Guidance: Excise duty drawback on ship and aircraft oil stores (Excise Notice 172)

1. Overview

1.1 What this notice is about

It explains what drawback of Excise Duty on ships and aircraft stores is. It also explains:

• what you need to do to be eligible to claim drawback
• how to make a claim

1.2 Who should read this notice

This notice is for:

• ship operators and suppliers of oil for use as ship or aircraft stores
• operators and pilots of certain aircraft making foreign flights

If you export excise duty paid oils on a commercial basis, (that is, as cargo), view Excise Notice 207: excise duty drawback

1.3 When you can claim drawback

If you have paid excise duty, you can claim drawback on oils (including oil mixtures) when they are:

1.4 When you cannot claim drawback

You may not claim drawback on the oils or oil mixtures if:

• you do not have to pay excise duty on them
• they carry a nil rate of excise duty (for example, Avtur)

You cannot claim drawback if they have been relieved of excise duty under another scheme such as:

1.5 Drawback of Customs Duty and VAT

You cannot claim drawback on Customs Duty and VAT. You might be entitled to relief from Customs Duty in some circumstances. Find out more from:

1.6 The law covering this notice

UK law:

• The Hydrocarbon Oil Duties Act 1979, section 15
• The Customs and Excise Management Act 1979, sections 61, and 132 – 137
• The Excise Goods (Drawback) Regulations 1995 (SI 1995 No 1046)
• The Revenue Traders (Accounts and Records) Regulations 1992 (SI 1992 No 3150 as amended)

1.7 Health and Safety

You must follow all health and safety legislation, such as the Health and Safety at Work Act 1974.

You may need to display warning notices and issue health and safety instructions to staff and visitors. If you handle, inspect or sample drawback goods you must issue:

2. Claiming drawback

2.1 How to claim drawback

You claim drawback by submitting one of the forms shown below:

In exceptional circumstances, where you are unable to this, please contact the HMRC Excise Helpline for advice.

2.1.1 Ships

If you’re drawing back the excise duty paid on heated heavy oils, you need to make your claim in standard litres. A standard litre is a litre of oil at a temperature of 15°C and a pressure of 1013.25 millibars.

You may need to:

• calculate the volume from weight
• convert litres to standard litres

To work out the density and temperature, use a method recommended by the:

• Institute of Petroleum
• Standardisation of Tar Products Tests Committee

We cannot accept claims based on notional factors. We recommend using tables from the:

• American Society for Testing Materials
• Institute of Petroleum

2.1.2 Aircraft

If you’re making a claim for light oil, you should submit your claim on the same basis that the duty was charged.

2.2 Reason for rejecting a claim

A claim will not be processed, and will be returned to you if:

• you have not converted to litres
• it does not have an original signature
• we received it outside the time limits (see paragraph 2.3)
• the claim is incomplete

Remember when you claim excise duty drawback, you cannot claim:

• before you pay the duty
• more duty than you originally paid
• if you’re claiming duty relief under any other scheme
• for any part of a journey within the UK before you leave for a destination outside it
• on any flight where the aircraft does not land abroad

2.3 Time limits for making claims

If an event triggers a drawback claim (such as export or destruction) you must claim within:

• 3 years of the date you originally paid that duty
• 2 years of the date of the event giving rise to the claim

We cannot pay claims submitted outside these time limits.

2.4 If you export duty paid oils as stores

You do not need to tell HMRC that you intend to do this. A ‘Notice to pack’ is not required. We may inspect, sample, and test oil.

3. Evidence for claiming drawback

3.1 Information your supplier should provide

For each consignment you receive, your supplier should provide you with:

• accurate statements of the proportion of duty paid oil
• the rate of duty they paid

3.2 If you manufacture or deal in oil

For each consignment that you send out, you should supply your customers with accurate statements of the proportion of duty paid oil, and the rate of duty that was paid.

If you’re claiming drawback, you must keep detailed records of the receipt and use of mineral oil. Your records must show the:

• name and address of the person who sold the oil to you
• description of the oil
• quantities used

3.3 Provide evidence of loading or shipment

If you are using oils as stores you will need the following evidence.

