Safe Speed Forums

Ruling on red diesel will save industry money

By Maureen Hodges - Farming editor

A CARLISLE accountancy firm has won a landmark tribunal decision for the agricultural industry by extending the situations in which cheaper red diesel fuel can be used in tractors.

The agricultural industry is celebrating after a tribunal made the ruling that will allow farmers and those associated with the agricultural industry to run larger tractors on public roads using red diesel rather than white for the purposes of agriculture.

Farmers taking their stock to market in the newer and more popular Fastrac-type tractors can do so using the cheaper fuel.

Red diesel is taxed at 4.22p/litre, white diesel at 53.27p/litre.

HM Revenue & Customs (HMRC) has complicated guidelines on which journeys can be classed as agricultural – and can therefore be fuelled using red diesel.

The test case was brought by Armstrong Watson on behalf of MW Plant (Contracts) Ltd, a Lockerbie-based land drainage company.

Customs officials had accepted that land drainage constituted agricultural work, but said hauling a digger from the depot to the farm using a large Fastrac tractor was general haulage, and so did not qualify to use red diesel.

Armstrong Watson took on HMRC, and a VAT and Duties tribunal headed by an independent barrister, agreed that the journey was part of the land drainage process and so “necessary for the purpose of agriculture”.

This meant that the firm’s Fastrac tractor – a large four-wheel-drive tractor – could use red diesel, rather than the more expensive white diesel. The panel also formally classified the large vehicle as a tractor for agricultural use.

Ian Fleming, one of Armstrong Watson’s VAT consultants, said: “It’s an important decision that will mean significant savings for a lot of people connected with the agricultural industry.”

The penalties for breaching the rules over red diesel include fines, the possible seizure of equipment and an assessment for back duty.

HMRC has already started a process to change the law to make the use of red diesel in such circumstances illegal. But until this happens the agriculture industry can continue to use red diesel.

Can you imagine Chelsea at school kicking out time with 200 of these parked on the pavement.

... and M&S car park..... going to need bigger todler and parent spaces