Disabled driver scheme abused

27 July 2007

  • VAT-free car loophole exposed
  • Buyers saving £12,000 in VAT - then sell car
  • One person bought 60 Range Rovers in two years

Disabled sign 234 www.sxc

Regulations which allow disabled drivers to buy new cars without paying VAT are under investigation over allegations that they are being abused.

A report by Radio 4's 'You and Yours' consumer programme highlighted a practice where a small number of disabled drivers have been ordering high-specification cars such as Range Rovers, Maseratis, Porsches and Bentleys and then immediately selling them on to dealers for profit.

They save up to £12,000 in tax per car.

The dealers then sell the cars as pre-registered vehicles to people who want to jump the waiting lists for these exclusive cars.

They also do not pay VAT, because the vehicle is classed as second-hand once it has been sold on.

At present, a vehicle only has to have small modifications to be eligible to be sold VAT-free.

Examples include fitting a small knob to the steering wheel to aid turning, which can be removed simply and without trace once the vehicle has been sold on.

Police and the Department of Work and Pensions are investigating cases in Yorkshire, Humberside, Merseyside and Derbyshire.

Reports suggest they have identified an individual who has registered 60 Range Rovers in the past two years.

At present, however, it appears as though the practice is legal and they cannot prosecute for VAT fraud.

Instead, police are looking to close the loophole and ensure that those involved are not involved in money-laundering or receiving benefits for disabilities while profiting from car trading.

At present, six people have been arrested.

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