A Cork company which imports used cars claimed yesterday the State operates a system of taxation which "tends to separate the Irish market from the remainder of the EU".
Used Car Importers of Ireland Ltd, with registered offices in Centre Park Road, Cork, has taken High Court proceedings against the Minister for Finance, the Revenue Commissioners, Ireland and the Attorney General.
The company imports and sells used vehicles, mainly from Japan, but also from other EU states. Both VAT and Vehicle Registration Tax (VRT) are paid on such vehicles.
In its statement of claim, the company alleges the Revenue Commissioners have operated VRT in a secretive and arbitrary way. As a result, the company found it impossible to calculate with certainty the amount of VRT liability.
Mr Justice Geoghegan made an order yesterday that certain documents in the possession of the Revenue authorities be made available to the motor company's lawyers. Mr Paul Sreenan SC said it was not clear to his client how the Revenue decided what it believed to be the market value of any imported second-hand vehicle.
In an affidavit, Mr Niall O'Dowling, of Cross Douglas Road, Cork, gave an example of the taxes imposed in relation to the sale of a used car by his company.
The price before taxes (base price) was £3,563. VAT at 21 per cent totalled £748. The Revenue decided the car was worth £6,844 and charged VRT of £1,588 (at 23.2 per cent). The sale price was £5,900.
Mr O'Dowling alleged VRT was not levied on actual purchase or sale price but on a notional value. He said the Revenue's valuations were on many occasions well in excess of actual prices obtained by the motor company.
In its defence, the State claims the value of second-hand motor vehicles for VRT purposes is the price which, in the opinion of the Revenue authorities, each vehicle might reasonably be expected to fetch on the retail market.
The Revenue used computer records and took into account all "relevant factors and characteristics" which affected or influenced the price. It claimed it administered the VRT system objectively and impartially.
The State denied that any progressive decline or loss sustained by the company had been caused or contributed to by the VRT scheme.
It argued that the company's business had been affected by "material alterations in market conditions generally in the motor vehicle trade, resulting in a lack of competitiveness in imported Japanese vehicles" on which the company was particularly dependent.
It also submitted that the value of Irish currency against that of Japan made it more expensive to buy used vehicles in Japan.
Within the EU, private individuals found it more attractive to go to other member-states to buy and import used vehicles because they could do so without import formalities and without paying VAT, the State contended.