Definition of van for expenses purposes clarified

Definition of van for expenses purposes clarified

May 10, 2023

HMRC has reminded employers to check the classification of company cars and vans for benefit in kind purposes after the Coca-Cola Court of Appeal ruling

On 20 July 2020 the Court of Appeal handed down its decision in respect of appeals by HMRC and Coca-Cola European Partners Great Britain Ltd. The case considered three different vehicles and whether they should be classified as vans or cars.

The case centred around the classification of crew cab vehicles, including a Vauxall Vivaro and a VW Transporter T5, with the court ruling that they had to be treated as company cars and were therefore subject to higher company car tax rates.

The decision agreed with HMRC’s longstanding interpretation of the car benefits legislation, which is that for benefits purposes the ‘construction’ of a vehicle is that of the final product when it is made available to the employee, and the use to which a vehicle is put, is not relevant when considering the meaning of construction.

The Court also explained that the correct approach was to determine what a vehicle was first and foremost suitable for.

It ruled that it would only be accepted as a van if the predominant suitability of the vehicles in question was for the conveyance of goods.

It is also important to bear in mind that the Court ruled that a multi-purpose vehicle can have no primary suitability at all.