Munster’s first independent VAT consultancy practice providing specialist VAT and Indirect tax advisory, assurance and interim management support services to owner managed businesses, small & medium enterprises, accountants and legal practices.

VAT alert: Revenue renew focus on the motor trade

Wednesday, May 29, 2019

by Nick Ryan

I understand that Revenue has established a new audit team, based in Kilkenny but to work nationally, which is to focus on the motor trade specifically looking at those dealers involved in cross border purchases of vehicles.
You may recall an earlier nationwide investigation in 2015/16 which created major problems for many motor dealers when Revenue, utilising minimal, if not questionable, evidence successfully challenged the VAT treatment of high levels of motor vehicles purchased from the UK originally categorised as margin sales with Revenue concluding the status was qualifying. This simple process resulted in significant assessments being raised though it is unclear as to the success rate of same.
What is of concern is the weakness of the approach in that Revenue’s case appears to largely rest on an assumption. One would expect where such an enormity of an error, its consistency of application in the industry, would warrant correction at the source; in this case the UK dealerships and auction houses. Also, given the scale of the assessments, the high numbers of vehicles identified as incorrectly categorised, does this not suggest an industry wide fraud? Yet this is not the case, the use of the EU Mutual Assistance facility is not evident, UK HMRC appear to contradict Revenue’s view as do the UK motor trade as there is limited evidence of any correction, audits occur yet there is no wave of news confirming large VAT repayments to UK motor dealers who have inadvertently accounted for VAT on the sale of qualifying cars to Irish motor dealers.
Clearly Revenue are of the opinion that the investigations in 2015/16 did not cover all involved and, the creation of a specific audit team suggests that Revenue strongly believe there are a large number of motor dealers operating inn the State which are worthy of investigation and, where that investigation will bear fruit.
The VAT Practice has worked with motor dealers who purchase vehicles from the UK and we recommend that all dealers should take the preliminary steps in reviewing the UK purchases to determine whether they could fall within the investigation category. The VAT Practice can assist dealers in completing this exercise and, in managing any approach by Revenue either by Revenue Enquiry or Audit.
Contact Nicholas Ryan on 0238838181/0833340324 or by email, info@thevatpractice.ie

Tags: Revenue investigate the motor trade, vat and margin scheme cars, VAT and motor cars, VAT and motor dealers, VAT and the margin scheme