Guidance: Aviation turbine fuel (Excise Notice 179a)

Parts of this notice may have force of law. These are identified at the relevant places in the notice.

1. Overview

1.1 Information in this notice

This notice explains the rules governing the supply and use of aviation turbine fuels (Avtur). Other aircraft fuels such as aviation gasoline (Avgas) are light hydrocarbon oils, which are not covered by this notice.
This notice has been updated as a result of the UK leaving the EU.

1.2 Who should read this notice

This notice is for anyone involved in the import, production, sale, storage and movement of Avtur including end users.

1.3 The law covering this notice

Primary legislation
The Hydrocarbon Oil Duties Act 1979 (HODA)
The Finance Act 2002
The Customs and Excise Management Act 1979 (CEMA)

Secondary legislation
The Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations 2002 (SI 2002/3057)
The Hydrocarbon Oil (Marking) Regulations 2002 (SI 2002/1773)
The Hydrocarbon Oil (Registered Remote Markers) Regulations 2005 (SI 2005/3472)

1.4 Definition of aviation turbine fuels (commonly known as Avtur, Aviation kerosene, Jet A1, ATK)

Aviation turbine fuels are heavy hydrocarbon oils defined for excise purposes as ‘kerosene’ (see Motor and heating fuels: general information and accounting for Excise Duty and VAT (Excise Notice 179) for definitions).

They are controlled oils as defined in Section 27 (1) of HODA which are intended for use as fuel for aircraft engines and are delivered for that purpose. This means they are included within the Registered Dealers in Controlled Oils (RDCO) scheme.

In this notice, aviation turbine kerosene is referred to as ‘Avtur’.

1.5 Duty rate for Avtur

Unmarked kerosene should not be used as road fuel. If it is marked it may be used off-road at a rebated rate of duty, or for heating, when the duty rate is nil.

For quality and safety reasons, Avtur is subject to a general marking waiver, is fully rebated, and has a nil rate of duty.

Avtur is only fully rebated if all suppliers and final users comply with the requirements set out in this notice.

1.6 Avtur and the RDCO scheme

We do not currently require returns to be submitted by Avtur RDCO dealers.

However, you must still fulfil your legal requirements under the scheme, such as customer checks and record keeping requirements, which are designed to minimise the potential for misuse of Avtur. See section 4 for more on RDCO obligations.

1.7 VAT liability for Avtur used on flights within the UK

Supplies of Avtur for commercial flights within the UK and all private flights are normally liable to VAT at the standard rate. See section 6 of Fuel and Power (VAT Notice 701/19) for further details.

For further information regarding VAT liability, see the section dealing with aircraft stores in Goods exported from the UK (VAT Notice 703).

Find rates of duty and VAT.

2. Storage and delivery of Avtur

2.1 Storing Avtur in an excise or tax warehouse

Avtur can be stored in an excise or tax warehouse. It’s subject to the same rules and regulations as other oils put into warehouse. See Motor and Heating Fuels: General Information and Accounting for Excise Duty and VAT (Excise Notice 179) for more information.

2.2 Rules regarding the supply of Avtur

Avtur must be used as aircraft fuel, and not as any other kind of fuel, to qualify for the marking waiver and full rebate. Avtur should not be used for purposes which do not involve combustion of the oil (for example, calibration of fuel systems).

If Avtur is used for meter calibration it should be returned to Avtur stock for ultimate delivery to aircraft.

Whenever you make a supply of Avtur, you must state on your commercial delivery note:

‘Delivered fully rebated as fuel for aircraft engines only. HMRC permission must be obtained before diversion to alternative use’.

If you make or sign, or cause to be made or signed, a declaration that is untrue in any way then you could be liable to the following:

• financial penalties
• imprisonment
• loss of the rebate of excise duty, or an amount equivalent to the rebate of excise duty involved

2.3 Where Avtur can be delivered

Avtur may be delivered:

• to a duty-suspended installation or to a Registered Consignee at import (Northern Ireland only)
• to an export warehouse
• to dedicated Avtur storage tanks (usually at airfields) — see paragraph 2.6
• for use in the design, testing, repair or maintenance of aircraft engines
• to armed forces for use in military aircraft
• direct to aircraft
• to an end user if you have evidence of use in an aircraft

UK-produced Avtur can be delivered:

• to an export warehouse
• to dedicated Avtur storage tanks (usually at airfields) — see paragraph 2.6
• for use in the design, testing, repair or maintenance of aircraft engines
• to armed forces for use in military aircraft
• direct to aircraft
• to another Avtur RDCO, or an end user if you have evidence of use in an aircraft

Avtur is a finished product which has a nil rate of duty on delivery to home use. Like other finished products, it does not usually travel under duty suspension between UK warehouses. Movements of Avtur do not require an accompanying W8 form. However, where Avtur has been warehoused for excise duty purposes it may be delivered to an export warehouse under duty suspension. In these circumstances the W8 duty suspension movement procedures will apply.

2.4 Redesignation of Avtur as marked kerosene

In exceptional circumstances we may allow kerosene delivered as Avtur (that is, unmarked and fully rebated) by cross-country pipeline to be marked and redesignated as marked kerosene. See also Motor and Heating Fuels: General Information and Accounting for Excise Duty and VAT (Excise Notice 179), paragraphs 7.12 and 8.13.4. This is intended to be a temporary measure solely to overcome significant and unforeseen operational problems. Normally, such product should instead be delivered as unmarked kerosene, duty should be paid at the unrebated rate, and the rebate should be claimed when the product has been marked at a Registered Remote Marker’s premises at its destination.

