Cars or Vans? That is the question

During the summer a very long running case was finally decided by the Court of Appeal over whether certain vehicles were cars or vans for income tax purposes.
The rules for taxing company cars and company vans generally give a much lower tax charge for those vehicles which are vans. For benefit in kind purposes a van needs to be a ’goods vehicle …primarily suited for the conveyance of goods or burden’.

This particular case looked at three different types of modified vehicle, each based on a panel van design, but with a second row of seats behind the driver (crew-cab vehicles).

The Court of Appeal decided in this case that since the vehicles in question were multi-purpose and equally capable of carrying goods or people, they were not primarily suited to the carrying of goods, and therefore failed to qualify as vans.

The view was that ‘primarily’ should be taken literally, so that the vehicles need to be clearly more suitable for goods than for people.

This decision was very much in line with HMRC’s own guidance as set out in their manuals.  This states that a van must be primarily suited for carrying goods, and where there are side windows behind the driver and the vehicle can be fitted with additional seating it is unlikely to qualify as a van.

Where there is any doubt about any vehicle, we would advise you to review their status now, given this latest clarification of HMRC’s stance.

For more information on this article please speak to Yvonne Graham.


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