A fiery issue
IT may be the oldest profession on the border but as the UK tax and customs authority, HMRC, clamps down on the sale of fuel from the North into the Republic, ‘smuggling’ the cheaper alternative into Cavan has become more difficult, as reporter Zoe Tunney found out...
There are winners and losers on both sides of the border, it appears, not least squeezed Cavan households facing into winter, the Celt’s research shows.
As of Monday (September 8), 1,000 litres of heating oil or kerosene would set you back between €900 and €925 including VAT in Cavan and Monaghan.
According to the Consumer Council of Northern Ireland Oil Price Checker website, the same quantity would cost around £535.74 in the North.
At an exchange rate of 0.87, the sterling price equates to €615.80 or so, with a saving of around €300, It’s clear to see why Cavan people are driving across the border and filling drums of the liquid gold to bring back to the south.
Then there is the smokeless coal, which people in the Republic are legally obliged to use in their open fires since the introduction of the Solid Fuel Regulations in 2022.
Of the handful of suppliers in Cavan and Monaghan contacted by the Celt, two sold smokeless coal. One offered it at €14.95 per 20kg bag, while the other coal merchant told us he was selling the same size bag at a loss of €10 because he “can’t get rid of them”.
The suppliers we contacted on the northern side of the border could all sell it at €10 or less. One retailer on the Donegal side of the border with Fermanagh could offer it for just €8 per 20kg bag.
Tommy Sheehan of North Pole Oils in Cavan Town is a coal merchant who at the time of writing was selling smokeless coal at a loss.
He is down from a six-day working week to three and has been forced to downsize the number of delivery lorries he has on the road from five to three.
Tommy estimates that, if he were to try to cover the cost of the coal, pay VAT at 13.5% and the carbon tax of €3.34 on a 20kg bag, he would need to charge customers €16 per bag to turn a profit.
On the face of it, the cards seem to be all stacked in favour of NI retailers except that HMRC has started to monitor how much red diesel and kerosene some of them are selling to customers from the Republic of Ireland.
If you are one of the many people from Cavan who has been making regular trips to Fermanagh for heating oil, you may wonder why your supplier now takes your name and address. This is for the monthly returns the business has to make to HMRC as a “registered dealer in controlled oils”.
There may be no hard border in Ireland after Brexit but tax and customs revenue is just that: Revenue. And it is a primary function of every government to ensure the correct amount is collected in their jurisdiction. Why it matters to HMRC that the Irish State is losing revenue to the North is a question answered later.
One supplier we spoke to on the Cavan/Fermanagh border claims, since HMRC began scrutinisng his returns last November, sales of kerosene in his business are down by 90%.
People are put off by providing their contact details, he says, and he has to turn them away from the pump once he establishes they intend to draw the heating oil back across the border.
There are cracks in the HMRC system and Cavan people who have schlepped to the border to save hard-earned money are finding the loopholes. For a start, cash is king and cash sales are still being processed in certain outlets with no names taken.
Some people have found if they go just a few extra miles along the border to another retailer, they can fill up with no checks because HMRC is not monitoring this particular supplier in the same way as its neighbour.
“People I have turned away have also called in on their way back from Enniskillen where they tell me they filled up at a well-known filling station there that is un-manned and operates a pre-paid pump system.
“It’s not a level playing field at all,” the business owner said, “people can go down the road or further inland.”
Another supplier close to his premises has also been targeted by HMRC. The person running that fuel depot says 80% of his customers come from the Republic.
“We sell kerosene at 74 cents or 63 pence sterling per litre, while in the south the price is €1.05,” the employee said. “If a customer buys 10 bags of smokeless coal from me, they’re making a saving of €80.
“They come here and fill eight to 10 drums in the boot of their car and put a blanket over them. Some come with a 1,000 litre cube in a concealed trailer. Can you blame them? Everyone has to live. The green tax in the south is where the problem is for them.”
“To sell diesel and kero in the UK you have to be registered,” the first businessman explained, “There has really always been a rule to say that we can’t sell heating oil outside the UK but, the way it looks to us now is that the loss of revenue in the Irish state has come to the attention of someone at a high level in the government, and HMRC has been asked to oversee and clampdown on what’s going on.
“We’ve had compliance inspections every three to four years for the past 40 years but, just before Christmas last year, HMRC came with the news that we are not to sell to Republic of Ireland customers. I’ve been selling petrol, oil, heating oil to anyone who pulled up at the pumps for decades but now the rule is that we have to police it!
“It came down to the level of sales here, I’d say,” the man continued. “Since enforcement our sales here is down 90% and they are not so rigorous on asking us for customer contact details.”
If sales in some Fermangh businesses are down by 90%, they certainly have not yet picked up by 90% in Cavan as Tommy Sheehan's experience has shown, although there's a long winter ahead.
The official line
The Celt contacted both His Majesty’s Revenue and Customs (HMRC) and Revenue Irish Tax and Customs and posed some uestions about their relevant jurisdiction to each agency.
To HMRC we asked why has this practice, which has always been a feature of border life in Ireland, become a problem now. A spokesperson for the UK agency responded with the following: “UK rebated fuel is marked with UK fiscal markers. It is allowed a rebate on condition that it will be used in the UK for a qualifying purpose. It has never been legal to supply UK rebated fuel for use in the Republic of Ireland, or to use it in the Republic of Ireland.”
A footnote to that response adds: “Collaboration with partner agencies including the Irish Revenue Commissioners has significantly reduced the incidence of fuel laundering in Northern Ireland.”
