Interesting one shamrock12345. I suppose it boils down to whether or not you are a resident in Ireland. If you are a resident then you will be forced to pay the VRT. If not then there's not a whole lot they can do other than threaten you. I would imagine that if it was that much of a problem for the inspector he just would have impounded it straight away.
Either way, if you are resident in Ireland, you need to register it for VRT or sell it. British citizenship has nothing to do with it, you are resident here and as such required to obey Irish laws.
Seeing as you cannot register it here as the VRT is too high) which makes me think you ARE resident here) you will need to sell it in the UK. The only thing is that I don't know if the Revenue can come to you after the fact and try to clawback VRT!
TBH unless there's a huge amount involved, I would just sell it and keep a low profile.