Car Or Van? Court Finds In Favour Of HMRC

When working out a benefit in kind, it can sometimes be difficult to decide if the vehicle you are looking at is a car or a van. Coca Cola and HMRC recently went to the Court of Appeal for them to finally decide ...

This recent case looked at employee vehicles, supplied by Coca Cola and was heard at the Court of Appeal to determine the correct classification of either a car or a van for Income Tax purposes.

For many, it is a confusing situation and creates a great deal of debate. Ultimately, the court decided that these particular vehicles, a Vauxhall Vivaro and a VW Transporter were, in fact, cars and not vans.

"This decision has far-reaching effects for both employees and employers!"

When it comes to company cars, the Income Tax and NI benefit in kind are generally a lot more expensive. This is the same for any fuel benefits provided by the employer to the employee.

In most cases, it is obvious if it is a car or a van. However, be warned that HMRC likes to challenge any reduced benefit in kind payments because the employee believes they were given a van if it can be proved it is a car instead.

HMRC claimed:

- The vehicles submitted had removable bench seats along with a number of other modification. Changes to a vehicle could affect the tax treatment
- The employer could not prove in court that the vehicles were solely for the conveyancing of goods or burden. Passengers could be transported in a private capacity

The margin of victory was incredibly slim, but HMRC still won the ruling.

Both types of vehicle were classed by the Court of Appeal as multi-purpose so not exclusively for the conveyance of goods or burden. This ruling has also cast a great deal of doubt on how double-cab pickup trucks should be treated for benefit in kind purposes.

HMRC must now be wondering how to change the legislation, especially given the need to increase taxation in the face of the Coronavirus pandemic. Anyone with a modified pick-up or van must now be wondering if they will have to reassess their fleet policies.

So now we know ... just because it looks like a van, is insured like a van, and is used as a van, doesn't necessarily make it a van anymore.

If you'd like to find out more about anything I've written here, do call me on 01908 774323 or leave a comment below and let's see how I can help you.