Or you could simply fake a plate that looks like a real one - so how
will
the "automatic detection" know if a car is there or not ?

Because the device reading the microchip will not detect its existence in
the plate. Simple - if it ain't there, then it is fake!

From the transponder reader's pov, what's the difference between a car
without a transponder and an empty space without a transponder?

Presumably the system would be tied up with an appropriate
camera which would detect the presence of a vehicle, but I take
your point, and failing such a system it would depend on a person
being present - say in a police car which had the facility to read
the transponder.

What will happen regarding foreign registered vehicles ?

Such a miniscule problem, why worry?

I'd like to know what will happen to foreign visitors if they bring their
cars to the UK. Will the cars be impounded?

Presumably if they commit an offence, they would be dealt with
in the same way they are now. AIUI they are fast-tracked
through the magistrates court if necessary. If they are not
committing an offence, then there is no problem.

Like I said, such a tiny problem, why worry? Let their own
country deal with them - we reportedly have over one million
uninsured motorists in the UK, lets worry about those first!

How will the system detect a foreign car?

You could say the same thing about the current system
of number plate recognition - the UK system is setup
to read UK number plates, not foreign ones - same
problem.

I do believe that this sort of device is the way forward. I'm
not saying that it will be without its own set of problems, but
if one million motorists are happily driving around uninsured,
then the current system is far from acceptable. Whether
the public sector has the ability to pull it off remains to
be seen!!

Matt.