S.I. 2007/1640: memorandum from Her Majesty's Revenue and Customs

Biofuels and Other Fuel Substitutes (Payment of Excise Duties etc) (Amendment) Regulations 2007 (S.I. 2007/1640)

1. This memorandum has been prepared by the Commissioners for Her Majesty's Revenue and Customs in response to the Joint Committee's letter of 27th June 2007 requesting a memorandum on the following points:

(1) Given the amendment of the Biofuels and Other Fuel Substitutes (Payment of Excise Duties etc) Regulations 2004 made by regulation 8(2) of these Regulations, explain the absence of any amendment to the references to paragraph (1) in regulation 19(4) and (6)(a) of the 2004 Regulations.

2. Regulation 8(2) amended regulation 19 of the 2004 Regulations by substituting a new paragraph (1) and adding a new paragraph (1A). Paragraph (1) provides that the requirements of paragraph (1A) apply to a producer of biofuels other than a large producer. Paragraph (1A) requires a producer to furnish information returns and make duty payments quarterly. New regulation 19A(3) and (4) requires a large producer to make information returns and duty payments monthly.

3. The Department accepts that as a result of the amendments made by regulation 8(2) the references to paragraph (1) in regulation 19(4) and (6)(a) of the 2004 Regulations should have been references to paragraph (1A).

(2) In relation to regulation 19A(5) of the 2004 Regulations (inserted by regulation 9 of these Regulations) which applies regulation 19(2) to (8) to large producers as they apply to producers -

(a)  explain the absence of any adjustment to the references to paragraph (1) in paragraphs (4) and (6) of regulation 19;

(b)  explain why regulation 19(4) is not applied with the substitution of "month" for "quarter", given regulation 8(3) of these Regulations; and

(c)  explain why any provision is needed to apply paragraphs (7) and (8) of regulation 19 to large producers, given that those paragraphs do not appear to exclude large producers at all.

4. Regulation 19A(5) applies regulations 19(2) to 19(8) to large producers as they apply to producers. As the references made in regulation 19(4) and (6)(a) of the 2004 Regulations to paragraph (1) had not been amended by reason of the oversight mentioned above those references are equally erroneous in relation to large producers.

5. Regulation 19A(5) provides for regulation 19(4) to apply to large producers with the substitution of the word "quarter" for the word "month". The order of the words "quarter" and "month" was inadvertently reversed. Regulation 19A(5) should have provided for regulation 19(4) to apply to large producers with the substitution of the word "month" for the word "quarter".

6. It is proposed to take the points about paragraphs (7) and (8) of regulation19 in reverse order. As paragraphs (1), (1A) and (6) of regulation 19 apply to producers other than large producers it was felt that readers might consider that paragraph (8) was of equally limited application. This paragraph was therefore applied to large producers so as to leave readers in no doubt on this issue. However large producers are a subset of producers (see the definition of "large producer" in regulation 3(5) of these Regulations). The Department recognises that the expression "every producer" in regulation 19(8) encompasses large producers and that it was, therefore, inappropriate for regulation 19A(5) to apply regulation 19(8) to them. The Department also accepts that regulation 19(7) is of general application and that it was not appropriate for regulation 19A(5) to apply regulation 19(7) to large producers.

7. The Department apologises to the Committee and undertakes to prepare amending Regulations at the earliest opportunity.

Her Majesty's Revenue and Customs

3 July 2007