Judgment due in €131m case over imported used cars

A judgment is due today in a complex court battle where €131m in damages are being sought for the alleged mishandling of the vehicle registration tax system by Revenue.

The company which took the case, Used Car Importers of Ireland Ltd (UCII), said the tax was unfair, arbitrary, and wiped out its chance to exploit a competitive advantage.

It is seeking compensation for a lost opportunity and the return of taxes already paid.

UCII claimed the actions of the tax authorities since 1993 have favoured new car dealers and scuppered its plans to import fleets of nearly new cars from Japan.

In a 33-day hearing last year, the High Court heard UCII’s plan to import thousands of cheap, secondhand cars from Japan for sale in Ireland did not proceed as planned because of the Revenue’s interpretation of the law underpinning VRT.

The hearing, before Mr Justice Roderick Murphy, was the culmination of 18 years of litigation between UCII, the Department of Finance, and Revenue.

A key feature of the case was Revenue’s decision to base the VRT charge for secondhand imported vehicles on a guide price it estimated to be a fair depreciated value.

UCII said in its experience, the Revenue’s estimate was substantially higher than the amount it was charging Irish customers for the Japanese models.

According to the company, this left it liable for an unnecessarily high VRT bill and eliminated its competitive advantage.

VRT was introduced on Jan 1, 1993, to replace importation levies in response to the EU’s open market agreement.

UCII negotiated plans with Japanese dealers who handled fleets of nearly new right-hand drive cars. UCII had also taken up a lease on the old Ford lots in Cork to handle the stock.

However, the court heard the nearly new Japanese imports were effectively priced out of the market because of Revenue’s VRT estimates.

In a prepared example, the company said a car it could sell for €4,398 was liable for an additional €601 in VRT because of Revenue’s decision to use more expensive value estimates.

Revenue said the prices it used to calculate VRT were based on market research and drawn from an internal depreciation database first drawn up in 1992. It denied the regime favoured new car dealers and said every effort was made to reflect asking prices for secondhand cars.