New dye aims to banish fuel fraud
Illegal fuel laundering should be "virtually eliminated" by next spring with the introduction of a new dye, Revenue and Customs has said.
It will be almost impossible to remove the marker put in tax-rebated fuel which is intended for agricultural use, senior HMRC official Pat Curtis added.
That means a roadside check can easily detect motorists who use discounted red diesel.
The fraud is currently worth around £400 million a year in lost tax revenues in Great Britain and £80 million in Northern Ireland, where the problem is particularly acute.
Mr Curtis said: "The whole idea of this marker is to virtually eliminate laundering."
In April 2015 in the Republic of Ireland, Northern Ireland and the rest of the UK, the new fuel marker will be implemented after a number of years of trials.
Red diesel is cheaper than regular diesel and is intended for off-road agricultural use.
Organised crime gangs have established sophisticated laundering plants to remove the giveaway dye, sourcing chemicals from China and using the internet to improve their techniques, Mr Curtis added.
In Northern Ireland, which shares an open border with the Irish Republic, the problem has been a long-standing one. Figures for 2012/13 indicate the illicit market to be worth 13% of the total.
The number of laundering plants dismantled in Northern Ireland has trebled in 10 years, from 13 in 2003/04 to 38 last year, Stormont's justice department told Ulster Unionist MLA Sandra Overend.
A particular increase in the number of cases in 2009/10 was due to a previous advance in detecting marker.
Mr Curtis, the national oils lead for specialist investigations across the UK at HMRC, speculated: "If you thought someone was going to turn off the tap on your illicit source of money, would they go for broke?"
Rising demand for discounted diesel in a time of austerity as well as technological advances in detecting illicit fuel was driving the increase, the official said.
"People are always trying to make ends meet and businesses are coming under pressure," he said.
Remote border regions of Northern Ireland have traditionally been hotspots for laundering, with the size of the sophisticated plants detected on the rise.
Detection technology employed in Belfast has attracted worldwide interest; agencies across Europe have sent teams to Belfast to be trained and the minister for finance in British Columbia in western Canada has requested the testing equipment.
But Mr Curtis added: "The organised criminal gangs have become very efficient and developed new techniques."
He said older tests would have struggled to pick up the small amounts of marker which remained after laundering but that had changed.
"There has been a massive improvement in our intelligence."
He said local councils were reporting the dumping of the hazardous by-products of laundering, allowing better targeting of areas.
Laundering is not the only form of fuel fraud; "stretching" of petrol by mixing it with other materials and smuggling across the border were also common but laundering is the preserve of the "professional" organised criminal, Mr Curtis added.
RAC fuel spokesman Simon Williams said: "This is an important development which will prevent fraudsters cheating the system for profit. The environment will also benefit as there will be no more illicit dumping of hazardous chemicals used to remove the existing dye.
"Going forwards everyone driving a diesel vehicle on the road will have to buy legitimate fuel from a forecourt so there will be no avoiding paying fuel duty to the Government."
Edmund King, AA president, said: "Red diesel should only be used for agricultural use on farms and in fields but too many fraudsters have been cashing in.
"We hope that this new dye will put an end to the bootleggers but to be effective its use will need to be adequately policed.
"Hopefully this will give the Exchequer more tax to keep duty down for all road users."