The UK has been hit with a €32 million (£28m) fine by the European Court of Justice (ECJ) over dragging its heels on implementing a ban in Northern Ireland of the use of discounted fuel in private pleasure boats.
The hefty penalty comes after that the ECJ found that the UK had failed to comply “within the time limit prescribed by the European Commission” with the EU Fuel Directive. That bans the use of “red diesel” for propulsion in leisure vessels.
Despite that, the UK had continued to allow Northern Ireland boat-owners to use the coloured fuel, which is sold at less than the full tax rate.
Lawyers for the UK had argued that any fine should be set at a level proportional to the size of Northern Ireland’s economy – only 2.25 per cent of UK’s wealth measured as GDP – as it was only in the province that the ban applied.
In a statement following the judgement, the ECJ disagreed and said: “The fact that, since February 1, 2020, the United Kingdom is no longer a Member State is irrelevant for the assessment of its ability to pay, with the result that it is not appropriate to treat it differently from the Member States in that regard.”
An EU-wide ban on the fuel used for propelling such vessels – as opposed to heating or generating electricity onboard – came into effect in 2018 but it was not until October 2021 that the UK introduced the prohibition in Northern Ireland in accordance with the terms of the EU-UK Withdrawal Agreement.
Under EU rules, fuel must be marked with a dye if it is sold at less than the full tax rate. The ECJ argued that by dying all marine fuel red, it was impossible to determine if owners of pleasure boats with a single tank had paid the full duty on fuel used for propulsion.
The Court said: “Fiscal marking is intended to make it possible to identify gas oil that is not subject to the full rate of taxation, such as that used in commercial boats.
“That aim cannot be achieved if the marking may also be used for gas oil intended for uses subject to taxation at the full rate, such as that used for propulsion of private pleasure craft.”
Despite Brexit, in accordance with the terms of the UK’s withdrawal from the European Union, Northern Ireland remains part of the single market and remains bound by its rules.
In England, Scotland and Wales, boat owners can still use red diesel – minus the subsidy – to propel their vessels. The subsidy does still apply when the fuel is used for domestic purposes onboard.
The ECJ rejected UK arguments that the rule could not have been applied sooner, detailing a raft of “difficulties related to the legislative procedure, the general election, public consultations, geographic features, the variety in port sizes, difficulties in supplying both marked fuel and unmarked fuel, or the COVID-19 pandemic”.
Dismissing these claims, the ECJ said: “In that regard, the Court recalls that the practical difficulties referred to by the United Kingdom cannot be taken into account as a mitigating circumstance.”
The fuel directive means that owners of private pleasure craft – with a single tank for both propulsion and non-propulsion (such as heating) – in Northern Ireland are banned from using red diesel.
That applies unless the fuel was put in a vessel’s tank before October 1, 2021, or bought in a jurisdiction where it can legally be used to propel a pleasure boat. That could be elsewhere in Great Britain, the Channel Islands or Isle of Man where the fuel is readily available at marinas.