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Wednesday, 30 October, 2002, 17:55 GMT
Drivers conned by illegal fuel
Filling a car with fuel

Unsuspecting motorists could be filling up with illegal fuel, according to a special BBC investigation.

An estimated 4% of all fuel being sold in the UK may be illegal according to official figures.

That could amount to up to a billion pounds in lost tax each year.

Undercover Money Programme journalists gained first-hand evidence of the scam when they received a tip-off about a garage in north-west England.

They filled their van with diesel which, when tested later at a nearby laboratory, turned out to be illegal.

The most likely explanation, according to scientists, was that it had been illegally diluted with kerosene - a low-tax heating fuel.

Costing taxpayers billions

Illegal fuel is all about evading duty, and most of the fraud is on diesel.

In the UK, more than two thirds of the price of a litre of diesel - around 46 pence - is tax.

But there are other fuels on which the tax is lower.

Red diesel, which is supposed to be used only by tractors and other off-road vehicles, has a tax rate of only 3.5 pence per litre.

Kerosene - supposedly only for use as heating fuel - has no duty at all.

These are serious criminal organisations

Customs Minister John Healey

Anyone using those low-tax fuels on the road stands to save a lot of money. It is all highly illegal, but increasingly common.

And the trade is only part of a problem that could be costing taxpayers up to a billion pounds every year, according to a report published this year by the head of the National Audit Office.

Massive organised crime

Fuel fraud has become a major underground industry.

Criminals are setting up so-called laundering plants to remove, chemically, the dye from low-tax red diesel, so that it looks just like ordinary diesel.

Fuel laundering plant
Customs are discovering more and more fuel laundering plants
This allows them to sell on the resulting illegal fuel to unsuspecting customers more easily.

The government estimates that about 4% of fuel is illegal.

Some insiders in the fuel industry believe the true figures could be much higher.

In certain areas where there is a laundering plant nearby they say this figure could rise to 20%.

Customs Minister John Healey told the programme: "These are serious criminal organisations with the capacity to produce vast volumes of illegal fuel."

The scale of the problem is reflected by the dramatic increase in the number of laundering plants seized by customs over the last few years.

Three years ago, three were seized; two years ago it was 20; and last year the total was up to 38.

No obvious solution

Doctored fuel can damage engines. But there is no easy way for customers to know whether the fuel they are buying is illegal or not, apart from getting it tested in a laboratory.

For the government, the situation presents a real dilemma.

[The government] is expecting us to be unpaid detectives

Fuel supplier Mike Scott
It has announced a crackdown, with extra officers involved in fuel-testing programmes, and a controversial scheme to get fuel suppliers to gather information on any of their customers buying low-tax fuels.

Fuel suppliers believe this could amount to spying on their own clients.

Supplier Mike Scott of St Helens-based Caldo Oils told the programme: "They're asking us to do their job for them. They're expecting us to be unpaid detectives. "

Many people believe that the only way of solving the illegal fuel problem is to cut the level of tax on ordinary road diesel, but so far that appears to be a nettle which the government is unwilling to grasp.

Black Market Britain: Fake Fuel will be shown on Wednesday 30 November, on BBC Two at 19:30 GMT.

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