June 18, 2021


Crazy about car & automotive

Is it a van or is it a automobile – the taxman decides

WHEN is a van not a van? – when the taxman deems it to be a car.

The distinction amongst a van and a car can have major implications for tax specifically with respect to how they are treated for advantage in type uses – a van would commonly have a lessen benefit in sort cost than a vehicle.

This issue arrived to gentle in a scenario at the Courtroom of Appeal which held that some automobiles had been not necessarily utilized the have items and so need to be handled as automobiles for the applications of figuring out the cash equal of BiK.

The attractiveness worried 3 varieties of motor vehicle supplied to personnel by the employer, Coca-Cola European Associates Good Britain Ltd (Coca-Cola) which HMRC experienced assessed as becoming cars and trucks:

  • a Vauxhall Vivaro
  • a VW Transporter T5 Kombi van (Kombi 1) and
  • a a bit distinct VW Transporter K5 Kombi van (Kombi 2).

The 1st-tier Tribunal (FTT) experienced held that the Vauxhall Vivaro was mainly ideal for the conveyance of goods or stress, even with the addition of two further more passenger seats, and was hence a van, but that due to the fact a VW Transporter T5 Kombi van (Kombi 1) and a somewhat various VW Transporter K5 Kombi van (Kombi 2) were similarly acceptable for carrying items and travellers, they have been thus not mostly acceptable for the conveyance of products or load and so should be handled as cars.

The choices on Kombi 1 and Kombi 2 ended up appealed by the taxpayers and The Upper Tribunal (UT) upheld the choices of the FTT and so all get-togethers correctly repeated their respective appeals in the Courtroom of Enchantment.

The a few motor vehicles ended up all primarily based on panel vans, but third-bash contractors made a bit distinctive variations to just about every of the autos together with introducing seats, windows, panelling, racking, strapping, cargo nets, cargo tracks, shelving and storage units.

The scenario hinged on regardless of whether the motor vehicles in question had been “primarily suited” to the conveyance of items or stress. If so, then they would be vans if not then they would be cars and trucks.

The Courtroom of Appeal dismissed the appeals in regard of Kombi 1 and Kombi 2.

The courtroom also uncovered that the FTT and UT experienced been improper in law to distinguish the Vivaro “on a narrow balance” or “fine margin”.  The design of the Vivaro was very equivalent to that of Kombi 2, in that it experienced removing storage units in the mid-area which have been interchangeable with seating. The Vivaro, it held, was also a multi-reason car which was not largely suited to the conveyance of products.

Appropriately, HMRC’s appeal was permitted and all 3 vehicles are cars and trucks for the reasons of money tax.

Craig Hughes, Tax Director at Brown Butler claimed the case has wide ramifications as massive quantities of staff members are provided with these cars or many others of a identical character.  The scenario turned on good margins and any other situation would need to have to be seemed at on its individual fact sample.

He said: “One level to be aware is what effect this may perhaps have on double-cab pickups which are ordinarily addressed as vans.  Arguably, a double-taxi pickup is less acceptable for the conveyance of products or stress than the Vivaro and Kombis in this circumstance, due to the fact its seating and load locations are forever mounted.

“Nevertheless, HMRC has accepted for lots of many years that a double-cab pickup (assuming it has a load potential of at the very least 1 metric tonne) is a van for the objective of tax.

“The final result from the Courtroom of Appeal is binding, while we are waiting to listen to if an charm to the Supreme Courtroom can be produced.”

HMRC does have a listing of automobile-derived vans and their classification