Industry:
Don Armour (FTA)
Hugh Bray (TSA)
Susan Hancock (FPS)
Chris Hunt (UKPIA)
John Spargo (UKOITC)
James Spencer (AUKOI)
HMRC:
Michael Connolly (SI)
Clare Guy (LC)
John Hill (ESM)
Annie Purkis (ESM)
Apologies:
David Blevings (NIOF)
Peter Cullum (RHA)
Roy Holloway (PRA)
No objections to the note of the Joint HMRC-Industry Intelligence & Security Forum on 14 April 2008.
AP1 - Susan to check progress on Retails Sites CoP and inform HMRC.
Revised draft circulated. (Agenda item 6.)
AP2 - Annie will update the group on progress made in developing a sign for display on pumps.
HMRC will be publishing a design which could be printed by RDCOs. (Copy attached.)
AP3 - HMRC will further consult the group on future proposals for the design, content and frequency of Activity Reports
Annie circulated a proposed format for monthly reports to be sent to all RDCOs as an insert. This would be a one-pager on the reverse of notification of redundant RDCO numbers. It would provide information on how to contact HMRC, any new publications or policy initiatives which might be of interest and recent cases. It could also be used to communicate on issues raised by industry representatives. The group agreed that this would be useful. Annie would arrange for production of an update, which would also be circulated to the industry representatives (Don had suggested this would be useful for an audience beyond the RDCOs).
AP 4 - Annie to obtain some background (on Authorised Economic Operators) for circulation to the group
Some information had been circulated following the previous meeting. Since this HMRC has produced a Public Notice and has developed an informative Internet site.
John Spargo mentioned some material on export control schemes and physical security (including storage), which had been provided by the HMRC IT Liaison Officers. The physical control requirements were currently voluntary.
AP 1. John Spargo to provide material on export control schemes and physical security for circulation to the group.
AP5: John Hill to provide industry representatives with anonymised
responses to the review and the findings and recommendations.
Done.
AP6: Annie to invite TSA and NIOF to the next meeting.
Done.
AP 7: Annie to pull together proposals on the forum and wider arrangements for stakeholder engagement to the group.
HMRC proposed to issue a quarterly update which would be published on the reverse of the letter includ sent to all RDCOs
Annie had circulated draft ToR for the new forum, which explained how it would link with Working Groups, the NI forum and bi-lateral meetings. The intention was to provide greater transparency regarding issues raised and how they were being addressed. The group accepted these. Annie would arrange for publication of the ToR and links to documents regarding the current Working Groups on the HMRC Internet site. She would keep the group informed of developments so that they could bring this to their members’ attention.
Annie also asked that members of the group let her know if they have concerns or ideas for issues that could be addressed through Working Groups.
Annie had circulated the Measuring Indirect Tax Gaps Report to the group. The oils tax gap estimate had been calculated following a fundamental review of the methodology. This had resulted in an estimate of 5 per cent. However, under both the previous and new methodologies the figures demonstrated a significant and continuing downward trend. Annie asked the group if they had views on the tax gap estimates. The general view was that it did seem high, and that the RDCO scheme had definitely had an effect in reducing the illicit market.
Clare provided an update on assurance activity, which remained focussed on RDCO assurance and audit work following detections of misuse of fuel. HMRC had concerns about falling levels of RDCO return compliance, which could potentially be linked with recent VAT changes and the withdrawal of pre-paid envelopes. She asked industry representatives to encourage compliance as the effectiveness of the scheme depended on analysis of data – more sophisticated analysis made the data more valuable and enabled HMRC to better monitor trends.
HMRC was taking an active approach to encourage compliance, contacting RDCOs to remind them of their obligations and focussing efforts on repeat offenders as well as on education.
Susan said that she had been told that one of her members had been asked to produce returns because information had been lost. She would provide information and HMRC would look into this.
Clare explained that increasingly work was being undertaken on a collaborative basis across HMRC and other government departments. Specifically, there had been some success in cases looking at excise duty, VAT and direct taxes. For example one case had led to a VAT assessment of £1/2 million.