You must obtain HMRC authority before using this exceptional concession. If a large business you should contact your Customer Compliance Manager (CCM) or telephone our Imports and Exports helpline. You will need to satisfy us there’s a temporary operational need for this facility, and must make sure that the limits of the concession are not breached.

2.5 Physical security at Avtur distribution and remote marking premises

Avtur storage and distribution sites, and Registered Remote Markers’ premises, are controlled by the occupiers without our continuous supervision. The level of physical security at such installations should be sufficient to guard against illicit removal of goods. Appropriate control must be exercised over goods, persons and vehicles, entering and leaving such premises.

Dealers in Avtur, anyone handling product on their behalf and any other third parties must be able to demonstrate to us that they have procedures in place, which ensure:

• the safe custody of Avtur — a controlled oil — in their charge
• that all persons employed at, or using, the premises are aware that the installation may contain controlled oil
• that all persons understand that any unauthorised removal of controlled oil, or action which avoids the proper charge of duty, is a revenue offence

Details of appropriate warning notices are shown in Motor and heating fuels general information and accounting for Excise Duty and VAT (Excise Notice 179), Appendix C.

2.6 Avtur storage tanks

These must be:

• fixed at a distribution site approved by us
• at an airfield, for delivery to an aircraft
• for transport to either of the above or directly to an aircraft, to be approved by us, and with conditions set by us
• clearly labelled for use as Avtur

3. Parts of the RDCO scheme that apply when trading in Avtur

3.1 Applying for approval as an RDCO

You must be approved by us as an RDCO before you deal in Avtur. You must also make sure that Avtur is supplied only to other dealers who are approved as RDCOs or to legitimate end users.

If you’re an Avtur dealer, you do not need to submit RDCO returns.

See paragraph 3.4 below for Avtur dealers who do not need to apply for approval.

3.2 If you’re already an RDCO

If you’re already registered as an RDCO and you also deal in Avtur, you will be required to submit an additional HO4 application form stating that you’re an Avtur dealer. You can get this form by contacting the Excise Processing Team.

You will also have to provide details of the trading names and premises that you use for your Avtur business. You will retain the same RDCO approval number and will not be required to include Avtur transactions on your monthly RDCO return (Form HO5).

3.3 How to apply for approval

If you deal in Avtur and you’re not currently registered under the RDCO scheme, you will need to apply for approval. You should complete form HO4.

3.4 Who does not need to apply

Sales at the wing tip

All businesses involved in the supply of Avtur from importation or refining through to delivery to the aircraft are included within the RDCO scheme. However, occasionally ownership of the Avtur changes at the point of delivery or loading onto the aircraft — often referred to as ‘at the wing tip’ or as ‘flash sales’. An example would be where a UK supplier of Avtur delivers fuel to an aircraft, but at the wing tip — point of delivery — sells the fuel to an agent acting on behalf of the airline. The agent then makes the final supply to the airline.

As this type of transaction takes place on or after delivery to the aircraft, currently we’ll not seek to include you within the RDCO scheme if you’re one of these agents.

End users

The RDCO scheme does not include end users of Avtur, although end users have an obligation to make sure the correct treatment of any Avtur not used as aircraft fuel. Section 7 of this notice has more information.

3.5 What we’ll do with your application

When we receive your application we’ll check it has been completed correctly and in full. If it’s incomplete, or is in any way unclear, we’ll ask you to supply the missing particulars or clarification. We’ll not progress your application until that has been done.

After that, assuming there’s nothing in your application to justify refusing your approval outright, we’ll carry out checks to satisfy ourselves that the information you have given is full and accurate and that you’re suitable for approval. These will involve checks of our records and, in the case of a company, are likely to include checks with Companies House. They may include checks with other government departments and agencies, and with credit rating providers.

Our checks will usually include a visit to you, during which we’ll look at your premises and everything you do there. We’ll ask you for details about (but not limited to) your suppliers, customers, business plans, accounting and stock control systems, premises suitability and security and financial viability.

If we find that the information you have given to us is untrue or incomplete in any important aspect, your approval may be denied.

Should these checks not provide sufficient assurance that the business is suitable for approval, further information may be requested. Your application will be put on hold until that information is received and checked.

3.6 Fit and proper test

We’ll only approve your application if we’re satisfied that you’re fit and proper to deal in controlled oils. This means we must be satisfied the business is genuine and that all persons with an important role or interest in it are law abiding, responsible, and qualified.

a) We’ll only approve you if you satisfy us that:

• the business is genuine and commercially viable
• the relevant premises are (or will be) secure and suitable
• appropriate control will be exercised over the product, persons and vehicles entering and leaving the premises
• all rebated fuel supplied at or from your premises will be accurately measured and recorded
• your accounting and stock control systems will be adequate
• you will provide safe and secure access for our officers to all parts of your premises
• you will be able to meet the obligations described in paragraph 4.1

b) We’re very unlikely to give approval if the business, or the applicant, or anyone with an important role or interest in the business has:

• any unspent criminal convictions for any offence of dishonesty or for any offence linked to terrorism or organised crime (an ‘unspent’ conviction is one that has not expired under the terms of the Rehabilitation of Offenders Act 1974)
• previously had their RDCO registration revoked
• previously had their application for approval as an RDCO refused
• been involved in fuel-laundering, and we’ll consider that to be the case where they are linked to:-
  • seizures of laundering equipment
  • premises on which laundered fuel (or unlawfully mixed fuel) has been found
  • premises from which laundered fuel (or rebated or other blend of fuel) has been supplied
  • deliveries of rebated fuel to places where laundering or unlawful mixing has taken place
• had oil or vehicles or any other revenue goods seized from them
• a history of fraudulent behaviour, including misrepresentation or identity theft

c) In addition, we’re unlikely to approve an applicant if they, or any person with an important role in the business:

• is an undischarged bankrupt
• is the subject of an undischarged sequestration order
• has been subject to a confiscation order under the Proceeds of Crime Act 2002
• we have evidence that the applicant, or any person with an important role in the business is associated with known non-compliant persons or fraudulent businesses has:
  • been involved in attacks against or abuse of tax repayment systems
  • a reckless attitude to their tax responsibilities
  • outstanding, unmanaged, HMRC debts or a history of poor payment
  • a poor revenue compliance record (for example poor record-keeping in spite of warnings)

The lists above are not exhaustive. We may refuse to approve you for reasons other than those listed, if we have justifiable reservations about your suitability to deal in controlled oils.

