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PRA warns of threat to duty deferment

22 November, 2013

Chancellor George Osborne

PRA chairman Brian Madderson has written to the Chancellor George Osborne warning him that attempts are being made to block the duty deferment scheme which PRA says could do so much to help

independent forecourt operators.

The legislation that underpins the scheme, the Excise Payment Security System (EPSS), was introduced in 2007 to help SMEs (small and medium size Enterprises). It enables forecourts to buy fuels without paying the 60% cost of VAT and duty upfront, before they can recoup it in sales.*

However, retailers have to apply to HMRC for deferment, and Madderson says HMRC now appears to be trying to obstruct the process, even though the right is enshrined in law.

In his letter to the Chancellor he said: “Assistance is immediately required from Government to ensure that HMRC honour both the spirit and letter of EPSS. Already five independent retailers have successfully applied but it now seems that HMRC are trying to renege without Government knowledge and agreement.”

Madderson’s comments were in a letter to the Chancellor outlining measures he could incorporate into his autumn statement on December 4, which would help to arrest the decline of the independent petrol retailing sector.

The PRA chairman said the loss of independent forecourts was eroding the energy resilience of the UK for retail fuels, and resulting in job losses and removal of local amenities.

He told the Chancellor that duty deferment was “a zero cost initiative for Government with significant economic and resilience benefits”.

Turning to the pressure on independent forecourts from supermarkets, Madderson said each new supermarket forecourt was taking about 12mlpa out of the market, equivalent to the volume of six average independent sites.

He said: “It is imperative that petrol filling sites are subject to and form part of a National Policy Statement that links to sustainability of existing sites. This is another zero cost initiative for Government with significant economic and resilience benefits.”

Madderson also reminded the Chancellor that both he, and the Prime Minister, have pledged to cancel the next increase in duty due on 1 September 2014, Government finance permitting, but he conceded that it was unlikely there would be any cut in duty this year.

He also welcomed the work by the Treasury in partnership with the industry, on extending the rural fuel duty rebate scheme.

* For full details about the duty deferment scheme see the December issue of Forecourt Trader.