HMRC must love me...

Having finally found the time to go looking for some legislation, I've written HMRC another email asking how to pay duty on waste lub oil used as fuel. Hopefully this time they will come back with a price, rather than some bogus info to put me off.

Dear Mr Preston,

Thank you for your email dated 9th June 2009. I have done some further
research regarding the use of waste lubricant oil in a diesel engined
road vehicle, and I would value some further advice.

>Any oil used as motor fuel must, under EU and UK law, bear excise duty and the
>specific duty rate charged would depend on the exact type of fuel (and the type of
>motor it is intended for) These factors would also determine the type of HMRC >approval/registration required by you.

>However you do need to be aware that you might be in breach of environmental
>legislation if you collected and transported quantities of such waste oil from
>various sources, and also if you then applied any type of process to this waste oil.
Thank you for your advice on this point. Most of the issues regarding
this are resolved by the fact that I intend on using oil that I
personally remove from engines, processed on the same site, and
immediately transferred to the fuel tank of the road vehicle. I
understand that there are licensing requirements imposed by
legislation, but I will be in correspondence with the relevant
authorities with regard to this.

>The finished product then used in a motor vehicle would possibly fail to meet EU
>and UK specifications on the exact content of sulphur and toxic heavy metals or
>other substances in it. I would strongly advise you to research and deal with these
>issues first before embarking on this project. I say this because such waste oil is
>normally considered only fit for burning as furnace fuel due to the heavy metal
>contamination and it is normally not cost-effective to reprocess it into motor fuel of
>an acceptable standard, even with the sophisticated methods available in oil
> refineries and the consequent economies of high volume.
Having reviewed all the legislation I can find on this point, it is
irrelevant, as I am neither buying waste oil to use as a motor fuel,
nor selling any oil as a motor fuel. None of the legislation I have
found prohibits actual use, only the buying and selling of
"unsuitable" oils with intent to use as motor fuel. You may also be
interested to know that in the UK a high percentage of most cheep
lubricant oil is recycled used oil which has had the impurities
removed and then been re-blended. In the USA, where due to the absence
of fuel duty, rules are more straightforward, at least one firm
markets equipment aimed at vehicle workshops, which is intended to
filter and process waste oil into a road fuel for diesel lorries.

>Additionally, from an HMRC perspective the Hydrocarbon Oil (Marking) Regulations
>2002 prohibit the sale of ‘dark oil’ as fuel for a heavy oil vehicle and lubricating oil
>might well fall within the dark oil specification (at Section 2(1) of the Regulations)
Again, this point isn't relevant provided no financial transaction
takes place to obtain the oil. If the oil in question is drained from
machinery I own then by subsequent use of the oil afterwards as motor
fuel isn't an issue provided it is confined to my personal use in my
own vehicles.

>Therefore before I advise as to the appropriate mechanism for paying any duty due
>I believe that the above questions need to be resolved.
Having confirmed the answers to the above questions, I would now be
interested in knowing the appropriate rate of duty, and mechanism for
payment.
Yours sincerely
John Eastwood.

On 6/1/09, John Eastwood wrote:
> Dear Sir,
>
> I was asked to email you after phoning HMRC's advice line, as they
> were unable to answer my query.
>
> I am looking to run a road vehicle on processed waste lubricant oil.
>
> The oil will be processed mainly by various forms of filtration, and
> blended with normal "pump" diesel before being used in the vehicle.
>
> The vehicle's engine and fuel system would be suitably adapted for
> burning the blended fuel, chiefly by increased filtration, and the
> addition of a heat exchanger to warm the oil to decrease its viscosity
> prior to its supply to the engine. The vehicle would have twin fuel
> tanks, with a changeover system, as the engine would still need to be
> started on normal diesel.
>
> The fuel used does not meet HMRC's normal heavy oil specifications -
> if used in an un-adapted vehicle, it would lead to poor performance,
> and probable engine failure.
> The fuel does not meet HMRC's definition of an alternative fuel
> either, as the oil waste used is predominantly hydrocarbon.
>
> I anticipate the production and use of the oil to be on a fairly small
> scale - probably no more than HMRC's limit for unregistered vegetable
> oil processors of 2500L a year.
>
> I realise I am probably required to pay the duty on the waste oil
> which is used. What I have been unable to find, despite searching your
> website, is what I am required to do to register, in order to pay the
> duty. I would be grateful if you could let me know:
>
> 1) If I need to pay duty, and at what rate
> 2) How to register, and what records and information I need to keep
>
> I am aware that there may be other requirements imposed by
> environmental legislation, and that I will need to make various
> applications for the handling of waste materials, but those
> requirements I will be querying with the relevant other government
> bodies.
>
> Yours sincerely
> John Eastwood
>