3.7 Granting or refusing approval

If we accept your application, we’ll issue a certificate of approval. You should check the accuracy of the details on the certificate which should be kept in a safe place and made available to our officers on request. Any inaccuracies should be reported to the Mineral Oil Reliefs Centre immediately to the address below.

We’ll only grant an approval for oils for which you have a genuine business need. In addition we’ll only grant approval for premises which we consider suitable to receive and store rebated fuels.

The oils and premises for which you’re approved will be listed on your approval certificate, plus details of any conditions that we have placed on your approval.

If we refuse your application, we’ll inform you in writing and give our reasons. Our letter will also provide details of:

• your rights
• how to request a review of the decision
• how to appeal

You can write or email the HMRC Mineral Oil Reliefs Centre.

3.8 Conditions and restrictions

Where we have concerns regarding certain areas of your business we may grant approval but impose specific conditions or restrictions to address these concerns. We’ll advise you of our decision and outline the condition(s) giving you sufficient time to put systems and processes in place to meet these conditions. Once these concerns have been addressed to our satisfaction, we’ll remove the conditions from the approval. If these concerns have not been addressed fully and to our satisfaction we may revoke your approval. You will be notified of our decision in writing and have the right of appeal.

Where we have imposed restrictions on your approval, these will remain in place until such time your circumstances change, at this point we’ll review the restrictions applied to your approval and advise you accordingly.

3.9 Changes affecting your approval

You must advise the Mineral Oil Reliefs Centre by emailing morc.exciseenquiries@hmrc.gov.uk if any information contained on your RDCO approval letter or in your application form changes. You must notify us of the following changes within 30 days of the change occurring:

a) if the status of your business or the company changes for example:

• a sole proprietor becomes a partnership
• the approved entity is transferred to a business which is not an approved RDCO
• there’s a change in VAT number for the business

You must notify the Mineral Oil Reliefs Centre and complete a new HO4 application form, or

b) If there’s any change in the information provided in your application, for example a change in or addition of:

• directors of the company
• trading name
• premises
• controlled oils

You must notify the Mineral Oil Reliefs Centre and we’ll amend your approval.

However, we’ll not automatically approve the new applicant or amend your approval until we have carried out the checks set out in paragraph 3.5 and are satisfied that the changes do not affect your status under our fit and proper test as detailed in paragraph 3.6.

We’ll notify you of our decision in writing as per paragraph 3.7.

If you’re uncertain whether the change requires a new approval or an amendment you should contact the Mineral Oil Reliefs Centre by email: morc.exciseenquiries@hmrc.gov.uk.

3.10 Time limits on your approval

The approval is open-ended until it’s cancelled either by you, if for example you cease trading or cease dealing in controlled oil, or by us.

3.11 Cancelling your approval

We can cancel your approval either at your request, because you cease dealing in or selling controlled oil, or because we think it necessary, see section 7 for further details.

If you cease to trade in controlled oil, you must inform us immediately and make arrangements to dispose of your stocks of controlled oil within 30 days, see paragraph 3.12.

We’re likely to cancel your approval if:

• it’s considered necessary for the protection of the revenue because, for example, we have evidence that you have been involved in the misuse of controlled oil or excise fraud. In such cases, we may also prosecute you
• in light of any new information that comes to our attention, or that you notify to us, we’re no longer satisfied that you’re fit and proper to hold an RDCO approval as per paragraph 3.6
• you persistently fail to meet the requirements of the scheme as, for example, at paragraph 6.3. However, this is likely to be the final step following a series of warning letters and civil penalties — see section 7

We’ll notify you in writing of our intention to cancel your approval. Subject to the exclusion provisions, you will not be entitled to receive or distribute controlled oils after your approval has been cancelled.

3.12 Disposing of controlled oil stock if your approval is cancelled

Where your approval has been cancelled at your request because you have ceased to deal in controlled oils, you should Deregister from the Registered Dealers in Controlled Oil Scheme online.

You should return it to the Mineral Oil Reliefs Centre.

You’re must give details of how you will dispose of any controlled oils held in stock at the date you ceased to trade. The stock must be disposed of in a manner agreed with the Mineral Oil Reliefs Centre, within 30 days of cessation of your RDCO approval.

If HMRC cancel your approval, you should comply with the instructions given in your cancellation letter.

4. Supplying or selling Avtur

The RDCO scheme was introduced with the aim of identifying and tackling commercial oils fraud. Our aim under the scheme is to work in partnership with honest distributors to improve our control of the supply chain for Avtur and other controlled oils, and to protect the legitimate trade.

We encourage distributors to take sensible and reasonable steps to minimise the chance of Avtur and other controlled oils being obtained by those intent on commercial scale laundering or misuse. The key to success of the scheme is good communication and co-operation between HMRC and business.

4.1 The RDCO obligations when supplying Avtur

This section has force of law under under the Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations 2002 and The Revenue Traders (Accounts and Records) Regulations 1992.

