Firstly, in order to use red diesel, the vehicle must be one which is specifically excluded from the legal definition of "road vehicle" in the Vehicle Excise Registration Act 1994. This class of "exempted vehicles" includes the majority of agricultural machinery such as tractors and diggers. However it also covers quad bikes and limited use vehicles (as long as they are registered as such) and the vehicles in question must be used for agricultural, horticultural or forestry purposes - this also includes gritting and snow clearance on public roads.
Use for agricultural contracting is also permitted, although the vehicle has to be used as part of the agricultural operation of the contractor.
In terms of enforcement, HMRC officers have the power to:
- Examine any vehicle and its fuel;
- Require the vehicle’s owner or driver to open the fuel tank for inspection;
- Require the vehicle’s owner to produce documentation relating to the vehicle;
- Enter and inspect any premises, apart from private houses, to inspect, test and sample fuel; and
- Ask anybody concerned with the sale, purchase or disposal of rebated fuel for their documentation.
The penalties for using red diesel illegally can be severe. Vehicles found to be using rebated fuel illegally may be seized by the authorities. The vehicle’s owner will then have to pay a fee for the vehicle’s release, which would include a penalty for the offences (up to a £250 fine for each offence), along with an amount to cover the duty owed.
Serious offences may result in the issue of an unlimited fine to the operator and a prison sentence of up to two years.
For further information please contact our Agricultural and Rural Property Team.