You need an order which must show that the:

• ship, or aircraft, is entitled to duty free stores for the journey in question
• owner, master, commander, or duly authorised agent of that craft placed the order

You need a receipt which must:

• be signed by a responsible officer
• be validated by the ship’s stamp or other agreed form of authentication
• carry a statement confirming you’re entitled to duty free stores (normally a pre-printed statement on the delivery note)

You’ll need invoices and delivery notes.

Use these as supporting evidence (where possible) if you’re submitting individual claims on form HO60. We’ll only return them to you if you request it.

3.4 If the duty rates changes

This will normally happen at Budget time, and you can then choose one of two options:

(a) Keep separate physical stocks and records, clearly showing which duty rate was paid upon which stocks. Your claims must clearly state which rate is being used.

(b) Maintain a ‘stock exhaustion account’. This should show the volume of oil held at Budget time. You should submit drawback claims at the pre-Budget rate until that oil stock has been exhausted. Your claims should clearly show the duty rate used.

If the excise duty rate reduces, you must claim at the lower rate of excise duty, after the date the lower rate comes into force.

3.5 Records you should keep

As a revenue trader, you must follow the Revenue Trader (Accounts and Record) Regulations 1992. More information is in Excise Notice 206: revenue trader’s records). As a drawback trader, you must be able to show that the oils:

• had excise duty applied at the rate claimed
• have been loaded as stores
• will not be subject to a claim for relief of excise duty under any other scheme

You must keep your records for at least 6 years. If this causes you problems, speak to an HMRC officer. You may keep your records:

• on microfilm or microfiche, so long as they are legible, and you provide the necessary facilities to read the records
• on a computer

Our auditing officers will need access to the appropriate technical documentation at the time of their visit.

4. Conditions that restrict entitlement to drawback

4.1 Ships and ships stores

Commercial vessels are entitled to claim drawback on ships stores in certain circumstances. They must be:

• not less than 40 tons net register tonnage (NRT)
• leaving the UK for a port outside of the UK
• leaving the UK for an area of open sea outside of the ‘box’ (the seas bounded by the latitudes 48°30’N and 61°1’N and longitude 12°0’W, the skagerrak and the kattegat)
• tugs of less than 40 tons NRT, but not less than 200 tons gross, leaving the UK for a port outside of the UK

Pleasure craft may not claim drawback on mineral oils shipped as stores unless they’re departing on a voyage outside of home trade limits that is, south of Brest, or north of the north bank of the Elbe.

4.2 Aircraft stores

You may not claim drawback on the oils consumed on any flight where the aircraft does not land abroad. You may only claim either the:

• lower of the tank capacity of the aircraft
• amount of fuel for which you have evidence of loading since your last arrival from foreign

5. Dealing with HMRC

5.1 Visits by HMRC

HMRC officers will deal with you courteously. They will endeavour to give you any help that you need to meet your obligations to the department. The advice that they give you will be the same that they would give to any other business in the same situation. They will not discuss your business, duty, or tax affairs with anyone else.

Our officers will make appointments to verify your records. We ask you to have all your relevant records available at the time of the visit.

5.2 Officers powers

Our officers may:

• at any reasonable time, enter premises used in connection with the carrying on of a business (Customs and Excise Management Act 1979)
• inspect, sample, examine, and, test oils (Hydrocarbon Oil Regulations 1973)
• ask you to produce your business records
• remove or take of copies of those records (Revenue Trader (Accounts and Records) Regulations 1992)

5.3 Penalties

You could be liable to financial penalties, imprisonment or loss of the drawback involved, if you:

• obtain, or attempt to obtain, drawback in excess of the amount due
• make or sign, or cause to be made or signed, a declaration relating to the drawback, which is untrue in any material particular

Additionally if you obstruct, hinder, molest, or assault an officer in the course of their duty then you may be liable to:

• an unlimited fine
• up to 2 years imprisonment
• both

Your rights and obligations

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

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