As an RDCO, you must take every reasonable precaution to make sure that your supplies of controlled oil are only to persons who will use that oil as permitted by the law. This is a legal obligation imposed under Regulations 5(3) and 8(2) of the Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations.

If HMRC considers that you have failed in that obligation, they can take enforcement action against you, ranging from a variation of the conditions of your approval, to a warning letter, to (in more serious cases) withdrawal of your approval, civil penalties and even prosecution.

What HMRC regards as reasonable precautions: Your processes and systems

Your management, marketing, business processes and systems (for example, ISO 9000), operating and training procedures and practices must be robust.

You must make clear to your customers what restrictions apply to use of Avtur. Your labelling and marketing of products must be perfectly clear on these points — see the delivery note requirement further down this paragraph.

Checks on your customers

You must carry out appropriate checks on all of your customers and be accountable for all of your supplies to them. Your checks must be sufficient to satisfy you of a customer’s integrity and that they intend to use the oil supplied to them for a lawful purpose.

In addition to the standard checks described in paragraph 4.6 you must consider the following particulars and assess whether they are lawful and consistent with each other, the:

• nature of the customer’s business
• nature of the controlled oil being supplied, aviation kerosene, may be delivered only for use as fuel in aircraft engines
• volumes and frequency of your supply to them
• details of the movement, including the means of transport or collection, the route and the place of delivery
• payment arrangements and conditions

When supplying to another RDCO, you must confirm that they are approved by us to deal in Avtur. If the RDCO is not able to provide evidence of this, you should contact the Mineral Oil Reliefs Centre (MORC) by email to morc.exciseenquiries@hmrc.gov.uk or by phoning our Imports and Exports helpline.

You must make sure your staff are sufficiently trained to recognise and report suspicious matters to us.

If you suspect fraud, you must report your suspicions to us online at Customs, Excise and VAT Fraud reporting.

Delivery note statement

Your delivery notes must bear the following statement:

For all supplies of aviation kerosene: “Delivered duty-free as fuel for aircraft engines only. Permission must be obtained from HMRC before diversion to alternative use”.

There are additional obligations on those who supply Avtur that may be used for private flying. More details on these obligations can be found in paragraph 4.16.

4.2 Recording and keeping information about supplies of Avtur

In addition to the usual accounting records covered in section 9 of this notice, you must also record additional information about Avtur supplies.

The next paragraph has force of law under Regulation 6 of the Revenue Traders (Accounts and Records) Regulations 1992.

You’ll need to record these checks to satisfy us that you’ve carried them out. Paragraph 3.10 has more details.

We’ve reduced the requirements for Avtur compared to those for other RDCO products. For instance, you do not have to submit a return if you only deal in Avtur and no other controlled fuels. The records you must retain will depend upon the nature of the supply.

You must keep the information, set out below, in your normal business records. You do not have to keep it in a central or dedicated file.

Sales	Information to be retained for your records
Sales made to another RDCO approved to deal in Avtur (not to an end user)	name of customer delivery / invoice address customer’s RDCO approval number quantity supplied
All other (bulk) supplies (direct to end user / aircraft)	name of customer customer’s address and postcode invoice address including post code customer’s phone number — see paragraph 4.3 terms of payment if appropriate, delivery address including post code — see paragraph 4.3 if collected, customer’s vehicle registration number quantity supplied delivery note signed by an authorised representative of the airline or aircraft (if direct to an aircraft) aircraft identification number (if direct to an aircraft) copy of document confirming aircraft ownership or use (if supply is not direct to an aircraft)

We may, for control reasons, impose further requirements by way of conditions on the information that you’re required to keep. These conditions will be notified to you in writing. This might include your obligation to check that your customer has suitably secure Avtur storage facilities.

4.3 Provision of information by customers

We recognise that some information will not be relevant to certain customers and so you will not have to provide it. There may also be instances where your customer is unable to readily provide certain information.

Information	Action taken
Phone number	If you do not hold a customer’s phone number as part of your normal business practice, we’ll not insist that you obtain it for our purposes. If a phone number is obtained and this is just a mobile phone number, this should be considered with other indicators under paragraph 4.7 in deciding whether to make a supply.
Post code of delivery	If you’re dealing with a new customer who does not have their postcode readily available, you do not have to insist upon the customer producing it at that time. You should ask the customer to supply it as soon as possible. For new customers, we expect you to hold this information by the time of the third delivery. But where deliveries are irregular we would expect the information to be held earlier than this. Failure to capture this detail within a reasonable period may result in a penalty for failure to exercise your obligations, particularly if you continue to supply.

4.4 Customers who refuse to supply information

This section has force of law under Regulation 6 of the Revenue Traders (Accounts and Records) Regulations 1992.

As an RDCO, you have an obligation when selling or delivering Avtur, and so you must take all reasonable precautions and exercise reasonable care to make sure that you only make supplies to customers who have a legitimate use for that oil.

The failure of customers to give requested information would be reasonable grounds for suspicion that the customer intends to misuse the Avtur. Although it’s your decision whether you make the supply, you should bear in mind that without this information you will not be able to comply with your obligations to us, nor will you be able to undertake checks to satisfy yourself that the customer will not misuse the oil. You may, therefore, leave yourself open to sanctions (see section 7).

4.5 Discharging obligations

Merely recording this information does not discharge your obligations.

Although gathering this information will provide some of the material necessary upon which to make a decision about the legitimacy of the supply, you will still need to make that judgement based upon the indicators outlined in paragraph 4.7 of this notice.

