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The Court of Appeal (CoA) has found that Revenue acted unlawfully by failing to provide a used car importer with details on how the open market sale price for used vehicles was determined for the purpose of calculating the registration tax. of vehicles (VRT).
Judge Brian Murray said the flaw meant that used car importers of Ireland (UCII) could not find out whether the Treasury’s system for valuing imported vehicles would, as a general rule, be too close to their true value (affecting thus the calculation of the VRT).
However, the judge said that while UCII was entitled to a finding that this breach was illegal, it was not entitled to prosper in relation to its other claims, including the refund of taxes paid, damages that UCII had calculated in 130 million euros.
He rendered judgment on behalf of the CoA of three judges in a UCII appeal against a 2013 High Court decision rejecting UCII’s claim against the Minister of Finance, Revenue and State.
It was the latest decision in a 25-year legal battle by UCII Ltd, Center Park Road, Cork, which alleged that VRT discriminated in favor of the domestic auto trade and against importers by imposing artificially high values on imported used cars.
The judge said that he would later hear the parties’ submissions on what order the CoA should make in light of the fact that the High Court did not address the question of whether Revenue had established that the methodology used by him to determine the sale price The market rate generally resulted in values close to their real value.
Given the time that has elapsed since the initiation of these proceedings and the facts to which they relate, those submissions may also address the breadth and nature of UCII’s claim on this single issue in which it was successful, he said.
They should also address the utility and fairness of referring this matter to the Superior Court and whether it is in the interest of justice that the process be referred given the passage of time, said UCII, whose sole directors were Niall O’Dowling and Fintan Riordan began to market in 1989 to source good quality used cars overseas including Japan and EU and sell to other dealers and directly to the public.
UCII sold around 670 vehicles a month. Everything changed when in January 1993, in order to ensure that there was no loss of income as a result of the opening of the EU single market, the government changed the vehicle registration system and introduced the VRT system.
The UCII began its legal action in 1995, but it was not until 2012, due to problems over the discovery of documents, that the case was heard in the Superior Court, where it lasted 33 days.
In his CoA ruling, Judge Murray said there was an obligation on the part of Revenue to make public a policy of the type in question in this case.
In this regard, it attached some importance to Revenue’s failure to respond to inquiries raised in the 1994 UCII correspondence and Revenue’s adherence to an apparently deliberate policy of non-disclosure of depreciation schedules that was illegal.
However, he said that UCII is wrong in stating that Income was required to take into account the price obtained from the sale of a vehicle to determine the open market price of that vehicle.
UCII was also wrong in its assertion that there was a fundamental conflict in the tests between its expert and those of the Treasury regarding the role of the depreciation of the vehicle tables in the methodology used.
The High Court’s conclusion that the challenge to the rationality of that methodology failed was based on the assessments provided in the industry’s “Auto Sales Guide” that the guide was a reasonable benchmark for this purpose and that UCII had not established that its application systematically overpriced vehicles.
The UCII has not established that the High Court erred in any of these findings and, consequently, its challenge on grounds of irrationality should fail, it said.
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