A ruling by HMRC has led to calls for more clarity on the definition of cars and vans for taxation purposes.
A recent First Tier Tax Tribunal decision brought confusion to the matter. Coca Cola disputed National Insurance Contribution payments on two generations of VW Transporter Kombi vans, and a Vauxhall Vivaro.
HMRC insisted that the presence of two rows of seats meant that the VWs were classed as cars, and NIC payments were due, while the Vivaro was classified as a goods vehicle. The decision was taken having looked at the vehicles as they were supplied to the driver at the point of handover, not just at the point of construction.
“In the case of the Vivaro classified as a van, the over-riding factor seemed to be the significant cargo space available in the middle section, even with the middle seats in place, compared with the VW Kombi,” explained Mike Down, head of tax investigations at accountancy experts RSM.
A van that is designed and marketed as a multipurpose vehicle is unlikely to be classed as a van, especially if it has side windows behind the front doors.
The situation remains ‘hopelessly unclear’ according to RSM, and could leave many employees facing tax bills on company vehicles they thought were classified as vans.
The decision could mean that double-cab pick-up trucks, which are currently classed as vans if they have a payload of one tonne or more, are also brought under review.
“We would welcome new guidance as to what HMRC deems to be a car and what is a van,” added Down.