A consultation has been launched today by HM Revenue & Customs (HMRC) regarding vapour recovery, an issue which the PRA has been trying to resolve with the tax authorities for a number of years.

After the election of the new Government last month, PRA chairman Brian Madderson said duty rebate on recovered vapour would be one of the issues he would be raising as a priority.

The consultation is focused on the Extra Statutory Concession (ESC) provided to suppliers on petrol vapour recovered during deliveries to service stations. Change is required, according to HMRC, because of a House of Lords ruling on a separate issue, called the Wilkinson case, which means the current system cannot be continued.

In the consultation document HMRC states: “There is no UK legislation to support the ‘vapour recovery scheme’, which is provided for by an Extra Statutory Concession (ESC). The ESC has been confirmed as ‘ultra–vires’ and should be withdrawn or legislated as part of the work HMRC is doing to review all of its concessions following the Wilkinson case.”

It is therefore seeking views on two options:

• legislation to place the existing ‘vapour recovery scheme’ on a legal footing;

• an alternative option to address the issue within existing warehousing approval terms and conditions.

PRA chairman Brian Madderson said this was a complex issue which needed careful consideration. He said: “We will be studying the consultation document with our legal advisers and will comment in due course.”

HMRC is seeking responses to the consultation by September 9 and plans to publish a summary of responses in October, and advise of the outcome, setting out next steps, including the approach to any potential legislation.

Click here for the announcement on the vapour recovery consultation and links to the detailed document.