When is a van not a van?

Paul Tofton, partner at Forrester Boyd

YOU would think it would be quite straight forward but a recent ruling by The Court of Appeal challenges everything we thought knew about ‘what constitutes a van’.

A recent and long running case concerning whether crew-cab vehicles should be treated as cars or vans for company benefit purposes has been concluded in HMRC’s favour with potentially significant implications for businesses and staff that use these types of vehicles.

Paul Tofton, partner at Forrester Boyd explains. At the core of the Coca-Cola case was the definition of a goods vehicle which is “a vehicle of a construction primarily suited for the conveyance of goods or burden”. The Court of Appeal has now ruled in the case that if the vehicle is equally suitable to carrying either goods or people, it fails “to be primarily suited for any purpose” and therefore defaults to being treated as a car for the purpose of benefit in kind (BIK).

The binding decision at the Court of Appeal means that 2020/21 P11D’s will need to reflect the outcome of the case very carefully (subject to any Appeal to the Supreme Court). This will not simply be a case of reviewing those van benefits already being declared to HMRC, as it may also affect ‘vans’ that have historically not been considered a benefit as they are simply taken home by employees overnight and used for commuting.

It’s important for employers to review their fleet and fuel provision for any crew-cab vehicles and consider their options carefully and any businesses looking to buy a crew-cab vehicle should also be aware of the implications for Income Tax.

You can read the HMRC guidance along with the Upper Tribunal hearing and Court of Appeal judgement here.

HMRC’s car or van guidance: EIM23110

Upper Tribunal: HMRC v Payne, Garbett and Coca-Cola

Court of Appeal: Payne, Garbett and Coca-Cola v HMRC