Motor dealers trying to reclaim tax on SUVs

Motor dealers are using a legal loophole to claim the repayment of €170 million in tax paid on four-wheel drives from the Revenue Commissioners, it emerged yesterday.

Revenue chairman Frank Daly told the Dáil Public Accounts Committee (PAC) yesterday that accountants working for the dealers were seeking the repayment of vehicle registration tax (VRT) on the basis of an ambiguity in the definition of sports utility vehicles (SUVs). The claims average €7,500 each.

Mr Daly told the committee that the total value of those received to date was €170 million, but added that he expected this to increase to €200 million.

The 2007 Finance Act changed the law, and the loophole has been closed since April.

High-profile accountancy firm Deloitte is one of those involved, and is believed to be responsible for a large number of the claims.

It is understood that others may be offering a similar service to the motor trade, but it was not possible to confirm this last night.

VRT applies to vehicles destined for use on the roads. It is understood that the claims are based on the fact that as SUVs are four-wheel drive and are designed to be driven "off-road" the charge should not strictly apply to them.

The Revenue chairman accused the motor dealers and accountants involved of "trying something on", and warned that he was confident that nobody would get a penny out of the scheme.

"Somebody obviously regards the taxpayer as fair game."

Motor dealers normally pay the VRT as they import the cars and then pass it on to the purchaser. When individuals import vehicles they pay it themselves.

In a statement last night, Deloitte said it regularly filed claims on behalf of its clients seeking the repayment of overpaid taxes from the Revenue Commissioners.

"Recently these repayment claims have included reclaiming taxes overpaid by motor dealers which resulted from an ambiguity in the VRT legislation.

"This ambiguity was in respect of SUVs. It is the motor dealer who must initiate a claim for any overpayment of these taxes."

The firm added that these claims were with the Revenue Commissioners for consideration in the normal way under relevant legislation.

If the Revenue turns down the claims it is open to any taxpayer seeking these refunds to take the issue to the High Court.

Mr Daly told yesterday's meeting that as a result of audits carried out in the motor industry, the Revenue is considering 30 cases for prosecution early next year.

Last year the Revenue netted €146 million in unpaid taxes from a special audit programme aimed at the construction industry.

Mr Daly told the committee that anyone working for the Revenue Commissioners would have been "saddened" to read yesterday that one of the agency's officials was being questioned by gardaí in connection with a tax evasion scheme operated by a group of motor dealers.