9,000 cars re-registered to save on cheaper tax

ALMOST 9,000 private cars have been re-registered as commercial vehicles for motor tax purposes since 2008, with more than 2,300 alone so far this year, it has emerged.

The Department of Environment explained yesterday that the reclassification of so many vehicles – which could save individual owners up to €900 per annum – had prompted its recent decision to instruct local authorities to carry out greater checks on vehicles being declared for commercial use.

Figures released by the department show that 3,553 private vehicles were re-registered for commercial use last year and 3,058 in 2008. A total of 2,345 vehicles have switched from private to commercial status in the first eight months of this year.

It is understood many of the recent re-registrations have related to expensive 4x4 vehicles like the BMW X5 and Ford Maverick, sparking Government fears that the system is open to increasing abuse.

However, the department has sought to play down media reports which suggested that thousands of owners of goods vehicles could be facing a major hike in their motor tax for using work vehicles for family or social journeys.

A spokesman for Environment Minister John Gormley insisted there has been no change in the motor tax regime. He claimed the department has simply issued a circular to local authorities on the rules and regulations regarding the motor tax of vehicles adapted for commercial use.

The spokesman said the RF11A Goods Declaration form – which requires applicants to make a declaration at a Garda station that the vehicle will be used for commercial purposes – had always been a requirement when first taxing a commercial vehicle.

“Owners of vehicles currently taxed for commercial purposes face no additional requirements regarding forms or declarations,” he said.

The only change is that owners who wish to register their vehicles as commercial vans for the first time will have to provide a Revenue registration identity number as proof that they have a business registered for tax purposes.

“The measure is designed to ensure that the appropriate rate of tax is paid,” said the spokesman.

The department’s circular to local authorities said the “overriding” reason for the change was due to people “putting the seats back in their vehicles”. It also recommends motor tax officials should ask the owners of small vans and adapted good vehicles for supporting documentation, including evidence of registration for VAT, a tax clearance certificate and a commercial insurance certificate.

“Applicants should be made aware that if the vehicle is used in any private capacity, it must be taxed at the private rate,” stated the circular.

The move has been widely criticised with the opposition as well as representatives of motoring and farming organisations.

AA spokesman Conor Faughnan branded the directive as “silly” and “difficult to enforce,” while the Irish Cattle and Sheep Farmers Association described it as “bureaucratic insanity”.

Fine Gael environment spokesman Simon Coveney said the plan was “unworkable, unenforceable and hits struggling tradespeople”.

Sinn Féin TD Martin Ferris said the measure would penalise licence holders who use commercially registered vehicles for purposes other than for work. “It will also, I imagine, impose considerable extra burdens on the gardaí who surely have better things to do than stopping Mr Murphy’s bread van on a Saturday night and interrogating him as to whether he was delivering sliced pans or going to the local club match or dropping his mother to Mass,” said Mr Ferris.

Communications Minister Eamon Ryan expressed concern that the controversy had created a perception that the Green Party was a party of “taxation and hurt”.

Q. What are the basic rules for registering a private vehicle for commercial use for the purpose of motor tax?

A. A vehicle must be constructed or adapted for the purpose of carrying goods.

Q. Surely all cars can carry goods?

A. Indeed. However, vehicles should only be certified as taxed for commercial use if: (a) the goods carrying area is greater than the seating area; (b) all seats to the rear of the driver’s seat are removed and seat bolt holes welded over; (c) all rear seat belts are removed and seat belt anchor points welded over.

Q. So why is there a problem?

A. The Department of Environment has become concerned that the owners of private vehicles are deliberately making a false declaration that they are being used for commercial purposes in order to avail of a much lower motor tax rate – resulting in savings of up to €900 per annum.

Q. How are they allowed to do this?

A. Herein lies the kernel of the problem. Many local authorities accept the bona fides of applicants solely on the basis of declarations made on official forms rather than on any visual inspection of the vehicle.

Q. But don’t owners have to sign a declaration at a Garda Station when first registering a vehicle for commercial use that it will only be used for carrying goods in the course of a business or trade and will “not be used at any time for social, domestic or pleasure purposes”?

A. Yes. Gardaí won’t admit it publicly but checks, if any, on the validity of such declaration are minimal. Visible inspections of the vehicle by gardaí are likely to be the exception rather than the norm.

Q. Fair enough as it’s probably not a role for gardaí, but don’t goods vehicles have to be tested regularly?

A. Light goods vehicles are required to undergo a roadworthiness test called the Commercial Vehicle Test (similar to the NCT with additional checks) every year.

Vehicles which pass the test must then obtain a Certificate of Roadworthiness from a motor tax office.

Since September 2005 test centres are supposed to refuse to test adapted goods vehicles which do not comply with the conditions mentioned above. They will inform local motor tax offices about such a refusal.

However, motorists who are deliberately abusing the system are unlikely to be submitting their vehicles for the CVT in the first place.

Q. So what change has been introduced by the Department of Environment?

A. It has revised a form which now requires applicants for a vehicle to be given commercial status to provide proof that they have a business registered for tax.

Q. Should that end the abuse of the system?

A. It remains to be seen, although it is unclear what level of cross-checking between various Government bodies, eg Revenue and motor tax offices, will take place. There could be greater enforcement by the gardaí, but one suspects the force wouldn’t necessarily welcome such an additional burden.

Q. If I drive a commercial vehicle, can I not use it outside work hours and at weekend for family and social events?

A. Under the strict letter of the law – no. However, like many pieces of legislation it is more honoured in the breach than in the observance. Ideally, the law should be amended to reflect the fact that many people who genuinely drive commercial vehicles also make use of them in their leisure time for a variety of reasons, financial and otherwise.

Q. Will such motorists face punishment under the new measure by the Department of Environment?

A. In theory – possibly. In reality – unlikely.