Dáil Éireann Debate, Thursday - 25 November 2010
4 Deputy Phil Hogan asked the Minister for the Environment; Heritage and Local Government the changes to policy and requirements on taxpayers that recent circulars from his Department concerning commercial motor tax have had; and if he will make a statement on the matter. [44485/10]
View answerThere has been no change to the system of motor taxation in respect of goods vehicles. My Department issued a circular letter to motor tax offices in August 2010 reminding authorised officers of existing provisions with regard to the taxation of vehicles on a goods basis. This circular reiterated the terms of a 2005 circular letter. 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. If a vehicle is adapted, it must have the same characteristics as a goods vehicle in regard to space and accommodation for carrying goods and it must have limited seating capacity. In effect, this means that in order to be taxed in the goods category, the goods carrying area of the vehicle must be greater than the seating area, all seats to the rear of the driver's seat must be removed and seat bolt holes welded over and all rear seat belts must be removed and seat belt anchor points welded over.
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 used in a private capacity, 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 a vehicle is correctly taxed, and it is thus open to a motor tax office to seek additional documentation supporting a claim for the goods rate of motor tax. 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. In circumstances where an RF111A goods only declaration is required, an income tax registration number is now routinely sought.
I would not expect 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. The requirement to sign the RF111A goods declaration form is not new and constitutes a statement by the applicant that the vehicle is being used in the course of trade or business. I would not expect that this declaration should need to be sought at every renewal once particulars of the vehicle and its use have not changed since the last renewal. The form would normally be sought at the time of first taxing as a goods vehicle and on change of ownership. I reiterate that the legal provisions governing the taxation of goods vehicles have not changed.
The reason I have submitted this question is that, although the legal provision may not have changed in respect of the application of motor tax to particular vehicles, there is no consistency of application. There is genuine confusion among local authorities and citizens about the application of this provision arising from a circular sent in August. There have been some changes to the documentation. One is now required to provide more information on tax and VAT changes. The primary purpose of the vehicles in question is the carriage of goods. However, some local authorities are still seeking to interpret the provisions of the circular in a way that one cannot bring one's children to school or collect materials from the local shop without having gardaí, who may wish to employ a strict interpretation of the law, stating the vehicle should be taxed differently under the motor tax code. I ask the Minister to understand there is genuine confusion and revisit the circular in order to provide clarity. It is not good enough to say gardaí should overlook this aspect and be pragmatic. In terms of application, this is either the law or it is not. Does the Minister accept there is confusion? Will he agree that it is necessary to reissue the circular in order to provide clarity for local authorities in order that the current farcical situation will not continue where there are different interpretations of the same circular from one local authority to another?
I return to the reason my Department issued the circular letter because it is important that we understand it. It was brought to the attention of my Department by the Department of Transport that the number of vehicles being adapted to avail of the goods rate was increasing. In some cases, they were high-powered, high-specification vehicles that would not be used for commercial purposes in the normal course of events. Accordingly, my Department considered it appropriate to remind motor tax offices of the existing provisions regarding the taxation of vehicles as goods vehicles. As in the case of any tax compliance matter, this is important. Some 1.9 million motorists pay tax on their private cars, while some 340,000 goods vehicles are taxed by businesses. To be fair to these individuals and businesses, it is important, as I hope the Deputy will agree, that the correct rate of tax is paid in all cases and that the potential for abuse of the system is restricted.
The Deputy claims there is a lack of consistency in the application of the circular across motor tax offices. The legislation and procedures applicable to the taxation of goods vehicles apply equally to eveybody. However, each applicant and application is different. As I stated, under Article 3 of the Road Vehicles (Registration and Licensing) (Amendment) Regulations 1992, there is an onus on the licensing authority to be satisfied that it is authorised to issue the licence applied for and, accordingly, that the said licence is the appropriate one for the vehicle. The supporting documentation that may be sought as evidence in this regard may vary from applicant to applicant. It has always been the case that discretion is required and such discretion is given to the authorised officer. I do not believe there has been a case in which an individual who is a bona fide user of a van and merely drops into a shop for a bottle of milk or drops his or her children off at school has been brought to task by the Garda. Perhaps the Deputy knows of such a case, but I have no such evidence and none has been brought to my attention. If the Deputy has such evidence, I ask him to bring it to my attention because I do not believe it to be the case.
I ask the Deputy to be brief because we need to move on.
I cannot let that go. In terms of the application of this provision, I am aware of cases in which individuals used to pay about €400 in motor tax, but when the new regulations were issued or the new interpretation by the local authority came into play, some of these individuals had to pay €1,200. I am sure Deputies on all sides of the House have been in touch with the Minister to bring such matters to his attention. I do not know anything about the Garda Síochána. I am not in charge of the Garda anymore than the Minister is and do not know what it does from day to day. All I know is that the application of this provision under the commercial motor tax code has caused genuine confusion. I would have thought the best way of dealing with the matter since August would have been to state the new regulation to be applied was a vehicle would have to be solely and wholly used for the carriage of goods. That is a reasonable suggestion. What the Minister should do — if he will indulge my suggestion — is reissue the circular and say exactly what it means because there is a misinterpretation between local authorities.
I do not know whether the Deputy has had an opportunity to read the circular, but it is crystal clear.
I have read it.
It states: "Dear authorised officer, it has come to our attention that an increasing number of vehicles have changed their tax class from private to adapted goods... Your attention is drawn to circular MT10/2005, copy attached, which deals with this issue". In simple terms, it reiterates what was contained in the circular of 2005.
And adds to it.
In other words, nothing has changed.
The Minister is wrong.
The Deputy continues to refer to "new" regulations. There are no new regulations. The regulation is available and plain for anyone to see. It mentions Article 3 of the Road Vehicles (Registration and Licensing) (Amendment) Regulations 1992. We are talking, therefore, about regulations that appeared in 1992. The Deputy has been in government since that time.
I have not.
The Deputy's party was in government in 1994 and 1995.
The Minister is going back to the Dark Ages.
The Deputy's party applied the same regulations, something which has been overlooked in much of the related commentary. Successive Governments have applied them. There should be supporting documentation which can include but is not limited to certain items. This is what is stated very clearly in the circular. I refer to the circular of 2005 which mentions evidence of registration for VAT, a tax clearance certificate, a commercial insurance certificate and a copy of the applicant's notice of tax registration form. This is one of those issues that, unfortunately, took hold in the silly season in August, but there was no substance to it. The position remains exactly the same. However, it is clear that in order to save money some individuals were abusing the system. I do not believe the Deputy would agree with this. If a person is abusing the system, it means somebody else has to pay more money, which is wrong.
The Minister should answer the question he was asked.
We are moving on.
