READ ON TO FIND OUT HOW THE END OF DEROGATION WILL EFFECT NARROWBOAT USERS:-

Charging duty and VAT for narrowboats

The following is an illustration /example of a calculation of duty and VAT under the new arrangements. It is intended to be an illustration only. The proportion split between propulsion and domestic usage will vary.

HMRC have confirmed that VAT is charged at the reduced rate of 5% on fuel for propulsion and domestic use.

This example assumes a 60% (propulsion) and 40% (domestic) split for a purchase of 100 litres of red diesel (the price of diesel is assumed to be 0.86ppl which includes 9.69ppl duty already paid to fuel supplier):
  

Responsibilities of the narrowboat fuel purchaser

It is the responsibility of the fuel purchaser to make a declaration in writing about the amount of fuel being purchased for propulsion. A simple declaration that incorporates the following wording will be required.

“I declare that 60% of the fuel purchased will be used for propelling a private pleasure craft”.

HMRC is aware that accounting methods and systems can vary from supplier to supplier, for example, some may wish to print the declaration on invoice slips or till receipts. Others may wish to prepare a simple form for signature by the customer. An example proforma is attached.

The Declaration must be signed and dated by the purchaser. The RDCO supplier must ensure that the purchaser’s name and address is noted in his normal records.

This process can be simplified for regular customers who can make one annual declaration covering all their transactions for a period of up to one year.

The Declaration about fuel usage is the responsibility of the purchaser.

The RDCO has a duty of care when selling or delivering controlled oil and must therefore take all reasonable precautions and exercise reasonable care to ensure that they only make supplies to customers who have a legitimate use for that oil. (See HMRC Notice 192).

Residential narrowboats

HMRC have recognised the status of residential boat owners whose primary residence is their boat. Some of these will be at fixed moorings or moved a very short distance along the towpath from permanent moorings to fuel. If they live aboard the craft permanently and hold certain documentation such as houseboat licence, residential mooring licence, council tax bill in respect of the mooring or other documentation that provides proof of permanent residency they may purchase all their fuel at the rebated rate. They will be required to make and sign a Declaration that zero percent of the fuel is for propelling purposes. It will be the responsibility of the residential boat owner to ensure they hold the requisite documentation should HMRC wish to check the validity of the declaration made in these circumstances.

Continuous cruisers may not declare zero percent under these arrangements, even if they reside permanently on their craft. They must declare their actual intended usage.