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Author: JW / / Latest News

Update: Beware Combi-Vans are Probably Cars for Benefit in Kind Purposes!

We’re republishing this article because there has been a tax case involving Coca-Cola where the judge rules that some of these Combi type vans were ‘vans’ and others were ‘cars’.

Here is the summary of the Coca-Cola case:

Coca Cola vs HMRC

Coca Cola and two of its employees took HMRC to the First Tier Tribunal when HMRC declared that the employees’ Volkswagen Transporter Kombi and Vauxhall Vivaros were cars and not vans.

Both the Kombis and the Vivaros were bought by Coca Cola to transport vending machines to and from their designated locations and all had the following modifications:

  • additional racking
  • floor coverings
  • bulkheads (bulkheads are partitions that are located behind the seats in a van to separate them from the cargo being transported)

The judge’s decision came down to his assessment on whether each vehicle had a “dual capability of carrying passengers and carrying cargo”.

For the Vivaro, the judge decided that “on a narrow balance, the construction of the Vivaro was primarily suited to the conveyance of goods” because:

  • the engine/transmission and the mechanical components (fuel tank, exhaust, rear suspension) of the Vivaro were mounted transversely and the driver’s position was set high, “each in order to maximise the load area and the load volume”
  • the sliding door and the rear door “facilitated loading”
  • the suspension was designed to carry a 3-tonne gross weight value
  • the braking system and components were designed to “operate effectively up to a maximum of 3,000 kg GVW and whilst towing a braked trailer of up to 2,000 kg”
  • the middle part of the payload section was taken up by seating which needed tools for its removal and that there was still enough space with the seating in to carry a payload

For the Kombis, the judge decided that the vehicles were not “constructed primarily” to be exclusively for the use of goods conveyance because:

  • the Kombi’s basic design characteristics were the same as the “VW Transport T5 panel vans such as the Shuttle and the Multivan…essentially minibuses designed to carry passengers”.
  • the Kombis were provided with seats which, when fitted, “took up most of the space in that sector. When the seats were removed, almost the entire area of the mid-section was available for conveyance of goods”.
  • the seating issue, mentioned above, made Kombis multi-purpose vehicles because the vehicles were suitable “to enable workmen to be taken to work and for goods to be carried”

Why does it matter?

A van attracts a flat-rate benefit in kind tax treatment whereas a car’s benefit-in-kind treatment is determined by the list price of the car and its CO2 emissions.

VAT and Capital Allowances are also different for Van and Cars, and the rules for Benefits in Kind, Capital Allowances and VAT are not all equivalent either.

 

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