What happens if I produce heavy oil which does meet the fiscal definition of gas oil, fuel oil or kerosene?
In this event the excise duty position is entirely different. The resultant oil will be liable to duty at the relevant rate irrespective of the purpose for which it is to be used. In the case of kerosene and gas oil the current applicable duty rate is £0.5035 per litre, whereas for fuel oil it is £0.0929 per litre. Fuel oil attracts a rebated rate of excise duty without any requirement for marking. However, gas oil and kerosene are only eligible for rebate if they have been marked in accordance with the requirements of the Hydrocarbon Oil (Marking) Regulations 2002. Marked kerosene used in off road vehicles attracts a duty ate of £0.0969 per litre, although when used for heating purposed marked kerosene if fully rebated. There are different HMRC requirements if kerosene, gas oil or fuel oil is produced. An excise warehouse will be required and, if any oil is marked, the conditions of the warehouse approval will need to allow this as a permissible operation in warehouse.
