Friday, 3 June 2011

VRT - the Irish Kafkaesque nightmare

I received an email from a reader by the name of Shannon a while back, calling attention to the following query in The Irish Times "Helpdesk" column.  

As you will see, it illustrates nicely the Kafkaesque workings of Vehicle Registration Tax (VRT) in Ireland, a tax cooked up to overcome the free-trade laws of the Treaty of Rome, which supposedly provided for the free trade of goods and services between EU states.  

When the Treaty of Rome came into effect, the Irish Government simply stopped calling their tax on vehicles "excise duty" and renamed it "VRT"  -  a tax to register your car in Ireland and have a little IRL badge in one corner and the name of your county along the top in a language most of us don't speak.   Bargain, huh? 

VRT means that some cars cost over 40% more here than they do in many other EU countries.  It also operates on the basis of a term invented by Revenue called the Open Market Selling Price (OMSP).   The OMSP is effectively the Paddy Price (PP): a price above and beyond what our nearest neighbours in the UK, for instance, pay for their cars. 

As the OMSP is just a dreamt-up figure which takes as its yardstick the inflated prices already forked out for existing cars registered in Ireland (after VAT and VRT are applied), it makes it really tricky if you want to import something a bit out-of-the-ordinary into our rotten little land.   

 I am quite sure that there is not another comparable 1992 Ford Escort Cosworth in Ireland, as you will see in the text below, which illustrates the nonsense of the OMSP concept.  There IS no comparable "open market" selling price in this instance.  

 But don't worry, Revenue will find a way to screw you anyway, as evidenced by the following:

How much VRT on an imported shell?

From DS: I rang Monaghan’s VRT office back in September 2010 to find out how to go about registering a 1992 Ford Escort Cosworth shell as it was from the UK. At the time they gave me a VRT figure of €5,900 but said it may be less as they were valuing the VRT on a complete, running 1992 RS Cosworth. I was happy with that and was told I could continue with the rebuild and this would all be worked out when the car was completed.

I was later told by another VRT office that what I was told in September 2010 was wrong – I would have to go an NCT centre for them to assess it and calculate the VRT price.

But the NCT centre can’t work out the VRT for it as they say it is not a fully complete, running car. After a lot of calls to various departments, I then get told that because the “car”, is in the country more than seven days I would be fined as I’m breaking the law.

Finally, someone in Revenue told me that it has to be fully rebuilt for it to be VRT’d at an NCT centre, as they will only VRT it when it is a fully complete, running car. I explain the whole shell saga to him to be told that the last good condition Cosworth he looked at for VRT he valued at €25,000 giving a VRT rate of €9,000. I’m then told that as mine is being rebuilt to such a high standard and will be better than its original intended build form, and that it is a one-off, it will be valued at the highest rate as a concourse car of €40,000-plus, meaning the VRT on it would be anything from €15,000.

Do you have any idea if the information I’ve received so far is correct?

Answer: We contacted Revenue on your behalf and they came back to us first with an apology for you, which we believe you’ve received for the confusion, but also with the following information.

“To be registered, a vehicle must satisfy the definition of ‘mechanically propelled vehicle’. One of the prerequisites of that definition is that it is capable of achieving vehicle propulsion at the time of registration to the satisfaction of the Revenue Commissioners’. Therefore, the Cosworth shell was not a “mechanically-propelled vehicle” and couldn’t be registered, and the NCTS would, correctly, refuse to register it.

“We no longer provide a speculative valuation service to those intending to register vehicle, ie, someone can’t value a vehicle accurately based on a phone call or cursory information relating to the vehicle.

“Instead, where we do not have a valuation on our website, we have published on our website the methodology used by Revenue. Additionally, in order to help an individual who may have an esoteric vehicle for registration, we have provided a form to guide them in the self-estimate.

“The main things that determine the valuation of a vehicle are: its open market selling price (OMSP), and that depends very much on the characteristics of the vehicle, make, model, version and variant and what it might fetch on sale in the State; the level of CO2 emissions; its condition, and in this, a badly-restored vehicle, it will have a lower OMSP than a well-restored one and will have a lower VRT charge; and finally its mileage.

“The engine size does not impact on the VRT charge unless it has lower emissions (and we determine the VRT on the emissions at the time of manufacture, not the later modification of the vehicle) and it is likely, in this particular case – unless we have satisfactory documentary evidence of the CO2 of the vehicle at manufacture – it will be charged at 36 per cent of the OMSP.

“When the vehicle is completed or when it satisfies the definition of a ‘mechanically-propelled vehicle’ and is presented for registration, Revenue valuation officers will have to determine the value.

“Because of this, the vehicle won’t be registered on the first visit and it will necessitate a second visit to the NCTS to pay the VRT charge that will be determined after the vehicle has been valued by Revenue’s valuation officers. Your reader will then be able to complete the registration of the vehicle.”


How do they continue to get away with this?  

See also:

Commission on Taxation says scrap VRT

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