When we asked if HMRC regard the practice as “smuggling” or “tax evasion” they answered: “It would be a matter of concern for the Republic of Ireland, as Irish fuel duty will be due on fuel entering the country. The same applies to Irish fuel entering the UK.”
We wanted to know why HMRC does not “just take the revenue generated from the sales of this fuel in the North and leave the monitoring of the practice up to Irish Revenue?” They said: “Rebated fuel supplied to persons from outside the UK may subsequently be diverted for illegal use in the UK, or for fuel laundering in either the UK or the Republic of Ireland.
“Extensive multi-agency partnering, combined with cross border cooperation with EU law enforcement partners has been a key element in HMRC’s operational response to fuel fraud.
“In addition, an aligned approach to fuel marking is vital for maintaining both jurisdictions’ fuel tax enforcement policy.”
The Celt also asked HMRC if it matters if a person from the Republic buys just one 20ltr drum of oil or a 1000 litre ‘cube’ of oil and we were told: “No – the rules relating to the supply and use of rebated fuel apply regardless of the volume involved.”
Finally, this newspaper asked how HMRC decide what fuel suppliers to target and why they may be monitoring one retailer but not another close by. We also wanted to know if Revenue asked HMRC to ramp up its regulation of this practice in the North on their behalf.
In a statement, HMRC said they were unable to answer some of our queries because “it would mean disclosing information about compliance activities, which would likely prejudice the assessment or collection of tax.
“It should be noted that visits are to check that operators are complying with the obligations of their Registered Dealer in Controlled Oil (RDCO) licence approval,” the statement concluded.
Revenue’s take
We also contacted Revenue. We asked the Irish agency to outline the current legislation for buying fuel in the North and transporting it across the border into the Republic.
In their statement they explained that with regard to petrol and diesel “there are no restrictions in national or EU law on individuals travelling to another Member State, purchasing fuel for their own vehicle, and returning to Ireland with that fuel in the vehicle’s tank.”
However, the importation of heating kerosene attracts a reduced Mineral Oil Tax (MOT) rate and must be marked in accordance with Irish law, Revenue said.
“In Northern Ireland, kerosene marked under UK legislation has a different colouration. Only kerosene marked in accordance with Irish requirements may be brought into the State for personal or commercial use. Distance sales of heating kerosene from Northern Ireland into the State may only take place under the control of a tax representative authorised by Revenue, who is liable for the excise duty due.”
We also asked Revenue what it estimates purchases of coal and heating oil in the North cost the state in loss of revenue. Revenue said it does not publish estimates of revenue loss from cross-border consumer purchases, “as such figures are difficult to isolate from broader consumption and trade patterns.”
The Celt also asked how Revenue monitors and regulates the illegal sale of kerosene and coal from the North into the Republic and they said: “Enforcement activity is risk-based and focuses on illegal practices such as fuel laundering and illicit distribution.
“Revenue officers carry out roadside fuel testing and premises inspections, and collaborate with An Garda Síochána and other national and international authorities where appropriate.
“Revenue maintains ongoing cooperation with HMRC on matters of mutual concern, including excise fraud and illicit fuel trade.”
Price at the pumps
Local prices quoted for home heating oil on Monday, September 8 (all prices incl VAT and exchanged into sterling at a rate of 0.87):
€0.91 / £0.79 (Cavan)
€0.96 / £0.84 (Cavan)
€0.90 / £0.78 (Monaghan)
€0.93 / £0.80 (Cavan)
We checked out the price charged for heating oil at other points along the border in the North (prices quoted per litre incl VAT and exchanged at a rate of 1.15):
€0.74 / £0.64 (Fermanagh/Cavan)
€0.81 / £0.70 (Armagh/Monaghan)
€0.78 / £0.68 (Donegal/Fermanagh)
Shovelling coal
Of the four local suppliers contacted only one also sells smokeless coal:
Price for 20kg bag smokeless coal on Monday, September 8 - €14.95 incl. VAT (Cavan)
We also checked out the prices charged for coal along parts of the border in the North.
The prices paid for various size bags of smokeless coal on September 8 are:
€10 (£8.50) for 20kg (Fermanagh/Monaghan)
€17 for 40kg (Note: bag weight) (Armagh/Monaghan)
€8 for 20kg (Fermanagh/Donegal)
Differing rates
Factors affecting the price difference on fuel on both sides of the border:
VAT rate North: 5%
VAT rate South: 13.5%
Carbon tax North: None
Carbon tax South: Carbon tax is paid by the supplier of the fuel and reflected in the price charged to customer.
The rate of carbon tax charged from May 1, 2025
Solid fuels including smokeless coal – €167.24 p/tonne or €3.34 per 20kg bag
Liquid fuels including kerosene – €63.50 p/tonne or approx. 18.3 cents incl. VAT per litre
Note: The carbon tax rate in Ireland is legislated to increase annually until 2030, rising by €7.50 per tonne of CO2 each year, except for a €6.50 increase in the final year, which will bring the rate to €100 per tonne.
The rate for petrol and diesel will increase each October, starting in Budget 2025, up to and including 2029.
The rate for other fuels, such as heating kerosene and gas oil, will increase each May, up to and including 2030.
Because the carbon tax on solid fuels like coal had its last scheduled increase on May 1, 2025, there will be no further carbon tax added to a bag of coal in May 2026.
Excise Duty North: No excise duty on kerosene, VAT is applied instead. Neither is any duty imposed on coal.
Excise Duty South: €160.81 per 1000l
* The National Oil Reserves Agency (NORA) levy is charged at a rate of 2 cents per litre on oil products such as petrol, autodiesel and kerosene.