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Following a period of consultation, HMRC have confirmed that proposals to reduce the burdens of the biofuels regime on non-commercial and medium-sized producers will be introduced.

The proposals, originally contained in HMRC Brief 02/07 (issued on 5 January 2007) are as follows:

• A de minimis production level of 2,500 litres per annum below which producers would not need to enter premises, submit returns or pay duty, and
• Reducing the frequency of returns for all but the largest producers (defined as those producing over 450,000 litres per annum) from monthly to quarterly.

According to HMRC, a large majority of responses to the consultation were strongly in favour of the proposals. A minority of respondents suggested a higher threshold than the proposed 2,500 litres per annum, below which producers of biofuels (or other fuel substitutes) would not need to register or pay duty. HMRC do not want to set the threshold so high that it gives some small commercial producers an advantage, through not needing to pay duty, over others. It is possible, however, to reduce unnecessary burdens on those producing for their own use and on those who may be testing small quantities prior to going into business. HMRC will therefore, monitor the effectiveness of the 2,500 litre level and consider the scope for raising the threshold a year after its introduction.

There were no objections to the threshold of 450,000 litres per annum, above which producers will have to submit returns on a monthly basis, as now, rather than quarterly.

There were no objections to the proposals to show some flexibility towards those producers whose output fluctuates around the thresholds (lower and upper).

There were also no objections to penalties for abuse of the conditions.

HMRC will shortly publicise the date of implementation of these changes, but it is expected that they will come into effect during the summer.

Link

HMRC Brief 37/07: Introduction of biofuels simplification