When is a car not a car? When it’s a van!

Oct 12, 2020

In a recent Court of Appeal case (Payne, Garbett and Coca-Cola European Partners Great Britain Ltd v The Commissioners for HM Revenue and Customs  [2020] EWCA Civ 889), the classification for benefit in kind tax purposes of three types of modified crew-cab vehicles (the Vauxhall Vivaro and the first and second generations of the VW Transporter T5 Kombi van) were under appeal. The case first began in 2017.

The case is the latest episode in a long running series seeking to establish the difference between cars and vans. The classification is important because the cash equivalent of the benefit in kind of a van and a car, both of which are defined statutory terms, are calculated differently. Although the calculation is based on several factors, including the vehicle’s emissions, in general, if a vehicle falls within the definition of a car the benefit and, as a result, the tax levied, is greater than if it were a van.

The Court held that the vehicles in question are cars rather than vans. As many thousands of these vehicles are provided to employees in the UK and many other vehicles share their attributes, the case has potentially significant, costly, and far reaching consequences for both employers and employees.

As a Court of Appeal decision, the outcome is binding. However, it is not clear if a further appeal to the Supreme Court can be made by the taxpayers involved. You can read our full analysis of this case in the September 2020 edition of tax.point which you can subscribe for at:- https://www.charteredaccountants.ie/knowledge-centre/Tax/taxpoint if you don’t already have a subscription.