Update - when is a car, not a car?

First published on 11 August 2020 by Alastair
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Following on from our article on taxable benefits on company vehicles, the tax case we referred to has now been through the Court of Appeal and the ruling has been changed.  The outcome of this, means that the criteria for determining if a vehicle is a van for tax purposes are even stricter than initially thought.

In the case in question (Coca Cola v HMRC), the position before the recent appeal was that of the three vehicles referred to in the case, with the two VW Transporter Kombis being classified as cars and the Vauxhall Vivaro classified as a van.  Although all three are multi-purpose vehicles that can be used for carrying goods and passengers, the Vivaro was seen to be a van largely because its second row of seats don’t span the width of the vehicle (as they do in the Kombi) and therefore give extra load space in the middle.  At the First Tier Tribunal, this relatively small difference was enough for the Vivaro to be considered to be constructed primarily for the conveyance of goods, and therefore a van, rather than multifunctional and therefore a car.

The Court of Appeal, however, have determined that this difference was too minor to consider the vehicle to be constructed primary for the conveyance of goods and have therefore ruled it is treated as a car for tax purposes.

Although this does not change the rules, it does show that the burden of proving that a vehicle is a van, is more difficult than previously thought and any ‘multi-purpose vehicles’ with rear seats are unlikely to be considered vans.

If you are unsure what this means for you and your business, please get in touch and we will be happy to assist.

Chris Leslie, Tax Senior


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