Crack down on illegal fuel trade

Illegal fuel costs the exchequer millions in lost revenue

Fuel smugglers have been singled out by the Chancellor in the Budget for tough new measures to curb cross border fraud.

Measures include stricter control of fuel intended for agricultural use and new markers for diesel to prevent its illegal sale.

In February, the National Audit Office revealed that petrol and diesel smuggling in the UK was costing the Treasury £830m a year in lost tax revenues.

The government spending watchdog said the problem was worst in Northern Ireland, where smuggling and legitimate cross-border shopping are costing £380m alone.

Noel Smith: "Distributors will have to make returns to Customs and Excise"

Noel Smith of the Petrol Retailers Federation said the measures were long overdue.

"It was suggested no later than 1999 to the Northern Ireland Affairs Committee that the registration of outlets would take place," he said.

"It will mean that the distributors will also have to make returns to Customs and Excise and the point will be how well will it be audited by them."

Gordon Brown revealed the new measures during his Budget speech on Wednesday, which will result in a tightening of control of the distribution network for rebated fuels or red diesel as its known.

Paraffin, which can also be modified to run diesel engines, along with home heating oils, will be controlled in the same way,

Low duty diesel

Suppliers will have to demonstrate that the fuel was sold for legitimate use, and not passed on to fraudsters.

A new European marker will be added to red diesel to make it harder for the fuel to be treated and sold illegally.

The Chancellor also promised more money and resources to detect the fuel frauds.

It is estimated that up to 450 of Northern Ireland's 700 filling stations sell some illegal fuel, while as many as 250 sell no legal fuel at all.

The Audit Office warned that across the UK as a whole, the main problem is the illegal use in cars of low-duty diesel intended for farm use.