Following agreement with Customs and Exciseand the Driver Vehicle Licensing Agency, the NAAC, NFU and Confederation of Forest Industries have released a new Memorandum of Agreement giving guidance on the use of red diesel in agricultural, horticultural and forestry vehicles on the road.

The aim is to clarify how rebated fuel can be used by farmers and agricultural contractors and ensure both the industry and enforcement officers have a clear and common understanding of how the law will be interpreted and applied.

Under current legislation, the exemption defines a tractor as a vehicle used on public roads solely' for purposes relating to agriculture, horticulture, forestry or cutting verges bordering public roads; or cutting hedges or trees bordering public roads or bordering verges which border public roads.

The new Memorandum more clearly defines the meaning of solely' as well as clarifying those activities which are acceptable uses of red diesel.

Jill Hewitt, chief executive of the NAAC, said: "We have had a clear message from HMRC that red diesel is intended for off road use and the agricultural sector is allowed the exemption for road use when this is incidental to the agricultural operation being carried out on the land.

"We are delighted it has been made clear that contractors are allowed to use red diesel to move between agricultural operations but we must not abuse our privilege and I would urge all operators to take note of the Memorandum. It can only be a positive step to have clear guidance so that if you are stopped you can actually feel confident that you are OK."

Hannah Moule, NFU Transport and Inputs Advisor, said: "Given the extensive range of machinery and equipment used within agriculture today, and how farming methods and diversified activities have developed, there are now many operations undertaken for which we have not had clear guidance on the permitted use of red diesel.

"With agricultural inputs and costs rising, red diesel is a valuable concession that we, as an industry, must use properly. The Memorandum is vital in giving the industry clarity over the permitted use of red diesel, so that we do not become complacent and risk losing this vital exemption."

Stuart Goodall, chief executive of ConFor, welcomed the agreement, saying, "This Memorandum is good news for forestry, providing much-needed clarification. All parties have worked hard to achieve this."