ROM1 – a step in the right direction

In a bid to reduce illegal oil trading, the Revenue Commissioners introduced monthly Return of Oil Movements (ROM1) reports into the Republic of Ireland last year. Feeling weighed down by ROM1’s administrative burden, its introduction was initially met with some reservation
More than a year on, industry players can now see benefits writes Irish correspondent Aine Faherty – particularly towards the achievement of its goal to reduce illicit trading.  Now Northern Ireland is also looking at ROM1 with a view to changing its existing RDCO system.

ROM1 – sales of legal diesel are on the rise

Since the introduction of ROM1 in January 2013, it is estimated that the legal diesel market in Ireland has risen 5.2%. Twelve months prior to this, the same market was down by approximately about 1.2%.
According to Paul Candon, Topaz marketing and corporate services director these figures provide ‘positive proof’ that the new legislation is having an impact.
“In recent years, rogue operators have become highly efficient in their operations. The fact that all genuine licence holders must now submit details, including opening/ closing stock balances and details of purchases/sales for all oil products, means illicit trading is now more difficult than ever,” said Paul.  “This issue is island-wide and also of great concern north of the border.”
Time to improve RDCO
Despite the RDCO system having been in place in Northern Ireland since 2003, the trade is still running at close to a £160m loss to Treasury. Although this tax gap has decreased by £50m since its introduction, Paul says it indicates that more work needs to be done.
“RDCO was a huge step forward for HMRC but the scheme needs to sit in sync with ROM1 in terms of the requirements for the licence holder,” adds Paul. “There need to be stronger controls in place where the movements of stocks and goods supplied are fully traceable, as well as a stronger legislative requirement for reporting.”
Donall O’Connor, managing director of Value Oils, which operates north of the border, believes that for the most part, the RDCO scheme does not appear to have stopped illicit product being bought and sold in Northern Ireland.
“Despite the fact that over 460 retail sites have been found with illegal product since 2011, there has not been a single prosecution.  I don’t have much faith in the present RDCO system as it operates.”
In Donall’s view the changes which have been suggested to make RDCO more similar ROM1 – to include purchases with sales – might be beneficial.”
Making further improvements to ROM1
For Jim Fitzgerald, managing director of Campus Ireland and chairman of the         Irish Petroleum Industry Association (IPIA), ROM1 is an important part of the Revenue Authority’s campaign against fuel laundering in the Republic.  “ROM1 is achieving its goal and has the full support of the oil industry as represented by IPIA.
“Early indications are that it appears to be having a positive effect in cutting off supply to the launderers,” Jim added. “IPIA and Revenue are in ongoing discussions to see how the effectiveness of the campaign can be improved further.”
Top Oil is wholly supportive of all measures taken to protect the legitimisation of the oil industry. John O’Donovan, Top Oil’s national reseller manager says that although ROM1 returns have increased the administrative burden on all oil businesses, especially the smaller players with less administration resources, “if it achieves its aims we believe it will be worthwhile,” says John.
“To begin with ROM1 returns did create an administrative headache for us,” said Rita Lambe of Lambes Oil, Co Offaly. “Now it’s a fairly routine operation which has made everything more transparent. It’s also gone some way to reducing the activity of rogue traders which is a good news all round.”
Does RDCO need updating?