Vehicle Tax Code

I thank the Minister of State for taking this Adjournment matter which concerns the new declaration involving the taxation of a commercial vehicle. This issue has caused major unrest in my area. I have received numerous representations about it in my constituency offices in Drogheda and Ardee. People may have had their vehicles taxed for years without any problem, but difficulties have arisen over recent months. It is essential the Minister of State would clarify the issue. I have been in correspondence about the matter with Louth County Council and other authorities in the north east. They have sent me differing answers so there appears to be some confusion even within the local authorities involved. They say the new declaration applies when a person is taxing a vehicle under the goods rate for the first time. It will apply, therefore, when the vehicle is brand new or new to the person who is taxing it. This has not been the experience of a number of my constituents. That is why it is essential for the Minister of State to clarify the matter now.

Other factors are also involved, including whether an owner has his or her business registered with the Revenue Commissioners or whether the building is VAT registered, in which case there are thresholds on VAT registration. It is important to clarify these issues for individuals who use their vehicles for work purposes, although they may also be used on an odd occasion for personal reasons. One example concerned a neighbour whose wife's car broke down. He was not legally permitted to use his van to pick up his wife and bring her home. We are now in quite a crazy situation. Other people may use a vehicle for work purposes but they are not self-employed and are therefore subject to other criteria. I will be interested to hear the Minister of State's reply. I thank him again for taking this Adjournment matter in the House.

I am taking this Adjournment matter on behalf of my colleague, the Minister the Environment, Heritage and Local Government, Deputy John Gormley. I thank Senator Carroll for raising this matter and hope I can provide the clarification he is seeking.

There is no requirement for the owner of a commercial vehicle to have a VAT number to pay road tax. The legal position is that to be taxed as a goods vehicle, a vehicle must be constructed or adapted for that purpose and used solely in the course of trade or business. Under section 2 of the Finance (Excise Duties) (Vehicles) Act 1952, if a vehicle is used in a condition or manner which would attract motor tax at a higher rate, tax then becomes payable at that rate. In other words, if a goods vehicle is not used solely in the course of trade or business, it must, like all other private vehicles, be taxed at the private rate of motor tax.

Under Article 3 of the Road Vehicles (Registration and Licensing) (Amendment) Regulations 1992, a licensing authority must be satisfied that it is authorised to issue the licence applied for and, accordingly, that it is the appropriate licence for the vehicle. It is thus open to a motor tax office to seek additional documentation to support an application for a goods vehicle licence. Such documentation may include a certificate of commercial insurance or evidence of registration for VAT purposes or, at the discretion of the licensing authority concerned, any other appropriate document. Provision of a VAT certificate would assist in satisfying a local authority that a goods vehicle licence is appropriate, but other documentation is also acceptable. It would not be expected that any person genuinely using a vehicle in the course of trade or business should have a difficulty supplying documentation to support a claim for what is, in effect, a concessionary rate of motor tax.

Form RF111A, goods declaration form, which may also be required by the licensing authority, has been in existence for a number of years and filling it in is not a new requirement. It constitutes the statement by the applicant that the vehicle is being used in the course of trade or business. This declaration should not need to be sought at every renewal once particulars of the vehicle have not changed, but it is normally sought at the time of first taxing as a goods vehicle and on change of ownership.

The legal provisions governing the taxation of goods vehicles have not changed. It has been brought to the attention of the Department of the Environment, Heritage and Local Government that high powered, high specification vehicles that would not normally fall into the goods vehicle category are being increasingly claimed as goods vehicles. In that regard, it is important that motor tax offices follow the requirements to ensure a vehicle is correctly taxed. If a concessionary rate of tax is being claimed in circumstances where it is not warranted, in effect other road users are being asked to make up the resulting loss of income. In the interest of fairness, all road users should pay the rate of motor tax appropriate to their vehicle and the use to which it is put in line with the relevant legal provisions.

The provision of a VAT certificate has been requested by some local authorities, which is where the confusion may have arisen. I wish to raise one other matter concerning the taxation of vehicles. Given the tough economic times, it might be wise to charge precisely one quarter of the annual road tax for a three-month tax disc, or half the annual rate for a six-month disc. At present, there is a reduction if one pays the annual road tax in a single payment. The alternative I am proposing would accommodate people in the current constrained financial circumstances. I thank the Minister of State for dealing with this matter in the House.

The Seanad adjourned at 6.25 p.m. until 10.30 a.m. on Wednesday, 10 November 2010.