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: Update on Revenue investigation of car dealers – assessments on the increase

Tuesday, July 21, 2015

by Nick Ryan

Following on from our VAT Alert of 5 June 2015 there has been a significant acceleration by Revenue in their investigations into the motor industry. The focus is clearly set on those dealers who have purchased margin scheme cars from the UK, either directly from dealers or through auction houses. What is of concern is Revenue’s approach in determining assessments and the speed in which these assessments are being issued; in one case we are aware of, the assessment was issued within 24 hours of the audit inspection! Also, considering the levels of assessments raised it is interesting to note the paucity of information Revenue are relying on in determining their case. Revenue are taking a draconian approach in pursuing their investigations and this then presents the need for a different approach when challenging their stance and, in looking to resolve matters successfully for the dealer.
The crux of the matter appears to be one of interpretation, Revenue are challenging the use of the margin scheme by UK dealers and auction houses for sales of specific vehicles, notably those which may have been purchased by finance houses; dealer demonstrators appear to also be of interest.
What makes this different to other investigations is that the assessment arises from what Revenue perceive to be an error in accounting for VAT correctly on a supply made by a UK taxable person which provides them with the opportunity to assess for the VAT due on the end sale without any need to correct matters in the UK. As with intra EU transactions, where the supply qualifies as an intra-EU dispatch then the responsibility for accounting for VAT on the supply shifts to the purchaser hence Revenue’s stance that they have EU law to rely on and provides for an easy win assessment. Or does it?
From our understanding of Revenue’s approach it appears to be flawed.
Following discussions with a number of accountants and dealers The VAT Practice is not convinced this is the correct approach and we believe it can be countered successfully. To do so, UK VAT expertise is required. With over 20 years experience in practising in UK VAT, from HMRC to working within the big 4,which included expertise gained from advising on VAT motor industry issues, we believe we are best placed to assist dealers in resolving any Revenue investigation successfully and, in doing so, with a keen eye on cost.
For a nominal fee we can review the assessment and supporting paperwork in order to determine its correctness. Where we believe our approach can provide for a successful challenge then we are happy to proceed on a success fee basis.
To conclude, The VAT Practice does not believe that this is a matter that is to be resolved just under Irish VAT legislation. We also believe that Revenue’s approach is flawed and can be successfully challenged.
For assistance in managing a Revenue investigation or to discuss a particular case then please contact Nicholas Ryan at advice@thevatpractice.ie or 0238838181

Tags: cross border supplies of margin scheme cars, Margin scheme cars and SIMI, motor dealers and VAT, Revenue investigation into the motor industry, Revenue target margin scheme car purchases, Revenue target motor dealers, vat and margin scheme cars