A couple of years ago HMRC took Coca-Cola and several of its employees to court, arguing that that their company vans were in fact, cars. Why? Company car tax.
In 19/20 the annual benefit in kind value on a van where there is private use is fixed at £3,430. For a car, it is the vehicles list price multiplied by a CO2 emissions derried percentage, between 16% and 37%. A similar rule applies to fuel provided for private use, a fixed £655 for vans and £24,100 x % as above for cars. Company cars are more often than not more expensive in terms of tax and national insurance than vans.
The vans in question were two modified VW Kombi vans and one modified Vauxhall Vivaro. The VW Kombi’s both had a second row of removable seats behind the driver and a separate 3 cubic meter load bay behind an internal partition. The Vivaro also featured a second row of removable seats and an internal partition. It had a 4 cubic meter load capacity which increased to 5 cubic meters with the seats removed.
The first tear tribunal ruled that the Kombis, having reviewed the primary purpose of their construction, were multi-purpose vehicles and therefore not goods vehicles but cars. However, the primary purpose of construction of the Vivaro was, by a narrow margin, for the carriage of goods, and therefore it remained a van. These two decisions, appealed by both Coca-Cola and HMRC respectively, have now been upheld by the upper tribunal, creating new precedent.
So what does this mean? If you are the driver of an employer provided VW Kombi it could mean a vast backdated tax bill! However, thinking more widely, what about those driving more popular double cab pickups with greater than one tonne payload capacity, historically accepted by HMRC as vans? The second row of seats are no doubt for the purpose of carrying passengers, and in relative luxury in some cases. Will HMRC seek to apply this decision to these vehicles also?
This article originally appeared in the August/September edition of Wiltshire Business.