Tax Appeals Commission determination 138TACD2021 regarding VRT, 2021

• Administrative Decision Number: 138TACD2021
• Year: 2021
• Date: 31 July 2018
• Subject Matter: VRT
• Respondent: REVENUE COMMISSIONERS

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138TACD2021

BETWEEN/

Appellant

V

REVENUE COMMISSIONERS

Respondent

DETERMINATION

Introduction

1. The Appellant is a motor dealership specialising in the sale of used

vehicles. This is an appeal against a decision of the Respondent to classify the

vehicles the subject of these appeals, as category M1 vehicles. The six individual

appeals herein each relate to an individual vehicle on foot of which an individual tax

obligation arises with each vehicle having undergone a separate conversion.

2. The Respondent determined that the vehicles the subject of these appeals were

category M1 vehicles and assessed the vehicles to VRT at the higher rates. The

Appellant submitted that the Respondent was incorrect in this decision and that the

correct designation of the vehicles was as category N1 vehicles. The Appellant paid

VRT at the higher rates based on the Respondent’s classification of the vehicles as

category M1 vehicles however, the Appellant herein seeks a repayment of VRT on the

basis that the vehicles fall to be classified as category N1 vehicles.

3. The EU designation of the vehicles is relevant to the amount of VRT chargeable upon

registration. The VRT rate for category A vehicles defined in section 130 of the

Finance ATC 1992, as being M1 vehicles, ranges up to 36% of the open market selling

price whereas, the rate of VRT applicable to category B vehicles defined as being N1

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vehicles, is 13.3% of the open market selling price. The repayment claimed in

relation to the six vehicles the subject of these appeals, totals €123,662.

Background

4. The Appellant is engaged in the motor vehicle trade and specialises in the sale of used

vehicles. These appeals relate to the amount of VRT assessed to

be chargeable upon the first entry of used vehicles on the register. The six vehicles

which are the subject of these appeals consist of various models of

vehicles (hereafter ‘the vehicles’). All six vehicles are used vehicles, formerly

registered outside the jurisdiction.

5. The Appellant submitted that it validly converted the vehicles from their original

specification as EU designation M1 passenger vehicles (‘M1 vehicles’) to N1 light

commercial vehicles (‘N1 vehicles’). In order to be an N1 vehicle and to avail of the

lower threshold of VRT and to avoid falling into the M1 default, a second hand

converted vehicle must adhere to (amongst other things) the minimum size

requirement for a loading aperture of 800mm and a cargo surface space of 12,800

cm2. This requires measurements to be carried out to assess whether the vehicle

adheres to those minimum requirements. The measurements are required because

of the nature of what a conversion is. New cars conform to a standard while

conversions are by their nature variable.

6. The National Standards Agency of Ireland (‘NSAI’) do not have expertise in relation

to second hand vehicles and the Respondent does not have expertise in relation to

measurement. As a result, a scheme was identified by the Revenue Commissioners

with the assistance of the NSAI whereby appointments of suitably qualified

individuals (SQIs) at approved testing centres (ATCs) are made. The qualification of

those individuals is set by the Revenue Commissioners, but is awarded by the NSAI.

The SQIs at the ATCs measure the vehicles and then produce the evidence that is

required for the vehicles to be designated as N1.

7. It appears from the evidence that the NSAI lost confidence in some of the

measurements carried out by some of the ATCs, but confidence was not withdrawn

from ( ), the ATC which carried out the

measurements in these six appeals. The evidence in this appeal was that the

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measurements were carried out by an individual who had been qualified to the

suitable standard.

8. The NSAI, as a result of its loss of confidence undertook a series of measurements of

new and unaltered motor vehicles. It is to be noted that the vehicles in this case are

neither new nor unaltered.

9. The Respondent refused to register the vehicles as category N1 and in doing so, relied

on information provided by the National Standards Agency of Ireland (‘NSAI’). Such

information was communicated to the Respondent by way of document referred to

as ‘NSAI database (listing new vehicles that allegedly do not satisfy Regulations

678/2011)’ (hereafter ‘the blacklist’). In addition, not all of the car models in issue in

these proceedings are in fact included on the black list. Two of the vehicles (being the

vehicles the subject of Appeals and ) are models which do not

appear on the blacklist. It is not disputed by either of the parties to this appeal nor

by NSAI, that the NSAI has no jurisdiction, responsibility or authority regarding

second hand, pre-registered vehicles and that any advice provided to the Respondent

by NSAI related to the registration of new vehicles only.

10. The six appeals herein are historic insofar as the rules in relation to qualifying

criteria changed on 31 July 2017. Section 53 of the 2017 Act introduced more

restrictive and exclusionary criteria for classification as a category B vehicle, subject

to the lower rate of VRT. However, section 53(2) of the 2017 Act provided that such

amendment would not come into operation until 31 July, 2018. Insofar as the Finance

Act did, prior to the 2017 Act, provide for a less onerous means of converting an M1

vehicle to an N1 vehicle, this process has been overtaken by section 53 of the Finance

Act 2017, from 31 July 2018 onwards. Thus for the purposes of this appeal, the

relevant definitions of category A and category B vehicles are those contained in

section 130 of the Finance Act prior to amendment by the 2017 Finance Act.

11. The Respondent has specified, in accordance with their statutorily provided role to

ensure the proper administration and collection of VRT, that certain requirements

must be satisfied prior to the registration of used converted vehicles. The primary

submission of the Appellant is that the Appellant has observed and satisfied all of the

Respondent’s specified requirements relating to the confirmation of the

categorisation of used vehicles converted from M1 to N1, in particular, the provision