A consultation has been launched by HM Revenue & Customs regarding vapour recovery, an issue which the PRA has been trying to resolve with the tax authorities for a number of years. The consultation is focused on the Extra Statutory Concession (ESC) 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 The ESC has been confirmed as ’ultravires’ and should be withdrawn or legislated as part of the work HMRC is doing to review all of its concessions following the Wilkinson case."

The consultation vindicates the PRA’s case that there was no legal basis for the scheme, and that it was damaging retailers because they were paying duty on fuel they never receive, and suppliers get the rebate. PRA chairman Brian Madderson said they would consider what should be done to correct the current situation, so that retailers are no longer disadvantaged.

HMRC is seeking responses to the consultation by September 9.