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UK fined for red diesel sales to pleasure boats

The UK has been fined €32mn by the European Court of Justice for allowing pleasure boats in Northern Ireland to use lower-tax red diesel.

According to a report in the Financial Times, lawyers say the case sets a precedent for future disputes.

The fine was a warning that although Britain has left the EU, it is still bound by some of its rules because Northern Ireland remains in parts of the EU single market.

The court also said it levied a higher fine because London took so long to comply with a judgment dating from 2018.

The UK did not change the law governing marine fuel in Northern Ireland to comply with the EU rules until October 2021.


The court based the fine – which was larger than expected – on the size of the UK economy rather than that of Northern Ireland’s economy.

“This is an important case because it sets a precedent for how the ECJ will approach other infractions,” said Alexander Rose, a subsidy and competition law specialist at law firm DWF.

“The ECJ had discretion as to the amount of the fine, but chose a higher figure of £27.6mn (€32mn) in order to prevent ‘the repetition of similar infringements of EU law in the future’, a direct reference to the commitments in the withdrawal agreement and the Northern Ireland protocol.” 

James Webber, partner at law firm Shearman & Sterling, added: “The UK remains subject to the jurisdiction of the ECJ and can be fined for failing to correctly implement EU directives in Northern Ireland, as has happened here in relation to fuel excise duties.”

Under EU law only commercial boats are allowed to use lower taxed fuel, but by dyeing all marine fuel red it was impossible to distinguish if pleasure craft were paying the full rate, the court heard.


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