Motor trade tax evasion crackdown targets 1,000

A CRACKDOWN on tax evasion in the motor trade has been launched with the Revenue Commissioners investigating more than 1,000 businesses.

A major inquiry is underway into car sales and maintenance businesses in Cork, Kerry, Limerick and Clare. A separate inquiry is also underway in Dublin.

Revenue sources say related investigations could be launched in other regions of the country dependent on the level of tax evasion found in the southern area.

"It is open to other regions within Revenue to conduct similar investigations at any time," a Revenue inspector said.

Revenue believes there has been widespread tax evasion and VAT fraud. They expect to reap millions in undeclared taxes and penalties. Dealers and industry related businesses such as car maintenance firms have until June 16 to declare unpaid money, where they are liable.

So far 19 areas of concern have been highlighted in written letters to dealers and other groups.

At least 100 of those contacted by Revenue are considered 'big' dealers, according to sources and many garages are expected to be hit for six-figure sums.

Many organisations, from BMW dealers to crash repair garages, have been contacted.

A Revenue inspector involved in the operation said: "The investigation covers all duties and taxes and takes in issues such as identifying traders who are not properly registered for tax and vehicle registration tax on imported vehicles."

One area of concern is the clawback VAT payments due to Revenue from vehicle sales, where even if a car is sold at a loss, the original VAT must be paid.

Already, following separate investigations, major car dealers have been hit by Revenue. In the most recent list of tax evaders named and shamed by Revenue in March, the group Murphy & Gunn Holdings Ltd (Rathgar, Dublin) which sells BMW, Lexus and Toyota models, made the biggest settlement with the commissioners for €5.23 million for a number of areas, including undeclared VAT. Murphy & Gunn say the company is now fully tax compliant.

"Revenue's south-west region will begin an investigation into the motor industry in the region on June 16.

Around 1,000 letters have been issued to traders in the region setting out approximately 19 areas of concern to Revenue and requesting them to review their position and, if necessary, to regularise their tax affairs before the investigation begins," a Revenue spokesman told the Irish Examiner.

The complex VAT/tax dodging mechanisms under investigation leave dealers until August 14 to pay Revenue in full. The 1,000 businesses have been warned by Revenue that areas being targeted include:

Payments by suppliers used as grants or incentives and not accounted for on the books.

Operating VAT rules on demonstration vehicles that are sold.

Inadequate garage documentation on acquiring vehicles, particularly trade-ins.

Charging correct VAT for car hire, when 13.5% applies for five weeks' rental and 21% for longer rentals.

The misuse of VAT invoices for vehicle sales and/or purchases.