When is a van not a van in Coca Cola v HMRC

A judgement made last month by HMRC has been a cause for concern for many company’s supplying vehicles for their workers. HMRC has ruled in a first-tier tax tribunal that vehicles supplied by Coca Cola for their employees should be liable to different tax costs.

What’s the issue?

The question is whether the type of vehicle supplied by Coca-Cola to it’s employees is a “good’s vehicle” for the purposes of section 115(2) ITEPA 2003. Section 115(2) defines a “goods vehicle” as “a vehicle of a construction primarily suited for the conveyance of goods or burden of any description…” The Appellants contend that each of the three vehicles is a “goods vehicle” and HMRC contend that they are not. VW Kombi vans and similar vehicles have not previously been thought to fall into this category due to them being designed to carry both goods and people. Historically, HMRC has offered a concession from 2002/03 onwards for vehicles of a very similar construction, double cab pickups (including both uncovered and covered models), if the payload capacity of the pickup exceeds a metric tonne. HMRC accepts that these vehicles can be treated as a van for benefit in kind purposes.

The Outcome…

With such similarities in the construction of the Kombi van, this has led to this concession being applied to the Kombi vans as well. However, HMRC judgement was reached that the primary construction of the Kombi van was not for the conveyance of goods and people equally. This means that the Kombi did not meet the requirement to be considered to be a van and therefore for benefit in kind purposes it is a car.

The first Tier Tribunal considered the facts provided from expert witnesses about the construction of two types of VW Kombi vans. They decided that the vehicles fell outside of the definition of goods vehicles. However, Vauxhall Vivaro vans did fall within the definition of goods vehicles.

Since this decision was announced however, there has been much concern from other employers.  Should the vehicles they supply to their employees be acknowledged as a car or a van and what implication could this have for their company. There is hope that HMRC will re-assess their own guidelines on the matter to clarify their rules for businesses.

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