I am assured by Revenue that combating the threat which illegal cross–border trade of all kinds, including that in household fuel products, pose to legitimate businesses, consumers and the Exchequer continues to be a priority. Revenue and An Garda Síochána collaborate closely in acting against illegal cross-border trade, and also cooperate with their counterparts in Northern Ireland under the framework of the North-South Joint Agency Task Force. I am assuming that the Deputy, when referring to household fuel products, is enquiring about the movement of home heating oils and solid fuel into the State from Northern Ireland.
Steps taken by Revenue to combat the illegal mineral oils trade, including home heating oils, include the introduction of stringent supply chain controls and reporting requirements, a rigorous programme of risk focused enforcement action and the application of robust legislation. In addition, Revenue and the UK Revenue and Customs undertook a joint initiative to introduce a new marker for use in marked fuels, which came into operation in April 2015. The industry view is that the actions taken have been successful in curtailing fuel fraud.
In relation to solid fuels, the Deputy will be aware that the regulatory regime covering the marketing, sale, distribution and burning of solid fuels in the State is enforced by local authorities in the State. Local authorities have powers to inspect premises and vehicles being used for the sale and distribution of solid fuel, collect samples of coal to check for adherence to environmental standards and to prosecute traders involved in selling coal that does not meet these standards. The collection of Solid Fuel Carbon Tax (SFCT) is heavily reliant on the effectiveness of this regulatory regime.
Solid Fuel Carbon Tax (SFCT) is an excise duty that applies to coal and peat when first supplied in the State for use as a fuel. Neither the movement of solid fuel into the State nor the physical presence of solid fuel in the State generate a liability to SFCT. Therefore, there is no smuggling offence, in terms of evasion of SFCT, attaching to coal coming into the State from Northern Ireland. Solid fuel carbon tax is collected by Revenue on a self-assessment basis and compliance with the law is enforced using the full range of compliance interventions and enforcement provisions for self-assessed taxes.
Currently, there is no carbon tax on solid fuel in Northern Ireland. This factor, combined with that jurisdiction's lower VAT rate on solid fuel, lower environmental standards and currency fluctuations, can give rise to significant price differentials which incentivises the sourcing of solid fuel from Northern Ireland. EU Single Market constraints, which still apply in Northern Ireland, preclude the use of any cross-border movement controls in the administration of SFCT. This means that solid fuel coming into the State from Northern Ireland is not subject to cross-border movement controls typical of harmonised excises on mineral oils, tobacco and alcohol. Revenue has no authority to stop vehicles and physically inspect loads of solid fuel. Similarly, Revenue has no authority to challenge transportation or possession of solid fuel that originated in Northern Ireland as such transportation or possession are not, in themselves, Revenue offences. Even if controls were possible, a person transporting solid fuel from Northern Ireland could legitimately claim that SFCT will be accounted for on relevant supplies made in the State. An SFCT return does not have to be made until one month after the end of the two-month accounting period in which the supply is made.
At the beginning of 2020 Revenue participated in a number of “joint operations” within Low Smoke Zones in conjunction with the Department of Environment, Climate and Communication and local authority solid fuel inspection teams, with a view to checking for compliance across several tax headings, including SFCT. In addition, a SFCT compliance module has been included in Revenue’s ongoing Mineral Oil Tax national compliance project. This project, along with many other field-based compliance activities, has been impacted by Covid-19 restrictions since mid-March 2020.