I am informed by the Revenue Commissioners, who have responsibility for the collection of mineral oil tax and for tackling the illicit trade in mineral oil products, that they are acutely aware of the threat to the Exchequer posed by laundered fuel. The predominant illicit activity in the mineral oil area in this State and in Northern Ireland is the laundering of marked diesel and its sale through illegal outlets. In both jurisdictions the respective difference in excise rates between marked (rebated) and normal diesel offers a considerable incentive for oil laundering and this illicit activity poses a serious threat to the Exchequer and to the economy on both sides of the border. Revenue employs a broad range of compliance and enforcement strategies to detect and counteract illegal practices involving mineral oils. These include ongoing analysis of the nature and extent of the problem; development and sharing of intelligence with agencies on both sides of the border; the conduct of intelligence driven operations using covert surveillance to identify oil laundry locations; seizure of illicit product, laundering equipment and vehicles; physical sampling at road checkpoints; closure of unlicensed or improperly licensed outlets and seizure of stock, and prosecution of those involved in illegal activities in relation to mineral oils.
In 2010, Revenue enforcement staff detected four oil-laundering plants in this jurisdiction and seized 228,000 litres of laundered oil. The DPP has issued directions to prosecute on indictment in two of these cases. A further 48,184 litres of illicit mineral oil was seized from retail outlets or in the course of delivery to such outlets In addition, nine retailers were found dealing in laundered oil and eight haulage companies were detected using it in their vehicles. There were four court convictions in 2010 for laundered oil offences.
In 2011 nine oil laundries and 327,000 litres of laundered fuel were seized, together with nine oil tankers and twenty-nine other vehicles. Sixteen persons were arrested in the course of these operations and files have been sent to the Director of Public Prosecutions, who has to date issued directions to prosecute on indictment in respect of five of these cases and on summary disposal in a further case. Three other cases are en route to the DPP's Office seeking directions. In addition, a further 718,181 litres of illicit mineral oil has been seized, the large majority from retail outlets or in the course of delivery to such outlets.
To date in 2012 six oil laundries and 135,050 litres of fuel has been seized together with one oil tanker and nine other vehicles. Two people were arrested in the course of these operations. In addition to this a further 317,725 litres of illicit mineral oil has been seized, the majority from retail outlets or in the course of delivery to such outlets. To date in 2012 there have been two court convictions for laundered oil offences with a fine of €2,500 imposed in one case and a two-year suspended sentence in the other.
Revenue is also engaged in an ongoing and vigorous campaign targeting specific locations nationwide, with the intention of immediate closure of unlicensed outlets and challenging of instances of non-compliance. In 2011 thirty-two filling stations were shut down by Revenue because they did not have a licence or were in breach of licensing conditions. To date in 2012, twenty such outlets have been closed.
While there has been considerable success in detecting and closing oil laundries, it is recognised that this approach, in isolation, will not solve the problem. Oil launderers need to be denied access to marked oil for the purposes of laundering and they need to be denied access to the market for their laundered product. Since July last year the licensing regime for road fuels has been tightened up to make it more difficult for launderers to get their product on to the market.
New legislation was enacted in this year's Finance Act which significantly strengthens the provisions for the control and supervision of the fuel supply chain and restricts the scope for illegal activity. The previous licence for persons dealing in road fuels has been replaced by a new auto-fuel trader's licence, as and from 1 July. In addition, anyone dealing in marked diesel or marked kerosene will now, for the first time, have to be licensed for the purpose. The requirement to have a marked fuel trader's licence comes into operation with effect from 1 October 2012.
The Revenue Commissioners are the licensing authority and will have power to refuse a licence where the applicant does not show to their satisfaction that relevant conditions that they may attach to the licence can be satisfied. Revenue are empowered also to revoke a licence, if the holder contravenes or fails to comply with the terms of the licence, or any provision of excise law relating to fuel.
In parallel with the introduction of the new licensing system, the Regulations that lay down the detailed rules and requirements on mineral oil matters have been reviewed and new Regulations, containing additional and reinforced provisions, were recently made. The requirements with regard to record keeping have been strengthened, and a new requirement for persons dealing in fuel to make periodic returns to Revenue has been introduced. All traders, including traders in marked fuels, will have to make monthly returns, electronically, detailing their fuel transactions. This system of returns, which will come into operation from the start of next year, will be an important new source of information for Revenue in relation to the supply chain. It will, for example, assist in the identification of unusual or anomalous patterns of activity.
In addition, Revenue and HM Revenue and Customs in the UK have been working in partnership to identify a new, more effective marker. A Memorandum of Understanding has been signed between the two authorities. A joint "Invitation to Make Submissions" (IMS) seeking proposals was published in June. Both authorities are committed to seeking the widest possible range of proposals, so that the most effective marker for the future can be identified. The closing date for receipt of submissions is 30 November.
Revenue has committed to applying ten per cent of its compliance resources to combating the illicit trade in mineral oil. The legislative steps that have been taken, together with the work on the development of a more effective fuel marker, will provide important new support and enhance the effectiveness of compliance action.