This means that, under Regulation 8 (2) of the RDCO Regulations 2002, you must carry out the checks in paragraph 4.6 appropriate to your supply to satisfy yourself that the customer, and stated use of the Avtur, is legitimate.

4.6 Guidance on the standard checks

There are a number of checks that you probably already undertake in line with CAA requirements and good commercial practice, like credit checks. However, you must perform the following checks to satisfy us that you have taken reasonable steps to make sure the legitimacy of the supply. You should read this in conjunction with paragraph 4.7, which advises you how to identify suspicious end use.

The following section has force of law under the conditions imposed under Regulation 8 (2) of the RDCO Regulations 2002.

When buying, selling, loading, unloading, delivering, moving or holding controlled oil, you must undertake the standard checks outlined in this section.

The standard checks:

Type of Supply	Action to be taken	When?
Supplies made to another approved RDCO	Interrogate our secure internet site to confirm customer details by using HMRCs Online Services or contact our Imports and Exports helpline	If a new customer, check before making supply If a confirmed RDCO and supplies continue, check quarterly to confirm their approval has not been withdrawn If the period between orders is over 3 months, treat as if a new customer
Supplies collected by the customer	Mark the vehicle registration number on the copy load ticket	Every time Avtur is collected from you
All other supplies	Check the oil is not put directly into a road vehicle. Notify us of any suspicions immediately. See also the information requirements in paragraph 4.2.	Every time delivery is made

4.7 Checklist to identify suspicious end use

The following section has force of law under Regulation 8 (2) of the RDCO Regulations 2002.

There are circumstances, especially in combination, which could give rise to suspicion that a customer for rebated fuel may be misusing the product. These circumstances, which have been identified by the industry, are detailed below. If any of these indicators are present when someone orders Avtur from you, you should report the facts to us, under Regulation 9 (2) of the RDCO Regulations 2002, see paragraph 4.10).

In the case of Avtur, you must satisfy us you have taken steps to make sure it’s to be used in an aircraft engine. The following general indicators to help identify suspicious supplies have been drawn up by the Federation of Petroleum Suppliers and endorsed by the United Kingdom Petroleum Industry Association, the Downstream Fuel Association, and the United Kingdom Oil Industry Taxation Committee.

Concerns at the point of ordering

• mobile phone number given as the only point for contact
• new customer with an apparent lack of concern with product price
• customer offers to pay in full prior to delivery as an incentive
• payment to be made in cash, by banker’s draft, by fuel card, or with a cheque from someone else
• sudden large increase in volumes purchased by an established customer or increased frequency of repeat orders
• delivery required into a road tanker, or other temporary storage, or to a number of seemingly unconnected delivery points
• large quantities of Avtur ordered by a transport company
• aggressive or evasive responses to requests for detail

Suspicions should be passed on to delivery staff, by management, for possible confirmation during delivery (but only with caution).

Concerns at the point of delivery

Inappropriate product for the apparent site requirements, such as:

• site occupied by the operator of a fleet of diesel-powered road vehicles, such as taxis or coaches, or subject to frequent visits by such vehicles
• aircraft engine use seems unlikely in context of the evidence at the delivery point
• nervous or unusual behaviour by persons on site, possibly with excessive site security for the type of business
• location known to several drivers (especially those of other companies) or other indications of frequent or multiple deliveries
• delivery required into a tank with a draw-off point at the bottom

Suspicions, or confirmed suspicions, must be reported back to management for action. Under no circumstances should they be made apparent to the customer.

4.8 Reporting your suspicions

If any of the above checks lead you to suspect that customers are not entitled to receive Avtur or are using it for an improper purpose, report the facts to us (see paragraph 4.10, and keep a record of the suspicious circumstances and the action taken.

The following section has force of law under Regulation 9 (2) of the RDCO Regulations 2002.

If you have either a suspicion based on the checks carried out in paragraph 4.6, or you have evidence that the customer is making improper use of the Avtur, by using it as a road fuel, you have a duty as an RDCO to notify us immediately, under conditions imposed by Regulation 9 (2) of the RDCO Regulations 2002.

Based on the checks you have made and the existence of any indicators in paragraph 4.7, you should notify us of the information that you have gathered and the reason for your decision if you decide not to supply.

You’re advised not to supply this customer if you suspect that he does not have a legitimate use for the Avtur, under conditions imposed under Regulation 8 (2) RDCO Regulations 2002, unless we advise you otherwise.

4.9 Cause for concern after supply

When considering whether you have contravened the RDCO regulations or failed to comply with conditions, restrictions or requirements (including any obligations imposed on you in paragraph 4.1), the extent to which you have followed the guidance set out in paragraph 4.6 will be taken into account by HMRC.

Provided that this is not a regular occurrence and you:

• notified us immediately
• obtained the information set out in paragraph 4.2
• undertook the checks set out in paragraph 4.6
• made the supply in good faith

We’ll not hold you liable for any penalties, or other sanctions. However, we may ask you to review your procedures.

4.10 Concerns that the Avtur you have supplied will be misused

This following section has force of law under Regulation 9 (2) of the RDCO Regulations 2002.

If you have any cause for concern that Avtur you have supplied may be misused, you should notify us without delay of the customer name, address, post code and VAT number (if known), and details of the type and quantity of oil supplied.

You should not make any further supplies to that customer until you have carried out the additional checks in paragraph 4.7. If these checks satisfy you that the cause for concern was groundless, you may resume supplies to that customer.

If, however, you still have suspicions about the end use of any Avtur you have supplied, you should contact us immediately.

If you suspect fraud, you must report your suspicions to us online at Customs, Excise and VAT Fraud reporting.

