4. Written evidence from the Road
Haulage Association Ltd (RHA)
INTRODUCTION
The Road Haulage Association (RHA) was formed
in 1945 to look after the interests of haulage contractors operating
throughout the United Kingdom, in effect, amalgamating local organisations
that had already been established. The Association has subsequently
developed into the primary trade association representing the
hire-or-reward sector of the UK road transport industry. There
are now some 10,000 companies in membership varying from major
companies with over 5,000 vehicles down to single vehicle owner-drivers.
FUEL FRAUD
The RHA gave both oral and written evidence
to the Northern Ireland Affairs Committee's inquiries into the
related subject of the impact in Northern Ireland of Cross Border
Fuel Duty Differentials. Essentially our views remain as set out
in that previous evidence.
In our previous evidence the RHA stated that
fuel smuggling between Northern Ireland and the Republic was caused
primarily by the huge differential between rates of excise duty
applied to fuel in the UK and in Ireland. This remains the case.
Excise duty on diesel in the UK is now 47.10 pence per litre (ppl)
resulting in an average retail price across Northern Ireland of
92.9 per litre (including VAT). In contrast, on the Continent
the price for diesel is now typically the equivalent of around
20 to 25 pence per litre cheaper than it is in the UK, resulting
in a saving against UK purchased fuel of £200.00/€291.00
difference per 1,000 litre tank of fuel.
Since fuel represents approximately one-third
of a haulier's total business costs, there is a huge incentive
to obtain fuel at the cheapest rate. There are two main options
for achieving this: firstly by making legitimate purchases of
fuel in another EU Member State—either by crossing the border
to the Republic or whilst travelling on the Continent; secondly
by purchasing smuggled or illegally laundered fuel. Although the
first option is completely legal (subject of course to some limits
on carrying capacity etc) both options result in loss of revenue
to the Exchequer.
SCALE OF
THE PROBLEM
The difficulty of putting a precise figure on
the scale of the problem remains. However, the RHA is convinced
that smuggling is now extremely widespread. Indeed, anecdotal
evidence suggests that smuggled fuel is now finding its way into
mainland UK (particular in the North) as well as Northern Ireland,
extending the problem to hauliers based in that part of the country.
The most recently published figures contained in HM Revenue &
Customs report "Measuring and tackling indirect tax losses
2004" show that the revenue being lost to the Exchequer through
fraud on diesel amounted to £1,000 million in the year 2000
plus a further £300 million as a result of legitimate cross-border
purchases of diesel. The amount being lost reduced slightly in
2001 and 2002, but HMRC expects an increase in the figure for
2003. The RHA believes that this situation will not improve whilst
the cross-border price remains substantially lower than that for
fuel purchased within the United Kingdom.
REMOVING THE
INCENTIVE
Whilst we are aware that extra resources have
been made available to HM Revenue & Customs for enforcement
in this area since the Northern Ireland Committee's last inquiry,
the RHA remains of the view that the only way that this problem
can be eradicated altogether is to remove the differential that
exists between fuel duties within the EU. The European Commission
itself has recommended that in order to remove distortions of
competition within the road freight industry, duties on fuel used
for commercial purposes should be "harmonised" across
the EU. The RHA has been campaigning on this issue for some time
but until action is taken to bring fuel prices in the North and
South more into line, problems of smuggling and cross-border shopping
for fuel are likely to continue.
January 2006
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