Former Scottish haulier banned from being a director after red diesel abuse

Commercial Motor
April 16, 2018


The former boss of a Scottish haulage firm has been banned from being a director for nine years after several years of illegally using red diesel in vehicles to evade duty.

Scott McClung was the sole director of SDS Logistics (Bonnybridge). 

SDS Logistics was based in Leslie Park, Denny, Stirlingshire but ceased trading in August 2016, when it was placed into liquidation with an eventual deficiency to creditors of £1,860,934.

An investigation by the Insolvency Service following the liquidation found that between May 2014 and April 2017, SDS Logistics misused close to 1.7 million litres of rebated Gasoil, otherwise known as red diesel, in their road vehicles.

Gas oil is a rebated fuel, dyed red, for identification purposes. It can be used in registered agricultural or construction vehicles, such as tractors, excavators, cranes and some other non-road applications such as boats, and carries a significantly reduced tax levy compared to Derv, the white diesel fuel used in ordinary road vehicles.

But it is illegal to use red diesel in vehicles registered for and used on public roads.

SDS Logistics’ misuse of the fuel was first detected when HMRC officials visited SDS Logistics’ premises in April 2016 and found four vehicles had been misusing red diesel.
HMRC levied an excise duty of £790,456 and a penalty of £553,210 but SDS Logistics failed to pay, leading to its liquidation.

On 13 February this year, McClung gave a disqualification undertaking to the Insolvency Service, which was accepted by the secretary of state, on 21 February 2018. The disqualification is from 14 March 2018 and is effective until 14 March 2027.

Robert Clarke, investigations group leader at the Insolvency Service, said: “The substantial period of this disqualification reflects the fact this director put his financial interests above all else in taking advantage of this subsidised fuel. The majority of similar businesses pay the proper duty on the fuel they use, and carry that legitimate cost within their trading strategy.

This was a blatant disregard by a director to obtain an unfair competitive advantage.”

What are the penalties for using red diesel

HMRC officers have the power to: Examine any vehicle and its fuel; Require the vehicle’s owner or driver to open the fuel tank for inspection; Require the vehicle’s owner to produce documentation relating to the vehicle; Enter and inspect any premises, apart from private houses, to inspect, test and sample fuel; Ask anybody concerned with the sale, purchase or disposal of rebated fuel for their documentation.

Vehicles found to be using rebated fuel illegally may be seized by the authorities. The vehicle’s owner will then have to pay a fee for the vehicle’s release, which would include a penalty for the offences (up to a £250 fine for each offence), along with an amount to cover the duty owed. Serious offences may result in the issue of an unlimited fine to the operator and a prison sentence of up to two years.

See our full penalties to using red diesel guide.


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