TC09627 - [2025] UKFTT 01068 (TC)

Mr Watters is the sole director of CFL. The business was set up in 2013 and supplies solid fuels, petrol and diesel. He used to deal in agricultural (red) diesel but stopped doing this in 2017. He bought the vehicle in 2017. The vehicle has 5 “pots” (segments of the tank) each with a 4,000 litre capacity. He explained that different combinations of pots are used in the vehicle to balance the load. He used pots 2, 3 and 4 to balance his load, but Mr. Mone did not use pot 3.

He says that he disputes HMRC’s assertion that the fuel was not consistent with UK duty paid fuel.

He says that the fuel was purchased within the UK from WR Kennedy & Co under invoice 991491 and he exhibited a copy of the invoice. He says that the invoice shows that the fuel was purchased on 4 April 2022. The fuel was collected from the terminal and offloaded in CFL‘s yard on 5 April 2022. Mr Watters exhibited CFL’s VAT account for the period, which (he says) clearly shows the fuel. His VAT returns have not been queried.

On 5 April 222 Mr Watters was contacted by Paul Mone of Black Hill Energy, who was looking to borrow the vehicle as he needed it to move a stock of fuel from his storage facility in Keady to his service station. Mr Mone collected the tanker on 5 April 2022 and moved 8,000 litres of diesel using pots 2 and 4 in the vehicle, which he returned later on 5 April 2022.

Mr. Watters says that when Mr Mone returned the vehicle to him and he loaded his own fuel, the pots in the vehicle were empty. The vehicle is loaded from the top. By lifting the lid on each pot, it was possible to look down into the tanker and as far as he could see it was empty. He did not wash out the pots as that leaves a trace of water.

On 6 April 2022 Mr Watters received an order for 12,000 litres of DERV from Top Service Station, Craigantlet. He loaded the vehicle at about 5 or 6 o’clock in the evening. He had received a price alert that DERV was dropping in price the next day, so he asked the driver to delay delivery to Craigantlet in order that he could pick up DERV at the reduced price.

On 7 April 2022 HMRC intercepted the vehicle whilst making a delivery and HMRC say that they took 3 samples. Mr Watters says that he was not provided with any samples or notice of sampling, and this is a breach of Schedule 5 HODA. He says that this makes the only evidence HMRC have inadmissible. He says that the fuel was bought in the UK and HMRC had the invoice from the outset.

Mr Watters accepts that the best way to protect one fuel from adverse traces of other fuels is not to use a pot for more than one fuel. He doesn’t loan his remaining vehicle anymore and only supplies one product.

Since the vehicle was forfeited, his sales have gone down, although to some extent this may be the result of Covid. If he had two tankers, he could put different products in different lorries and deliver for other people. Now he only delivers white diesel and petrol that he is dealing in. Only having one tanker restricts who he can deliver for as well as how much he can sell. He exhibited a copy of a letter from his accountants, written in very general terms, which indicated that CFL has been struggling financially with increased costs and competitive market and this has resulted in trading losses in the last couple of years. The accountant said that a loss of a major asset of the company would make it more difficult for it to continue as a going concern.

Mr Edwards put it to Mr Watters that he should know of the risk of fuel being contaminated, but Mr Watters’ view was that he did not think that was a real risk with very small quantities of a previous load.

Mr. Edwards asked Mr Waters why he did not challenge the seizure in the magistrates’ court, where the points he is making now could have been more fully exploited. Mr Watters position is that he was legally advised and he did what his advisers told him to. When asked why he did not ask his advisers to appeal the seizure, Mr. Watters said that that was what he thought they were doing.

In re-examination, Mr Watters was asked about Officer Spratt’s evidence and whether he had any explanation to offer. His view was that, if you put white diesel on top of red diesel, that would produce a contaminated sample. He had no explanation for the presence of solvent traces in the sample. He emphatically denied removing markers, laundering fuel or trying to profit from fuel laundering activities.