We’ll confirm receipt of any written notification from you, and will provide you with a unique reference number, which you should note in your records.

4.11 Checks carried out by your staff

You’re responsible for your staff and you will need to make sure that they are aware of the checks that they should be carrying out before making the supply. As an added precaution you should consider introducing your own management checks to make sure that your staff are making these checks and are exercising proper judgement in making the supply.

Similarly, if your employees are found to have been in collusion with a fraudulent customer, you’re ultimately responsible for their behaviour. However, providing you notify us immediately you become aware of the situation, we’ll take due regard of the action that you take against the employee, which may include dismissing the employee, or reporting the matter to the police.

4.12 Decisions on liability

It’s not the intention of the scheme to penalise you for genuine mistakes. In considering whether any action against you is appropriate, we’ll take into account your overall compliance with the scheme, the nature of the failing which led to you making the supply, and any other mitigating circumstances.

Where your failings resulted from non-compliance with the scheme, for example, failure to obtain any of the information at paragraph 4.2 or failure to undertake any of the checks set out in paragraph 4.6, we’ll investigate the cause to establish any reasonable excuse. If, however, there are no mitigating circumstances or your failings persist, it’s likely that we’ll take escalating action, such as the issue of warning letters followed by civil penalties. In the most serious cases we may also consider revocation of your RDCO approval.

Section 7 sets out the penalties, sanctions and guarantees.

4.13 Legal proceedings

We may, in exceptional cases take legal proceedings against you. For example, if you were knowingly involved in the supply and misuse of Avtur, we’ll take action against you. To do this, we would need sufficient evidence against you to support a prosecution.

4.14 Customer violence

You must decide whether or not to supply, but we would not want you to put yourself or your staff at risk if there’s any threat of violence. If you do decide to supply, we’ll not hold you liable, providing you notify us immediately.

If you suspect fraud, you must report your suspicions to us online at Customs, Excise and VAT Fraud reporting.

4.15 Supplying a suspicious or fraudulent customer

The (exceptional) circumstances under which we may ask you to make a supply to a suspicious or fraudulent customer to assist us in enforcement action are governed by strict rules. We’ll not routinely ask you to continue making such supplies, nor should you act upon any request from our staff to do so unless you’re in possession of a written agreement.

4.16 Avtur used in private pleasure-flying

The full rate of duty — the heavy oil rate — applies to fuel used for private pleasure-flying. Users of Avtur for private pleasure-flying must pay ‘an amount equal to the rebate’, as ‘duty’, to us.

Suppliers of Avtur must draw the attention of the customer to the requirement to pay us the duty, if they believe that the Avtur being supplied may be used for private pleasure-flying.

You must therefore ask the customer about the intended use of the fuel. If the fuel will be used for private-pleasure flying, you must obtain a signed and dated declaration from the customer to that effect and retain it with your records for our future inspection. If the customer states that it’s not for private pleasure-flying, no declaration is required, but your records must be noted to that effect.

Some supplies will clearly be for commercial purposes, and if you’re a supplier, you will know your regular customers. It’s only if the final use is in doubt, or where the fuel is clearly for pleasure-flying, that you need to ask for a declaration.

Suppliers are not responsible for paying the duty. The user must pay HMRC directly within 30 days of the declaration date.

The wording of the required declaration is:

‘I declare that some or all of the kerosene purchased is to be used for private pleasure-flying. I am aware that, on the quantity of kerosene used for private pleasure-flying, I have a legal obligation to pay to HM Revenue & Customs an amount equal to the rebate allowable on a like quantity of kerosene at the time of this declaration.’

You may decide where to keep this declaration in your records, for example on a sales invoice. Whichever method you adopt, the declaration must be signed and dated by the customer, with their address details. It must also contain your name and address, and the quantity of Avtur supplied.

More information on the supplies of Avtur for private flying can be found in Notice 554: fuel used in private pleasure craft and for private pleasure-flying.

5. Inward Processing Relief for Avtur

5.1 General

For detailed information regarding Inward Processing Relief (IPR) you should refer to Customs special procedures for the Union Customs Code.

There are strict handling, storage, sampling and distribution requirements in relation to Avtur. Avtur is subject to a form of processing other than ‘usual forms of handling’ for the purposes of eligibility for IPR.

Production of Avtur in the UK and EU is insufficient to meet demand, so importations from outside the UK and EU are essential. For this reason, operation of the IPR regime is often an important factor in facilitating business. Applications for IPR approval in respect of Avtur should be made under economic code 01.

Due to the nature of Avtur, and the manner in which it’s stored and distributed, the physical separation of product subject to the IPR regime from product that is not can be impractical. Furthermore, it may not be possible to maintain stock records that differentiate Avtur in free circulation from Avtur which has been declared to IPR. If this is the case it will be necessary for any IPR approval to include authorisation for equivalence — see Customs special procedures for the Union Customs Code (Notice 3001).

5.2 Discharging Avtur from the IPR arrangements

You must retain detailed records of all consignments of Avtur that are declared to the IPR regime on importation. To discharge your liability, you must dispose of IPR goods in an eligible manner. In the case of Avtur this will usually be achieved by transferring it for use as fuel on foreign going flights. Supplies for use on flights solely within the UK are not eligible.

It’s essential that you’re able to monitor and control the volumes of product that are subject to the regime. To discharge your IPR obligations, you must be able to demonstrate that the volume of IPR Avtur, or equivalent free circulation Avtur, loaded onto foreign going flights, equals or exceeds the volume declared to IPR on importation during a given throughput period.

