An estimated 30,000 foreign registered cars are being driven here illegally, prompting calls for a crackdown on VRT evasion. Daniel Attwoodreports
The Revenue Commissioners has confirmed that it is to launch a major crackdown on car importers who are evading Vehicle Registration Tax (VRT) and VAT.
According to motor industry estimates there are as many as 30,000 foreign registered cars being driven here illegally that should have been registered in Ireland and had VRT paid.
The Society of the Irish Motor Industry (SIMI), which represents the auto industry here, claims that some of these cars are being driven for up to three or four years without being registered in Ireland or having VRT being paid.
While the Revenue Commissioners rejects the number of such vehicles is as high as 30,000, it has confirmed that it is planning a major crackdown on VRT evasion this year.
A national VRT project concentrating on tax evasion and unregistered roadside traders will begin in early 2007, said a spokesman.
"In tandem, we will continue with our programmes relating to the detection of unregistered vehicles and investigating complaints and intelligence received in relation to specific instances of abuse."
However, the Revenue Commissioners points out that many unregistered vehicles are permitted to be driven here. For example, EU citizens looking for work are allowed to drive unregistered vehicles for up to one year.
In addition, if just one per cent of the 8.8 million people who holidayed here last year brought their own cars there would have been over 70,000 foreign registered vehicles legitimately on Irish roads. Revenue also points out that many Northern Irish residents travel to the Republic to shop and buy cheaper fuel.
"Revenue must recognise these rights and balance the detection of unregistered vehicles with the rights of EU citizens and bona fide tourists on short-term stay in the country," said a spokesman.
Evading VRT can prove tempting, especially when high value cars are involved. The saving on a high performance 2005-registered BMW M5 would be over €31,000, while evading VRT on mainstream cars such as a 2005 diesel Ford Mondeo can result in savings of over €8,000.
Even cars that are being registered here are often being "under-declared", which means Revenue is not being told of extra equipment such as satellite navigation or heated seats and is therefore undervaluing the cars when assessing them for VRT.
In addition, it is claimed some unscrupulous importers, who are sourcing the majority of these cars from Northern Ireland and Britain, are altering cars' mileages and even giving false declarations of when a car was first registered - all to avoid a hefty VRT bill.
"The Revenue Commissioners are failing in their duties," claimed SIMI chief executive, Cyril McHugh. "We estimate that the loss to the State is in the region of €90 million in VRT alone. Then one must consider that these cars are not taxed here and there is also the huge cost in unpaid parking fines and speeding fines as the drivers of these cars cannot be traced."
The motor industry here is already under severe pressure from the record number of cars being legally imported into Ireland, which last year numbered over 50,000.
It says that while it can cope with this added competition, it cannot survive if the Government does not act against those who are flouting the VRT laws. "In Denmark nobody is permitted to drive a non-Danish car for more than 24 hours before contacting the police," said McHugh. "Here it is taken for granted that you can get away for two years without being caught."
But the Revenue Commissioners denies the motor industry's claims, saying it takes a "vigorous approach" to policing VRT.
Over 12,000 foreign registered vehicles were stopped and investigated last year, although 75 per cent of those cars stopped were fully compliant. But for those 3,000 cars each year that were not, the Revenue took action.
"The full rigours of the law were brought to bear on the others resulting in seizures, compromise fines, scrappage of vehicles, re-export of the offending vehicles and in some cases, prosecutions," said a Revenue officer.
Late last year, a national VRT operation was mounted in conjunction with the gardaí during which 2,650 vehicles were investigated. Of these, 214 were seized because their owners had failed to register and pay VRT. However, just €74,000 in penalties were imposed, despite the total amount of VRT at risk being put at €1.4m.
While it is claimed tens of thousands of foreign registered cars are now being driven here when they should have been imported, many also end up being sold on the side of the road by unregistered dealers. "It is scandalous that these black market roadside traders, who are evading taxes and rates, are allowed to sell cars unchallenged," said McHugh.
"At least €30 million worth of business is going on at the side of the road - all of which is outside the VRT and VAT net."
As a result of its anger at the lack of action to stem the problem, SIMI has embarked on one of its most controversial advertising campaigns ever.
The hard hitting adverts single out the Revenue Commissioners and the Office of the Director of Consumer Affairs (ODCA) for particular criticism, and the society has warned that these ads will become more critical in the run-up to the election later this year unless action is taken.
While the ODCA is now working with the motor industry to tackle the problem of "clocked" cars, the Revenue Commissioners has said it is far from pleased with the society's ad campaign.
"We are not particularly impressed by ads, which are based on distortion, especially when there are opportunities open to these bodies to come in and engage with us on the issues involved."