Freight Transport Group Backs Two State Report on Avoiding Duty by Fuel Laundering

IRELAND – UK – Any road haulage operator or freight forwarder with experience of Irish cross border trade will know something of the fuel laundering scams which have blighted the market for decades. Varying rates of duty across any border will encourage drivers and operators to fill their tanks on one side before working across the divide but laundering fuel, usually by filtering and bleaching agricultural diesel until it appears to be road fuel, is an entirely different proposition.

Traditionally the reworked fuel was sold on cheaply to operators and drivers ‘in the know’ thus avoiding the normal duty charged but, as the years have passed, has evolved into a serious industry with unsuspecting customers buying the illicit product from what appear to be legitimate service stations as well as the traditional black market retail operations.

Now a report published by the British-Irish Parliamentary Assembly (BIPA) has examined the problem in great detail and stated the case as it appears on both sides of the border. Whilst the report also covers other criminal activity such as cigarette, tobacco and alcohol smuggling, sections 20 to 31 concentrate on the problems and potential solutions to the fuel situation.

The statistics make horrifying reading at a time when all responsible companies and individuals are attempting to mitigate their own impact on the environment. Three Irish border County Councils, Louth, Monaghan, and Donegal stated the cost of cleaning up the toxic waste from dumping sites was estimated to be approximately €1,000 per cubic metre, whilst the operatives concerned were put at some personal health risks in the process. Similarly, in Northern Ireland, a recent report estimated that over 2,500 tonnes of fuel laundering waste has been dumped in Northern Ireland over the last two and a half years, with clean-up costs of almost £1 million since 2012.

In the Republic the Revenue Commissioners reported that they had closed over 130 filling stations and seized over 3 million litres of fuel since 2011 and in the past 18 months secured 6 convictions for fuel fraud offences with a further 16 prosecutions ongoing. In the UK in 2013, HMRC detected and dismantled 38 fuel laundering plants in Northern Ireland and seized over 574,000 litres of fuel.

The UK based Freight Transport Association (FTA) was quick to comment on the report pointing out that fuel represents approximately 40% of operating costs for a haulage company, therefore the illegal fuel trade makes it harder for compliant operators, who purchase their fuel from legitimate sources, to make a sustainable profit, costing the Northern Ireland [and Irish Republic] economy jobs and limiting investment and growth in the local logistics industry.

The BIPA report also hints at a new marker it foresees being introduced into fuel later this year. These markers are designed to be resistant to the laundering process and this latest one awaits discussions between the Customs authorities and the oil and motor industries. In the meantime use of laundered or ‘stretched’ fuel often results in serious engine damage.

The report also calls for stricter sentences for those laundering or knowingly using laundered fuel whilst introducing the right of appeal by the prosecution should sentencing for offenders be considered too light for individual offences. Electronic tracking of discounted duty fuel supplies through licensed dealers was already helping the revenue authorities to identify patterns of misuse and the tax revenue in both countries were already rising as a result of more vigilance.

The FTA applauded the use of more stringent legislation and said only strong disciplinary action by the courts will act as a serious deterrent to those involved in the fuel laundering trade with Seamus Leheny, FTA’s Policy & Membership Relations Manager for Northern Ireland, adding:

“Every effort must be made to prosecute the owners of these fuel laundering sites who supply a minority of commercial goods vehicle operators in Northern Ireland, enabling them to use this saving to undercut the overwhelmingly compliant and legitimate operators across Northern Ireland.”