Michael Connolly explained that with the formation of the UK Border Agency inland detection staff had moved to Specialist Investigations (SI). SI had around 1,800 staff with specialist skills focussed on tax evasion and so provided real opportunities, while retaining the existing Road Fuel Testing Unit resource.
On current trends, Michael said that HMRC was detecting an increasing number of cases involving green diesel (ie rebated fuel from RoI). (This further indicated that fraudsters were finding red fuel more difficult to obtain since introduction of the RDCO scheme.) 24, 000 litres of laundered green fuel had been seized coming through Stranraer, with two people arrested in NI and five vehicles seized.
HMRC was increasingly concentrating its efforts on petrol stations and bulk sites. A new testing method had been developed which would better enable detection of laundered fuel. The prototype was being evaluated through LGC (HMRC’s forensics contractor for oils) but tests to date proved highly promising in detecting product which had gone through several laundering processes. HMRC would keep the group informed of developments.
In NI HMRC continued to tackle 'huckster sites' (where fuel is supplied very cheaply). In a recent case, as well as seizing pumps and pies, the tank had been dug out.
HMRC was keen to maximise media coverage of its work as well as the wider concerns around fuel laundering, for example the environmental impact.
Michael and Clare talked about the work HMRC undertook to identify and address new risks. This included:
Annie highlighted the role of the group in raising any concerns or potential risks members had identified to help HMRC in targeting its efforts.
Annie explained that along with information about this group she would be publishing the Terms of Reference of and other documents generated by issue specific Working Groups. Currently there were two groups which included various representatives of the wider group:
This had been established largely to help with implementation of the Renewable Transport Fuel Obligation which from 1 April 2008 would require that road fuel contained minimum levels of biofuels. It had looked at how HMRC fuels would sit with the new scheme, a Department for Transport policy, now administered by the Renewable Fuel Agency. It had also explored how HMRC requirements would be applied to biofuels and bioblends, for example in relation to movements, storage, measurement and accounting for duty on products. The Working Group approach had proved successful, with workable solutions to virtually all the issues identified.
This was a response to concerns raised by industry about the guidance published by HMRC in a number of Public Notices, some of which appeared to be contradictory. HMRC was attempting to clarify policy across excise duties and VAT and consolidate information. A further meeting of the group was planned for March.
Annie explained that, whereas this had been driven by the anti-fraud agenda, this was now more about regularising controls and ensuring consistency. There were some areas where rules were likely to need tightening, but the objective was to simplify in other areas so avoiding an overall increase in administrative burdens. Having considered the results of previous consultation, HMRC had developed proposals and would be issuing a further consultation document soon.
AP 2. As soon as it had been confirmed, Annie would notify the group of the timetable for the consultation on marine fuels.
Susan had provided an updated version of the CoP, which had been circulated to the group. The one outstanding concern was the requirement for the customer to prove that duty had paid, which did not appear possible in practice.
Everyone agreed that it was a useful document but it was felt that this should be issued as guidance rather than a CoP. Don also suggested that it would be useful for industry bodies to tailor this to the specific interests of their members. Annie said that she would review the draft again and clarify how best to publicise it.
AP 3. HMRC to review the draft and come back to the group with proposals.
Chris asked that HMRC work to agree as soon as possible a general protocol (based on existing approved methodologies, eg for marking at the gantry) for marking and to use this as a basis to simplify approval processes for marking premises. Annie stated that this issue had been identified on the team’s work plan for next year.
AP 4. Annie to discuss with team and to suggest that an initial discussion with Malcolm Watson (UKPIA) would help clarify industry’s position on marking of ultra-low sulphur diesel.
Susan explained the provisions of the Directive and the related responsibilities its implementation in UK had put on suppliers of fuel, one of which is to encourage customers to use less fuel. To enable them to assess its effectiveness, the Department of Environment and Climate Change also required data on the volumes of product supplied. FPS had entered a voluntary agreement to provide this information on behalf of members, but had pointed had that HMRC already had this data for heating fuel. Annie agreed that HMRC would be happy to work with DECC to help reduce any administrative burden on business.
AP 5. Susan to give Annie’s contact details to DECC to establish scope to reduce the burden of the Energy Service Directive on business.
The group agreed to six monthly meetings. HMRC to contact members to confirm date and venue.
