Conversions can put drivers on wrong side of law

People converting passenger four-wheel-drive vehicles from private to commercial road tax classification have been warned that they are in breach of the law unless they use the vehicles strictly for the carriage of goods “in the course of trade and business”.

The warning comes from the Department of the Environment as many people across the State convert five- and seven-seater four-wheel-drives to escape punitive tax rates for the passenger vehicles.

Concerns are also being raised by insurance companies, which say the conversions should be notified to them so an insurer can make a decision on whether to cover the vehicle and what premium to charge. “Otherwise, one runs the risk of running into a problem in the event of a claim,” says Insurance Ireland.

Several companies around the country are offering the legitimate conversions – costing about €1,000 – to re-classify four wheel drives for tax purposes. In some cases the savings can be as much as €1,500 a year in annual road tax.

EU standards

The companies carry out the work by creating a separate goods area behind the seats for conversion to a so-called “crew cab”. A number of car companies already offer new commercial versions of new vehicles, which are also classified as passenger vehicles, with a second row of seats under EU standards and the Revenue Commissioners are obliged to accept the designation.

As long as it is certified by an officially approved engineer or technician and conforms to the National Standards Authority guidelines there is no issue with the work.

However, the problem arises when the individual makes use of the vehicle outside the legal requirements set out by the Department of the Environment, which regulates motor tax.

These state that in order to avail of the goods or commercial rate of motor tax the vehicle must be used “solely for the conveyance of goods” in the course of trade or business, including agriculture. “A goods vehicle which is used for private purposes at any time does not qualify for the goods rate of motor tax. A vehicle that is used in a private capacity must be taxed at the private rate,” a spokesman for the department toldThe Irish Times.

The department also points out that a “goods only” declaration form needs to be signed and stamped at a Garda station before re-classification and this is a “declaration that the vehicle will only be used in the course of business or trade and not in a private capacity at any time”. Motor tax offices can also seek additional documentation in relation to an applicant including VAT registration proof; a tax clearance certificate and a commercial insurance cert.

However, many four-wheel-drive owners are using the vehicles outside the guidelines because they can still have a second row of seats behind the driver and passenger seats. One self-employed owner, who has had the conversion carried out on a Toyota Land Cruiser, admitted he had no idea that the use of the vehicle at any time – other than strictly for work – could cause a problem.

Declaration purposes

“I was able to reduce my annual road tax by almost 75 per cent but my understanding was that this re-classification was categorised as a crew-cab conversion and was approved and wasn’t a problem. Now it seems it might be when it comes to declaration purposes,” he said.

Some local authorities are even clearer about what constitutes so-called “crew-cab designation”. Wicklow County Council, which is the motor tax authority for the county, says it defines crew cabs as vehicles comprising a cab, with seating for a driver and a minimum of three and a maximum of six passengers. It points out that the cargo area (which the conversion companies provide) must be permanently separated from the cab and be for the exclusively for the carriage of goods, among other requirements.

But the council goes even further, saying that passengers are only allowed provided they are employed by the owner; that they can only be carried while they are being paid – and not going to or coming from work – and that the vehicle is ordinarily used for the conveyance of goods and employees in the course of their trade”. If the crew cab is used in any other situation “then the higher [private] rate applies”.

For the many people using the converted vehicles as their main vehicle this poses obvious problems in terms of misuse and false declaration. “I thought it might be a bit of a chance but the conversion was problem-free and complied, so I didn’t think there was a huge problem,” admitted one.

Enforcement is a matter for the Gardaí but one Garda Traffic Corps source said policing the minutiae of the tax code was a problem they could do without. “We are very strong on vehicle safety and road worthiness and take it very seriously. Proving someone is not complying strictly with what is a matter between them and the tax authorities is a bit of a distraction, frankly.

Civil issue

“We have had huge cutbacks and can’t really cover what we have to do. As far as I’m concerned, this is almost a civil issue rather than a criminal one, in practice, as long as the vehicle is roadworthy. There are plenty of non-roadworthy cars and trucks out there to take up our time.”

Production line

Land Rover is one company offering a combined commercial passenger vehicle that can be used as a commercial vehicle but also as a private one. Its Discovery Utility is classified on the production line – as are similar vehicles from Mitsubishi and Toyota – as being commercial, even thought it has rear seats. The difference in price between passenger and commercial price is some €12,000.

The company’s managing director, Gerard O’Farrell, says the company advises people buying the Utility to declare private or commercial use and pay the tax difference to avoid problems – the difference being about €300. “Revenue have already brought people to account when they have not declared correctly”.

It is perhaps a matter of time before others who have converted second-hand vehicles and use them for private use discover the same thing.

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