Converting commercial vehicles back to passenger vehicles is a tactic at the centre of many Vehicle Registration Tax scams, writes Paddy Comyn
There have been a number of instances of fraud in the motor industry in regard to Vehicle Registration Tax (VRT).
The tax, which is charged on any vehicle that is registered in the State, be it new or imported from another country, is based on the cubic capacity of the car.
It is currently charged at a rate of between 22.5 per cent of the open market selling price for cars up to 1.4-litre, 25 per cent for cars between 1.4-litre and 1.9-litre and 30 per cent for cars over 1.9-litre.
The main areas where fraudsters have cashed in centres around high-end luxury sports utility vehicles (SUVs), such as Range Rovers, where these have been converted from passenger vehicles to commercial vehicles, through the minor alteration of removing the rear seats.
Commercial vehicles are subject to a mere €50 VRT, compared to the sometimes thousands that would be due on the passenger versions.
Revenue investigations have centred around dealers and individuals who have then reconverted the commercial vehicles back to passenger models without paying the proper rates of VRT, which in some cases can be as much as €45,000.
The Revenue Commissioners have been carrying out "Operation Viking", which involved roadside checks to clampdown on VRT evaders since 2005.
In the case of commercial SUVs a separate national operation code-named "Operation Attic" is aimed to counter the conversion of SUVs from commercial to passenger vehicles where VRT and VAT is being evaded.
However, another area where there is a potential for misuse of the VRT system would be underdeclaration of the specification of certain models.
In the case of luxury cars such as Mercedes-Benz or BMW models, if there was underdeclaration of the engine capacity of the car, for example, if a 3.0-litre car was recorded as a 1.8-litre, this would also affect the amount of VRT paid. A 3.0-litre model would be subject to a VRT rate of 30 per cent, whereas the 1.8-litre model would only incur the lower rate of 25 per cent, thus saving several thousand euro.
VRT is also supposed to be paid on an optional extras that are fitted to a car, extras such as leather upholstery, premium audio systems and satellite navigation or optional safety equipment. Often these come in various grades or packages.
Fraud would occur if a vehicle was declared as a basic specification model, but was, in fact, a higher specification model, thus avoiding payment of any VRT on these often expensive optional extras.
In all of these cases, if it was a dealer who was underdeclaring the engine capacity, or indeed the specification of particular models and then selling the cars as high specification models, they could be making heavy profits on these vehicles.
They would also be competing unfairly with legitimate dealers by being able to sell these vehicles at greatly reduced prices.