At the moment almost all diesel sold in British marinas is red diesel, taxed either at a lower rate if some of the fuel is used for heating the boat, or at 100% for the fuel that is used only for propulsion by the engine.

In a case launched last year, the EU has argued that the UK should not allow red diesel to be used in this way.

Her Majesty’s Revenue and Customs (HMRC) has today informed the Royal Yachting Association (RYA) that it has lost its defence with the Court of Justice of the European Union of Case 503/17.

The court has ruled that the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under Council Directive 95/60/EC of 27 November 1995 on fiscal marking of gas oils and kerosene (OJ 1995 L 291, p. 46).

The European Commission took action against the UK as it considers that, by allowing the use of marked fuel for the purposes of propelling private pleasure craft, the UK has failed to fulfil these obligations.

The European Commission indicated its intention to commence infraction proceedings against the UK in July 2011.

In May 2013 the European Commission formally requested that the UK amend its legislation “to ensure that private pleasure boats such as luxury yachts can no longer buy lower taxed fuel intended for fishing boats” and issued a reasoned opinion to the UK Government, which HMRC indicated its intention to challenge in July 2013.

As a result, in July 2014, the European Commission indicated that it had decided to refer the UK to the Court of Justice of the European Union.

What does it mean for boaters?

Today’s judgment means that, while the UK remains subject to the Fuel Marker Directive, the UK must bring its practices into line with this ruling.

HMRC is now examining the judgment and will announce how and when the UK will adjust its practices in due course. The RYA’s Cruising, Legal and Government Affairs team is now analysing the full impact for our 112,000 members and the recreational boating community – and plans to meet with HMRC to discuss the next steps. The crux of the matter is ensuring the continued availability of diesel for the leisure boating community.

RYA members will be kept informed as the situation develops via the RYA Current Affairs hub.

Cruising Association response

Judith Grimwade, CA President, said: “We are delighted that the Court has finally delivered a judgment in this case, but given the uncertainties of Brexit, it remains to be seen what the impact will actually be. Whatever the outcome, we will continue to campaign for cruising yachtsmen to be able to travel between countries without being penalised for buying a fuel which is very often the only option available.”

No deadline is specified in the judgment and member states are usually given a reasonable period to make the adjustments necessary – which in this case could mean white diesel going on sale in UK marinas – bearing in mind many craft may continue to use red diesel for heating.

However, no-one knows what may happen as a result of Brexit. HMRC is examining this judgment and will announce how and when the UK will adjust its practices in due course.