A leading firm of accountants and business advisers has
called on HM Revenue and Customs (HMRC) to clarify its benefit-in-kind tax
guidance on company cars and vans with double cab pick-ups a specific concern.
The call comes from RSM following a First Tier Tribunal,
which ruled two Volkswagen Kombi models were cars, while a Vauxhall Vivaro was
classed as a van. Yet, argued the tax experts “most people would struggle to
see the difference”.
RSM said: “The case provides some useful principles,
[but] the picture remains unclear. We would welcome, as a matter of urgency,
new guidance as to what HMRC deems to be a car and what is a van. In the
meantime, with HMRC guidance contradicting the Tribunal findings, the
retrospective collection of tax on these
vehicles seems wholly unreasonable.”
RSM says that HMRC has taken a policy decision to
challenge the view of employers on some vehicles because the taxable benefit
arising on cars is significantly higher than on vans.
Current legislation states that a van must be a goods
vehicle, defined as a vehicle of a construction primarily suited for the
conveyance of goods or burden.
What’s more HMRC guidance argues:
- The test is applied at construction
- A vehicle designed and marketed as a
multipurpose vehicle is unlikely to be a van
- A vehicle with side windows behind the driver
and passenger doors, is unlikely to be a van, particularly if fitted, or
capable of being fitted, with additional seating behind the driver’s row
irrespective of whether fitted in the vehicle at the time.
HMRC accepts that a double cab pickup with a payload of
one tonne or more, excluding its hard top, is a van for benefit-in-kind tax purposes.
However, HMRC has challenged other types of vans with a
second row of seats to be cars, despite being classified by the Driver and
Vehicle Licensing Agency (DVLA) and insurance companies as designed and
constructed for the carriage of goods.
The DVLA classification restricts those vehicles to 60
mph in a 70 mph zone. It therefore, according to RSM, “seems inappropriate for
one government department to issue speeding fines as though they are vans and
another government department to impose tax penalties as though they are cars”.
Whilst the Tribunal decision was in favour of HMRC
regarding the Volkswagen Kombis, the case detailed salient factors which
contradicted those set out in HMRC’s guidance, said RSM.
The tax experts said: “It was found necessary to look at
all the characteristics of the entire vehicle as provided to the employee, not
just at construction. The side windows were considered irrelevant and being
multi-purpose per se does not rule out the van being constructed primarily for
the purpose of carrying goods.
“In the case of the Vauxhall 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 Volkswagen
“Employers should be mindful when relying on HMRC
guidance in determining the taxable benefit arising on a company vehicle, as
this may result in unexpected tax bills and possible penalties. The wider
consequence of this case could be that double cab pick-ups are brought under