The UK and Ireland governments are to bring in a new product to mark rebated fuels, including off-road diesel commonly known in the UK as ‘red diesel’, in a bid to fight illegal fuel laundering.
The marker is designed to help HM Revenue and Customs (HMRC) and the Irish Revenue Commissioners tackle the criminal market in off-road diesel, marked with a red dye in the UK and green in Ireland, and also kerosene primarily used for heating oil.
Launderers primarily target red or green diesel, filtering it through chemicals or acids to remove the government marker. The chemicals and acids remain in the fuel and damage fuel pumps in diesel cars.
The new marker is formulated to make it much harder for fraudsters to remove and will be implemented in consultation with the oil industry and other affected sectors and will be used alongside the current marker mix.
The use of illicit diesel is estimated to be 12-13% of the market share in Northern Ireland and about 2% in the rest of the UK.
Nicky Morgan, economic secretary to the Treasury, said: “I am delighted that our two countries have come together to fight the shared problem of illicit fuel. At a time when the government’s priority is cutting the deficit, it is unacceptable that criminals are cheating the system. The government has invested nearly £1bn in HMRC to tackle avoidance, evasion and fraud.
“Using illicit fuel is not a victimless crime; it robs the government of tax revenue that is used to fund vital public services and puts those businesses that follow the rules at a commercial disadvantage. It also has a severe environmental impact, with considerable clean-up costs for local councils. So we are boosting HMRC’s fight against this fraud by introducing a more robust marker to ensure it is far harder to remove.”
The announcement was welcomed by the Freight Transport Association (FTA). Seamus Leheny policy and membership relations manager - Northern Ireland, said: “FTA welcomes any effort that can help reduce or eliminate fuel laundering, and the announcement of this marker we are sure will go a long way to help.”
While welcoming the introduction of the marker, FTA also went on to voice a word of caution in the use of the initiative stating that “any chemical solutions to fuel laundering are prone to chemical counter-measures by fuel launderers.”
Leheny added: “Fuel represents approximately 40% of operating costs for transport operators hence legitimate operators in Northern Ireland are at a distinct disadvantage when competing against those that illegally use laundered diesel.
“Vigilance will be key in helping this marker to work successfully. Fuel launderers are determined to ‘out-smart’ such initiatives and FTA is calling on the authorities to make enforcement measures against criminal activities robust.”