As you may now be aware, there is a scheme for retailers to buy oil under duty-deferred terms from suppliers’ terminals. Using the ‘standard’ deferment scheme, the price of the oil is invoiced by the supplier but without the duty and VAT being charged to the retailer.
Instead, the duty and VAT is deferred separately against the retailer’s deferment account. The taxes are subject to an average four weeks’ deferment (credit) from HMRC.
The scheme clearly provides significant cash flow to the retailer and, by taking the duty out of the commercial supply, it also eliminates potential excise duty bad debts to the supplier in the event of default of payment of duty-inclusive invoices (because, unlike VAT, there is no bad debt relief for excise duty) and therefore should help ‘both ends’ of the supply chain regarding better credit availability. So what’s the catch?
Continue reading Duty deferment: A sense of duty – Forecourt Trader.