When is a van not a van – that is the question

Trying to decide whether a vehicle is a van or a company car for tax purposes has been thrown into question when HMRC took beverage giants Coca Cola to task over three commercial vehicles that they operated within their fleet– two Volkswagen Kombi vehicles and a Vauxhall Vivaro.

Legislation states that a van must be a goods vehicle, with a construction primarily suited to carry good or burden.

The Coca Cola case affects vehicles which have a second row of seats therefore the overall construction is designed to carry people as well as goods.  In the case, the Tribunal decided that the two Volkswagen vehicles were multi-purpose vehicles and should be classed as cars.  The Vauxhall was still classed as a van.  As a result of this, these multi-purpose vehicles suffered the much higher company car benefit in kind and also the favourable VAT treatment that vans attract was no longer available.

Businesses may well now decide to look at the double cab pickup as an alternative to bypass these rules, as HMRC still accept these as vans for benefit in kind purposes (as long as they can carry a load of at least one tonne excluding the hardtop).  If a van is now a car for tax purposes, it calls into question where HMRC will go next on commercial vehicles. 

Since August 2017, the case has been going through various appeals from both sides and we are still none the wiser as to whether the current decision will be upheld.  So how do employers account for these vehicles on a form P11D for benefits in kind?  HMRC’s own guidance does not explain any of the regulations that they have imposed on Coca Cola so where do companies go from here?

Deciding when a van is not a van can be extremely complex and various factors need to be considered to find the answer to this question.  If you need any further guidance or assistance on determining the status of your fleet, please contact Nicola Wignall