You will require evidence of eligible deliveries in the form of commercial documentation, which must be sufficient to provide an audit trail confirming the receipt of the Avtur as fuel aboard foreign going aircraft. Unless otherwise agreed in writing with HMRC, commercial documents used to supply the fuel must clearly state the IPR approval holder’s authorisation number, the quantity of fuel, the aircraft flight number and destination. The authorisation holder should also obtain a stamped receipt from the aircraft operator. The exact form of evidence required will be considered during the application process and stipulated on your authorisation.

6. Avtur not used as fuel for aircraft engines

6.1 Other purposes Avtur can be used for

Avtur can be used for other purposes, but if it’s to be used or disposed of other than as fuel for aircraft engines, or disposed of because it has been rejected for use as aircraft fuel (because, for example it has become contaminated or accidentally mixed), then in either case the oil is no longer classed as Avtur but is now unmarked kerosene.

You must get authorisation from HMRC before using Avtur for other purposes. We will only give authorisation in exceptional circumstances.

If we do authorise you to use Avtur for other purposes, then one of the following will apply:

Dealers approved for deferment of oils excise duty may account for duty on Form HO10. Otherwise duty should be paid immediately on Form W50 to the National Warrant Processing Unit at the Excise Processing Team

6.2 Refunds of duty on rejected Avtur

If the full rate of duty has previously been paid on rejected Avtur before any marking takes place, a refund of the duty can be applied for after marking. However, if Avtur is returned to duty suspension or to the premises of a Registered Remote Marker (RRM), there will be no duty credit as the original delivery would have been at the fully rebated (nil) duty rate.

6.3 Penalties if Avtur is used or disposed of other than as fuel for aircraft engines

Apply in writing if you have a requirement to use or disposal of Avtur as outlined above. You need to demonstrate your need and then, if authorised, we’ll provide written permission and instructions on how to repay the duty. You should write to:

Email: oils.policy@hmrc.gov.uk

If this is not done, the full rate of duty may have to be paid and penalties may also be appropriate.

If in doubt about what you need to do, please contact our Imports and Exports helpline.

7. Sanctions and penalties

7.1 General

This section has force of law under the Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations 2002 and The Revenue Traders (Accounts and Records) Regulations 1992.

We have the power to take action against you as explained in paragraphs 7.3, 7.4 and 7.5.

Our priority is that you understand your obligations and are able to comply with them, and wherever appropriate we’ll assist you to do so. However, we’ll take all circumstances into account in determining the appropriate response to non-compliance, and we have the power to take action against you as explained in paragraphs 7.3, 7.4 and 7.5.

The sanctions and penalties in paragraphs 7.3, 7.4, and 7.5 will be applied in an escalating scale of action against you, depending on the nature of the contravention. In the majority of cases we would expect that the lesser sanctions will have the effect of improving compliance, and that withdrawal of approval would be the exception rather than the rule. The action we’ll take is:

Stage	Sanction
1	Warning letters
2	Civil penalties
3	Withdrawal of approval

All of these stages will be well documented and we’ll give you written notification at each stage. If you feel that you have a ‘reasonable excuse’ for any particular failing, you should make your case in writing and we’ll take it into account in deciding whether the sanction should be maintained.

7.2 Advice and guidance

Where we consider it’s appropriate and will be beneficial in improving compliance, we’ll offer advice to help you get things right before we consider taking any further action over a failure to comply with our requirements.

7.3 Warning letters

These will be issued where our advice has failed to resolve non-compliance or where we consider that advice is not the appropriate response, depending on the circumstances. If warning letters fail to resolve the non-compliance, we may proceed to civil penalties and, ultimately, withdrawal of approval.

7.4 Civil penalties

The penalties available to us are civil penalties of £250 for each contravention including, where appropriate, daily penalties of £20. Daily penalties will be applied from the 46th day after the original penalty was imposed if it remains unpaid.

Situations where such penalties may be imposed include failure to:

• render returns by the due date
• make complete and accurate returns

We recommend that you obtain and retain proof of postage when submitting your return.

There’s also a penalty for wrongdoing — such as knowingly supplying rebated fuel for road use, or putting controlled oil into a road vehicle.

This can be up to 100% of the duty due.

7.5 Withdrawal of approval

This situation is likely to arise where we’re not satisfied, or are no longer satisfied, that you’re a suitable person to be approved — see paragraph 3.6. Any decision to revoke an approval will not be taken lightly and will be fully supported by written evidence. In such cases, we’ll set out our reasons for refusing or revoking your approval in a letter.

7.6 Appeals

The above sanctions are subject to the appeal provisions contained in the Finance Act 1994. If we impose any of these sanctions we’ll offer you a review and tell you about your right of appeal.

If you disagree with the decision, you may either accept the review offer or appeal to the independent tribunal. If you accept the review offer, but do not agree with the review conclusion you will still be able to appeal to the independent tribunal.

Disagree with a tax decision

7.7 Assessments to the repayment of rebate

We have the power to issue a revenue assessment to any person who:

• uses Avtur in a road vehicle
• is the person liable for the oil being taken into a road vehicle

Providing you, as a dealer, are not involved in this fraudulent misuse of Avtur, you will not be liable for the duty involved. Consequently, we would not seek recovery of duty from you. This applies even where you may have failed to carry out any checks, although in cases of such negligence you may render yourself liable to other sanctions such as a civil penalty or ultimately withdrawal of approval.

This will be established by reference to your compliance with the requirements of this notice.

7.8 Criminal proceedings

If you’re involved in fraudulent activity in contravention of any of the relevant legislation, we’ll seek to prosecute. The extent of the evidence available will determine such action. Such proceedings may also seek to recover from you a repayment of the rebate of duty. There are severe penalties for fraud, unlimited fines, and up to seven years imprisonment.

