A lovely summers day, and I reluctantly bring the news below but as the saying goes “forewarned is forearmed “
Some bad news from Court of Appeal Ruling regarding the definition of a vehicle when it has a second row of seats
The difference in the taxable benefit arising from having a van, as opposed to a car, available for the employee’s private use can be significant, as we have explained in our previous articles
The core of the Coca-Cola case, which we discussed in that newsletter, is the definition of a goods vehicle as: “a vehicle of a construction primarily suited for the conveyance of goods or burden.” If the vehicle does not fit within that definition, and it is not motorcycle, invalid carriage, or of a type unsuitable to be used as a private vehicle, it is a car for benefit in kind purposes
The Upper Tribunal in Coca-Cola decided that “of a construction” means you must look at the vehicle in the state it was provided to the employee, including any post-factory modifications.
Difficulties arise when the vehicle has a second row of seats behind the driver, in an arrangement known as a “crew cab”. This allows up to four people to be carried in addition to the driver. In such cases, where the payload is relatively small, the vehicle may be “primarily suited” to carry goods rather than people, therefore got away with it being treated for tax purposes as a van
The Court of Appeal has now ruled in Coca-Cola that if the vehicle is equally suitable to carry either goods or people, it fails the van test and must be treated as a car for benefit purposes. As this is a binding judgment, employers and the respective employees in receipt of these vehicles should follow the new Court of Appeal ruling and include it within the benefit in kind rules when submitting forms P11D for 2020/21 and later years.
Another point this leads me to is to remind clients make sure also to review how combi-vans have been reported on P11Ds for earlier years, as the HMRC view may be considered to be prevailing practice in at least 2018/19 and 2019/20
The Upper Tribunal judgment in the Coca-Cola case was released in March 2019 and the HMRC guidance in its employment income manual has stated its view on the definition of a van for many years.
Finally, Although there may be COVID spikes in Europe and parts of the UK, we should all spare a thought for the citizens of Beirut. Such desperate times
Take care , stay safe and be kind to each other.
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The information contained in this article is for general information purposes only and does not constitute advice, Whilst we endeavour to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability for a particular purpose. We recommend that professional advise should be taken from a suitably qualified expert before undertaking any action.
