different parts of land occupied by the same person — the waste should have been produced by the occupier of the land
• transport of agricultural, horticultural or forestry waste by the producer from where the waste was produced to a licensed waste disposal site or to a place where it is to be collected by a licensed waste carrier — this includes inorganic waste such as plastic packaging
• clearing the road after agricultural, horticultural or forestry operations, or cutting hedges and verges

Further examples of purposes relating to agriculture, horticulture and forestry

Working on someone else’s farm

If you are contracted or otherwise engaged to carry out agricultural work at a farm or other land used for agriculture, horticulture or forestry, you are using your tractor for purposes relating to agriculture, horticulture and forestry when:

• driving it to and from the farm (where you are going to use it for the contracted work)
• carrying the materials or equipment that you need to do the work
• removing any produce or waste resulting from the contracted work

Using your tractor to transport agricultural produce

If you were engaged in an agricultural operation such as the growing or harvesting of crops, this purpose and subsequently transporting the produce to where it will be sold or put to its intended use are purposes relating to agriculture.

But, if your involvement is limited only to transporting the crops, we consider the use of the vehicle to be for haulage, not for purposes relating to agriculture.

This would apply to someone contracted, for example, solely to transport crops from an agricultural producer to an anaerobic digestion plant. Such journeys are not considered a purpose relating to agriculture.

Transporting waste material

You may deliver waste material resulting from an agricultural activity on your farm to where it will be disposed of, sold or otherwise processed.

You may also collect waste material for agricultural use on your own farm, or the farm on which you work, or are contracted to carry out agricultural work, for example, spreading fertiliser on fields.

You are not engaged in purposes relating to agriculture if you are only transporting the waste material and you are not engaged in either the agricultural activity that produced it or in which it will be used.

Forestry work

Clearing felled timber is part of forestry harvesting. But you should note that this must be in a forest, or a commercial forestry enterprise. Cutting down trees anywhere else is not forestry work, even if you sell the timber.

Biodiversity conservation, environmental management, and ecological restoration

Land restoration and ecological and conservation projects are accepted as purposes relating to agriculture, horticulture and forestry providing the work is being done to mitigate the impacts of agricultural land use, such as overgrazing, horticulture and forestry on ecosystems and habitats. This includes maintenance of areas of agricultural land under environmental management schemes.

Ditch clearing and drainage

Ditch clearing and drainage, including work carried out by, or on behalf of a risk management authority (as specified in section 6 of the Flood and Water Management Act 2010), is accepted as a purpose relating to agriculture, horticulture or forestry only if the work you do is intended to benefit land used for agricultural purposes (including horticulture and forestry). This means the purpose of the work must, at least in part, be to avoid agricultural land becoming unfit to grow crops or rear livestock on. Any drainage work or flood and coastal erosion management activities that have no agricultural benefit to the land are not purposes relating to agriculture, even if the work takes place on agricultural land.

Working on utilities and infrastructure on or crossing agricultural land

Laying and maintaining utilities such as telephone or electricity cables that cut across agricultural land is a purpose relating to agriculture only if the utilities are installed specifically for the agricultural benefit of the land. Otherwise, the work and filling holes or trenches to repair the land afterwards is part of the work on the utilities is not an allowed activity. However, where it is necessary to bring in a specialist contractor to apply agricultural practices and technologies to ensure the land is properly restored for growing crops or rearing livestock, the contractor’s work is a purpose relating to agriculture.

Gardening businesses

If your business involves the cultivation and maintenance of a garden or gardens, this within the definition of horticulture.

If you work somewhere that is not a garden, such as playing fields, a livery yard, stables, at the side of the road, on someone’s private land, then this is not horticulture and, the vehicle or machine you use is not an ‘excepted’ machine’.

(See the ‘meaning of horticulture’ in the ‘Memorandum of Agreement’.)

Running and participating in agricultural shows, etc

An agricultural show is an outdoor public event demonstrating the skills and exhibiting the equipment, animals and so on, associated with agriculture and animal husbandry.

They are usually held on dedicated showgrounds and hosted in collaboration with several partners to:

• disseminate information on best practice and farming techniques, and the latest farming technology to farmers
• provide a source of information and education about the industry to members of the public
• raise charitable funds, which are used to further these educational aims and support local communities
• sell and showcase produce created from locally farm-grown ingredients

By attending agricultural shows, farmers are likely to receive beneficial farming advice from exchanging ideas.

Besides learning about new innovations, these events provide farmers with the opportunity to meet and ask researchers how different farming technologies can be used to improve productivity, and also how a particular innovation can be applied on their farm.

As these shows are held to provide information and education that benefits agricultural purposes, we accept that running or participating in agricultural shows, or taking part in charitable activities that promote the farming industry, are purposes relating to agriculture.

Similarly, running and participating in events which provide information and education that benefits horticulture or forestry are considered as purposes relating to horticulture or forestry.

Events hosted by a single company to convince farmers that its specific products are the best, or events aimed only at selling agricultural machinery, materials, livestock or produce, such as ‘farmers’ markets’, are not agricultural shows.

However, farmers may use rebated fuel in a qualifying vehicle to transport their produce or livestock to where it will be sold.

Training and tuition

Providing training or tuition in the safe and competent operation of a vehicle or machine that you use for agricultural, horticultural or forestry work is accepted as a purpose relating to agriculture, horticulture or forestry. This does not include where vehicles or machines are used only for training purposes, such as at tractor training centres or driving experience days.

Examples of activities that are not purposes relating to agriculture, horticulture or forestry

Sports fields and recreational areas

Maintenance of grassed areas such as sports fields and recreational areas, is not regarded as horticulture.

Wasteland

Cutting down trees or vegetation on wasteland is not agriculture, horticulture, or forestry work.

Stables, livery yards etc

Keeping animals for sport or recreation is not agriculture. This includes fish farmed or kept only for recreational purposes.

Flood defences

Building or maintaining flood defences is not agriculture.

Service providers — hire companies, dealers, servicing and repair garages, and hauliers

If you are not directly involved in an agricultural activity, for example if you’re:

• a dealer in farm equipment or materials, delivering materials or equipment that a farmer has leased or purchased from you
• lending equipment to a farmer
• a haulier employed to transport animals, produce, goods or equipment to or from a farm

you are not using the vehicle or machinery for purposes relating to agriculture, horticulture and forestry.

Although dealers are not entitled users and must use white diesel for their own uses, if you’re dealing in second-hand equipment of a type used for accepted activities, we will allow traces of marker (relating to use by the previous owner or user) provided you can evidence that you have only fuelled the vehicle or machine with the correct fuel.

If you’re a dealer and you loan a vehicle or machine for the purposes of a demonstration or trial that includes using the machine for accepted purposes, for example to a farmer for agricultural use, the user may use rebated fuel for those purposes. In those circumstances, the vehicle or machine will be treated as used equipment and the previous paragraph will apply to it.

If you’re a garage operator, you can service, maintain, repair, or inspect vehicles and machines that are fuelled with red diesel if the vehicle or machine is otherwise used for accepted purposes. You can also collect and return a vehicle that you work on.

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