Car Or Van? Court Finds In Favour Of HMRC
It has always been a confusing situation ...
Posted by Helen Beaumont on 04/11/2020 @ 8:00AM
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 ...
Car or Van? You may be surprised!
copyright: alphaspirit / 123rf
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.
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.
Until next time ...
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About Helen Beaumont ...
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
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