HMT Red Diesel Consultation: techUK response

techUK responds to proposed changes in tax treatment of red diesel and the implications for data centre operators

A wide range of business and industrial users are currently eligible to consume red diesel which is taxed at a much lower rate than normal (white) diesel.  Data centre operators use red diesel for this reason.  After March 2022 it will be illegal to use red diesel other than for agriculture, rail and non commercial heating. The issue for operators is that it is use, not purchase, that will be illegal from this date and severe penalties are proposed.  Since operators have large storage tanks and low generator activity, this may require existing fuel in tanks to be replaced. 

We were alerted to this issue on 29th September and had enough time to poll our operators and establish that this would pose significant problems for the sector.  We therefore submitted a response yesterday, just ahead of the deadline!  Our comments focus on the practical problems of draining and disposing of large quantities of fuel and the potential impact on resilience and compliance with SLAs. We also mentioned the impact of costs that could not be accommodated retrospectively into existing customer contracts and would therefore come off the bottom line.    

You can find our response below. 

The consultation is now closed but for reference it should still be here