Mind the dodgy dealers if getting bargain UK car
Buyers risk being hit with huge tax bills here
IF YOU'RE on the hunt for a second-hand car, a weak sterling could be enticing you to head to Britain to buy your set of wheels. Early last week, sterling fell back from a 10-month high against the euro after British inflation dropped more than expected.
If British inflation continues to fall, sterling is likely to get knocked back even more over the next few months. A weak sterling means your euro is worth more over there – so British cars could soon be a lot cheaper than they've been in a few years.
Buyer beware, however. Although many Irish people are snapping up bargain cars in Britain, many are also getting ripped off by unscrupulous sellers, according to Conor Faughnan, director of consumer affairs with AA Ireland. Irish consumers could also find themselves implicated in tax evasion scams, where dodgy dealers have avoided paying Value Added Tax (VAT) on a car – and then passed on that car to an unsuspecting consumer.
The consumer then faces getting hit with a massive tax bill – or worse.
"There is a big concern and a huge amount of investigation going on in relation to VAT transactions on imported vehicles," said Alan Nolan, director general of the Society of the Irish Motor Industry (SIMI), which represents Irish car dealers.
"That doesn't mean that there's an issue with VAT every time you import a car from Britain. But be careful to make sure that VAT has been paid. When the price looks too good to be true, sometimes it is."
Some Irish casual traders import cars into Ireland without paying any VAT – and then try to tempt consumers to buy that car by offering a knock-down price. The trader then advises the consumer to pretend that he or she has imported the car himself. Avoid these traders like the plague as you could find yourself at the centre of a fraud investigation if you buy a car from them.
"In the normal course of events, when someone is buying an import from an Irish retailer, the retailer registers the car on the customer's behalf," said Suzanne Sullivan, spokeswoman for SIMI. "However, if the retailer asks the customer to go and register it themselves, they should be very careful as the customer could be liable for any outstanding VAT liability. A consumer may be implicating themselves if they had made any potentially fraudulent statement about sourcing the car themselves – if the car subsequently turned out not to have had its due VAT paid."
If you're buying a car in Britain, ensure to get an invoice showing that VAT has been paid. This is the only way you can prove that VAT has been paid on the car.
Another tax which could catch you out is Vehicle Registration Tax (VRT) which you usually have to pay when importing a car into Ireland. Currently, the top rate of VRT – which is paid when a car is first registered in Ireland – is 36 per cent. The amount of tax you pay will depend on the open market selling price of the car – that is the amount that the Revenue Commissioners would expect you to get for that car if it were sold today. "What can regularly catch people out are higher import tax bills," said Faughnan. "Remember, your VRT is based on Revenue's assessment of what your car is worth. If you snap up a four-year old BMW for €13,000 but the car is worth €20,000, your VRT valuation will be based on €20,000."
Tax is not the only complication you could run into when importing a car.
Almost one in 10 of the cars imported from Britain last year had been either damaged or written off, according to research published this summer by car-history check agency Motorcheck.ie.
This problem is not unique to used cars in Britain, of course. If you buy a used car from an unscrupulous seller in Ireland, you could also end up with a write-off. However, you could find it harder to check out the background of a car if buying it abroad.
There are, of course, massive savings to be made if you import a car from abroad – but only if you do it right.
"It is possible to save several thousand euro when importing cars from Britain," said Faughnan. "The higher the value of the car, the more likely there is to be substantive savings. There are success stories – but people have also had their hearts broken after they imported a car which turned out to be a turkey."