8. Accounts and records

8.1 Accounting records that must be kept

If you supply or use Avtur, you must keep suitable stock and commercial records and make them available at our request. You must also show in your records how you have disposed of the fuel, for example:

• to other suppliers or users
• as fuel for your own aircraft engines
• for other purposes (but see section 6)

Paragraph 8.3 outlines the records that you must keep.

8.2 Units of quantity to use

You should normally declare the quantities in standard (at 15°C) litres. However, there are relaxations that may apply (see Appendix H of Motor and heating fuels general information and accounting for Excise Duty and VAT (Excise Notice 179)).

8.3 Information required

You will need to keep the information referred to in section 4, in particular the details of customers you have supplied and the checks that you have carried out (paragraph 4.6) and declarations obtained (paragraph 4.16).

The following particulars are normally to be included:

(a) Receipts and deliveries

• date and movement
• name and address of the consignor and consignee
• identifying particulars of the carrying ship or vehicle
• quantity and description of the oil
• distinguishing marks and numbers of the vessels or places where the oil is stored (receipts only)

(b) Usage

• date of use
• quantity of oil used
• any losses in transit

(c) Avtur destroyed

• date of destruction
• place and manner of destruction
• quantity and description of the oil
• whether the oil has been returned after delivery duty paid

(d) Oil marked

The accounts required are detailed in Motor and heating fuels general information and accounting for Excise Duty and VAT (Excise Notice 179) section 8, but are reproduced below.

• the quantities of marker, or composite solutions, received, and details of the supplier(s)
• the quantities of marker, or composite solutions, added each day to the Avtur
• details of the actual stocks of marker or composite solution held at the premises at the end of each calendar month, and at any time that our officer may require

8.4 How long to keep your records

You must normally keep your business records for six years. If this causes problems, ask either your CCM or our Imports and Exports helpline if you can keep some of your records for a shorter period. You must get our agreement before destroying any of your relevant business records that are less than six years old.

8.5 Keeping paper records

You can keep your records on paper, electronically or on microfilm or microfiche provided the records are legible and you provide the necessary facilities to read the records. You can also keep your records on a computer. Our officers will need to see the appropriate technical documentation as part of their visit.

9. Dealing with HMRC

9.1 What can be expected from HMRC

We’ll normally make an appointment to see you, and will try to make our visit with as little disruption to your business as is possible.

When we make our appointment we’ll tell you:

• who we want to see
• what records we want to see
• how long we think the visit will take

You can find out more detailed information about how we visit businesses in Factsheet CC/FS1a general information about compliance checks (PDF 306K).

9.2 What HMRC expect from you

We expect you to maintain your records in good order and allow our officers entry to your premises. We also expect you to have a duty of care to the taxpayer as well as to your customers. It would be helpful if you let us know if you believe oil is being misused. If you have any information you can contact the Customs Hotline on Telephone: 0800 595 000.

9.3 Health and Safety

You must comply with all the legal provisions relating to health and safety, such as the Health and Safety at Work Act 1974. These provisions may include the need to display warning notices, and to issue health and safety instructions, to both staff and visitors.

If you issue special equipment, or protective clothing, to your staff when they are undertaking activities such as handling, inspecting, or sampling oils, then you must provide similar clothing and equipment to our officers when they undertake the same activities.

9.4 Powers of HMRC officers

Our officers may:

• at any reasonable time enter premises or a part of a dwelling used in connection with the carrying on of a business (Customs and Excise Management Act 1979)
• enter and inspect any entered or approved premises and any vehicle on those premises (Hydrocarbon Oil Regulations 1973 s47)
• inspect, sample, examine, and, test oils(Hydrocarbon Oil Regulations 1973)
• require the production of your business records, and remove or take copies of those records (Revenue Trader (Accounts and Records) Regulations 1992)

If you obstruct, hinder, molest, or assault an officer in the course of their duty then you may be liable to either an unlimited fine, up to two years imprisonment or both.

10. Warning notices to be displayed at duty-suspended mineral oil installations and remote marking premises

10.1 Duty-suspended installations

HMRC previously referred to duty-suspended installations as bonded installations. Existing warning notices, which refer to ‘bonded installations’ will continue to fulfil the requirements of this notice. Any replacement(s) of existing notices should comply with the revised wording below.

Warehouse keepers and producers must make sure that sufficient warning notices in bold format are prominently displayed in such a way that all employees, carriers or visitors cannot fail to see them. The following notice is acceptable:

10.2 Registered Remote Markers (RRMs)

Operators should display warning notices in such a manner that all employees, carriers or visitors cannot fail to see them. The notices are to be in bold format and in the following text:

10.3 Reporting suspicious transactions

The minimum checks necessary to discharge your obligations in the supply of controlled oil are set out in paragraph 4.6. On occasion, despite the precaution of standard checks being followed there will be circumstances (especially in combination), which could give rise to suspicion that a customer may be misusing the product. These circumstances, which have been identified by the industry, are detailed in paragraph 4.7 of this notice.

If you have any suspicions about a customer to whom you have supplied oil you should notify us as soon as possible using our online service at Customs, Excise and VAT Fraud reporting.

Include the following information when notifying us of suspicious transactions:

• date of supply
• customer name
• VAT registration (where known)
• delivery address
• vehicle registration (if product collected)
• type of oil
• quantity supplied
• reason for suspicion

Your rights and obligations

Read Your Charter to find out what you can expect from HMRC and what we expect from you.

Help us improve this notice

If you have any feedback about this notice email: customerexperience.indirecttaxes@hmrc.gov.uk.

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If you need general help with this notice you should contact our Imports and Exports helpline.

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