TT276: Vans that are treated as cars?
At the end of 2017 a first tier tribunal considered combi type vans for the purposes of the benefit in kind taxation rules. It’s conclusion was that one was a “van” and other was a “car”.
Whilst these vans are generally a commercial vehicle for VAT purposes and for road tax purposes, the direct tax rules do not follow the same principles.
In this case the tribunal considered a VW Transporter T5 Kombi (generation 1 and 2) and a Vauxhall Vivaro. It found the Vivaro was a van and that the Kombi was a car. The impact of this was clearly significant for the benefit in kind treatment of the employee.
Part of the definition of a car (S115 ITEPA 2003) is that it is not a goods vehicle. A goods vehicle is defined as “a vehicle of a construction primarily suited for the conveyance of goods or burden of any description”.
In this case the judge considered modifications to be considered as part of the construction at the point it was provided to the employee. The Kombi vans had a removeable second row of seats (added as part of a modification) and are multi-purpose and therefore the judge could not conclude that they were primarily suited to the conveyance of goods despite the original construction, before the seats were added, being for conveyance of goods. Whereas, whilst the Vivaro also has seats, due to its configuration it could be concluded to still have a primary purpose of conveyance of goods.
The rules are similar for capital allowance purposes and therefore for employers, consideration also needs to be given whether 100% annual investment allowance can be claimed as a van or writing down allowance at 8% or 18% for a car depending on the CO2 level.
If you are considering the purchase of a commercial vehicle of this sort we can assess the tax position and advise you accordingly.
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