February 13 2014.

The UK and Ireland governments are to bring in a new product to mark rebated fuels, including the off-road diesel commonly known in the UK as ‘red diesel’, in a move that will boost both countries’ fight against illegal fuel laundering.

The marker will help HM Revenue and Customs (HMRC) and the Irish Revenue Commissioners tackle the criminal market in off-road diesel, marked with a red dye in the UK and green in Ireland, and also kerosene primarily used for heating oil. Excise duty on rebated diesel is charged at a lower rate than standard fuel duty.

The new marker will make rebated fuel much harder for fraudsters to ‘launder’ (i.e. remove the marker from it) and sell on at a profit.

The use of illicit diesel is estimated to be 12-13 per cent of the market share in Northern Ireland and about two per cent in the rest of the UK.

Rebated fuel use is strictly limited to specific circumstances, primarily in agriculture, construction and heating.

Nicky Morgan, Economic Secretary to the Treasury, said: “I am delighted that our two countries have come together to fight the shared problem of illicit fuel. At a time when the government’s priority is cutting the deficit, it is unacceptable that criminals are cheating the system. The government has invested nearly £1 billion in HMRC to tackle avoidance, evasion and fraud.

“Using illicit fuel is not a victimless crime; it robs the government of tax revenue that is used to fund vital public services and puts those businesses that follow the rules at a commercial disadvantage. It also has a severe environmental impact, with considerable clean-up costs for local councils. So we are boosting HMRC’s fight against this fraud by introducing a more robust marker to ensure it is far harder to remove.”