Last year, in an article called Company van tax: when is a van not a van?, I explained that in a recent tax case both the First Tier and Upper Tier Tribunals had found in favour of HMRC when concluding that a VW Kombi van was a car and not a commercial vehicle. At that time, a Vauxhall Vivaro van was still classified as being commercial.
In June this year, the case went to the Court of Appeal where it was found that these vehicles both VW and Vauxhall, were cars for the purpose of the legislation.
To be classed as a commercial vehicle, the legislation states that it must be of a construction primarily suited for the conveyance of goods or a burden. The Court of Appeal has taken this one step further to include any modifications made subsequent to the original construction. Furthermore, it was found that because these vehicles were capable of carrying both passengers and a load, they could no longer be classified purely as being primarily suited for the conveyance of goods or a burden and therefore the company car rules should apply. As the VW and Vauxhall were not sufficiently different, both should be taxed under the company car rules. This ruling will apply to all similar vehicles.
Why is this important?
As I explained in my previous article, the rules relating to company cars are far more onerous than those in relation to vans, for example
Unfortunately, this now indicates we have different rules for Income Tax and VAT. A vehicle that meets the above definition as being able to convey goods with a payload in excess of 1 tonne has, for the purposes of VAT and Income Tax, been treated as a commercial vehicle. VAT can still be recovered but the Income Tax rules relating to company cars will be applied where there is private use. It remains to be seen whether HMRC will update their guidance and whether there will be a challenge to the double cab pickup market which so far has avoided this particular spotlight.
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