High Court: Man who converted van to motor vehicle entitled to lower excise duty

About this case:

• Judgment:
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Mr Justice Keane found in favour of Dr Emil Prodanov (a litigant in person) in determining that the Revenue Commissioners were incorrect as a matter of domestic and EU law in refusing to classify his converted vehicle as a ‘motor caravan’, and also that the Appeal Commissioner (Ronan Kelly) was incorrect to uphold that decision.

Background

Dr Prodanov purchased a 1992 Ford E-150 Econoline passenger van in the United Kingdom in March 2014 and brought it into the State the next day.

He carried out modifications to the vehicle to make it suitable for use as a motor caravan, before presenting it to the National Car Testing Service (NCTS) for inspection and entry onto the register of vehicles maintained by the Commissioners under s. 131 of the Finance Act 1992 as amended.

Appeal Commissioner’s decision

The Appeal Commissioner agreed with the Revenue Commissioners in finding that the vehicle had not been significantly changed from its pre-conversion state, and therefore remained a Category A vehicle within the meaning of section 130 Finance Act 1992.

The determination that Dr Prodanov’s vehicle was not a ‘motor caravan’ within the meaning of that term under point 5.1. of section 5 of Part A of Annex II to Directive 2007/46/EC and, by extension, within the meaning of that term under s. 130 of the 1992 Act, was entirely based upon the Appeal Commissioner’s construction of that provision and, in particular, the words ‘living accommodation space’ that the provision contains.

Relevant provisions of domestic and EU law

Section 132 of the 1992 Act divides vehicles into four categories: A, B, C and D for the purpose of the charge of excise duty whereby ‘category A vehicle’ means ‘a category M1 vehicle’, and ‘category B vehicle’ means, amongst other things, ‘a motor caravan.’

Of significance to Dr Prodanov’s case was that a Category A vehicle attracts a VRT excise duty of up to 36 per cent of the value of the vehicle, whereas a Category B vehicle attracts a duty of only 13.3% of that value.

Section 130 of the 1992 Act also provides, ‘category M1 vehicle’ has the same meaning as in Annex II of EU Directive 2007/46/EC, and ‘motor caravan’ has the same meaning as in paragraph 5.1 of Annex II of the same Directive.

The definition of a motor caravan is classified as including:

“(a) seats and table;

(b) sleeping accommodation which may be converted from the seats;

(c) cooking facilities;

(d) storage facilities.

This equipment shall be rigidly fixed to the living compartment.

However, the table may be designed to be easily removable.”

Furthermore, section 130 of the 1992 Act is clear and unequivocal in stating that ‘motor caravan’ has the same meaning as in paragraph 5.1 of Annex II of Directive 2007/46/EC

High Court

Mr Justice Keane stated that it was not in dispute that Dr Prodanov’s vehicle contains the seats and table; sleeping accommodation; cooking facilities and storage facilities that are specified as the minimum equipment required to meet the definition of a ‘motor caravan’ under point 5.1. of section 5 of Part A of Annex II to Directive 2007/46/EC as substituted by Article 1 of Commission Regulation (EU) No 678/2011.

It was agreed that all of this equipment is rigidly fixed to the living compartment, with the exception of the table, which is designed to be easily removable.

Accordingly, it was beyond dispute but that Dr Prodanov’s vehicle was changed - yet the commissioners’ suggested that the degree of change involved was “not sufficient to come within the definition of ‘motor caravan’, properly interpreted, whether because the seats remain forward facing; or because the cooking and storage facilities are separately accessible from the rear; or because there is insufficient headroom; or perhaps on some other, more ineffable, basis”.

The Commissioners’ argument in this case, accepted by the Appeal Commissioner, was that the words ‘living accommodation space’ amount to words of restriction, preventing Dr Prodanov’s vehicle from coming within the definition of ‘category B vehicle’ for the purpose of s. 130 of the 1992 Act, and thus exposing him to the significantly higher rate of vehicle registration tax applicable to ‘category A vehicles’ under s. 132 of that Act

Justice Keane did not accept this argument and emphasised that the validity of any further guidelines relied on by the commissioners “must depend on the extent to which they correctly reflect the EU law definition of ‘motor caravan’ in Directive 2007/46/EC and cannot derive from any imagined general discretion on the part of the Commissioners to impose their own requirements.

Justice Keane therefore reversed the determination of the Appeal Commissioner and found that Dr Prodanov’s vehicle was a motor caravan as defined under s. 130 of the Finance Act 1992.