Car benefit or not?

Car benefit or not?

Didn't find your answer?

A Ltd Co client has recently bought a new Mercedes Vito 116 BlueTec Crew Van, long. It is well specced with "comfort seats", 2nd row of seats, tinted rear windows, DVD players in the front headrests (!) etc etc. It has a payload of 1 tonne. It is used by one of the directors for commuting to/from work and occasionally taking materials to sites. The DVD players in the headrests would tend to indicate some private use :)

It is not specifically mentioned on HMRC site defining cars and vans (the last update was May 15 though) my somewhat unpopular opinion, having read several articles, is that it is potentially a car for BIK purposes with an invoice cost of +/- £37k!

Any idea how/where to get a definitive ruling before P11d filing dates become an issue?

Many thanks

Replies (27)

Please login or register to join the discussion.

Replying to User deleted:
avatar
By lechiffre
04th Feb 2016 16:01

I've read that

Portia Nina Levin wrote:
It is a car for BIK purposes. See http://www.whatvan.co.uk/analysis-and-comment/2015/tax-warning-for-crew-...

___________________________________________________________________

I have read that, unfortunately it relates to an earlier model of Vito not the one I referred to. Mercedes has slightly amended the spec in later "vans". It now has a payload of > 1 tonne. The article also says that the accountant was taking it to a tribunal if I recall correctly, not that they had a ruling.

Personally I don't see how my client could defend a charge by HMRC that it is effectively a car and liable to car BIK. The lines are very blurred with these vehicles with its £600 sat nav and £400 DVD options, I think they are lucky that HMRC allows the input tax without a fight!  

Thanks (0)
RLI
By lionofludesch
04th Feb 2016 14:15

Training

Surely the DVD players are for Health and Safety Training dvds.

Thanks (0)
.
By pacta
04th Feb 2016 14:19

Spade

I do wish that we could sometimes call a spade a spade. I had wondered how many strayed between the IT/VAT definitions. Now I've found one. 

Thanks (0)
avatar
By User deleted
04th Feb 2016 14:36

Little doubt its a van

As far as I am aware there is no way of getting a definitive ruling, but I can't see HMRC trying to argue this is a car.  It's clearly a van.

Personally I would establish with the client if there was a BIK based on it being a van with the usual caveat 'legislation may change in the future' and run with that.

 

EDIT - Evidently I was wrong HMRC have argued this is a car.  Well you live and learn !!

 

 

Thanks (0)
Replying to Truthsayer:
Portia profile image
By Portia Nina Levin
04th Feb 2016 14:34

HMRC have argued that it is a van

dreamcatcher wrote:

As far as I am aware there is no way of getting a definitive ruling, but I can't see HMRC trying to argue this is a car.  It's clearly a van.

Personally I would establish with the client if there was a BIK based on it being a van with the usual caveat 'legislation may change in the future' and run with that.

HMRC have argued that it is a car. That is the point! http://www.whatvan.co.uk/analysis-and-comment/2015/tax-warning-for-crew-...

Thanks (0)
Replying to Fartch3:
avatar
By User deleted
04th Feb 2016 14:44

Yes I saw that thanks.  For

Yes I saw that thanks.  For the record I started my post before anyone had replied, got disturbed by a phone call and then carried with my post several minutes later completely unaware that you had posted a link. 

Thanks (0)
.
By pacta
04th Feb 2016 14:47

Borderline

If I'm honest, I can kind of see HMRC's view. It does look more car like than van like to me. Still though, frustrating to have different treatment for different taxes. 

Thanks (0)
Portia profile image
By Portia Nina Levin
04th Feb 2016 16:03

@OP I had understood that the Mercedes Vito Dualiner Crew Cabs that were the subject of the article also had a payload in excess of 1 tonne. In order for this to go to tribunal, HMRC must have raised assessments assessing them as cars, rather than vans, as they appear to have been treated on the P11Ds.

Thanks (0)
Replying to Wilson Philips:
avatar
By lechiffre
04th Feb 2016 16:29

Who won the day?

I am told by my client that the earlier "dualiner" (possibly 3 years ago if you read in the article that the initial period of rental was over) is a different model to the current "crew van".

I wonder if the tribunal has heard the case yet and, if so, who won? I think I can guess the outcome unless the taxpayer was heavily represented.

Thanks (0)
avatar
By Paul Soper
04th Feb 2016 17:14

Looking at the guidance - https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil... - it seems clear that what makes the difference to HMRC is whether the vehicle is an extra long dualiner fitted with the luxury seat pack, I suppose understandable, but also whether it is a long dualiner with a high roof - now that seems crazy - surely the need for a high roof is solely related to the load carrying capacity of the vehicle?  Except for a London Hackney Carriage which must have enough headroom for a passenger to sit wearing a top-hat of course...

Thanks (0)
Portia profile image
By Portia Nina Levin
04th Feb 2016 17:25

That "guidance" Paul only applies for VAT purposes. The issue is that there are differing definitions for VAT and direct tax purposes.

Thanks (0)
Replying to lionofludesch:
avatar
By lechiffre
05th Feb 2016 08:39

Up to date info needed

As I said, the list is out of date. I believe that Mercedes has also renamed its option packs... "comfort seating" is this the same as the "luxury seating"?

Thanks (0)
avatar
By Paul Soper
04th Feb 2016 23:55

Absolutely PNL....

The distinction between vehicles for tax purposes only makes sense if it is consistent - which it clearly isn't - but now that HMRC has responsibility for all taxes and increasingly tries to inspect businesses on a consistent basis (as if!!!) - the blurring of the lines evidenced here becomes more and more likely.  The Highliner is designed, usually, with a bulkhead to separate the cargo from the crew so why should that make a difference from a VAT or Income Tax/NIC perspective, it shouldn't...  These vehicles are commonly used by bands where the performers travel in the 'crew section' and behind the bulkhead is the PA, backline, instrumets etc etc - they are not cars by any definition and yet HMRC now seem to regard them as such for VAT purposes, notwithstanding the old 1 tonne limit and now, if the OP is believed seem to be extending the same concept to benefit in kind as well...

Thanks (0)
Replying to NH:
avatar
By rtrussell01
08th Feb 2016 15:45

Vans with second row of seats that are not pick-ups.

As the publisher of Comcar.co.uk we have always had problems with this so can you provide any more details on this "ADR route" please?

Some ten years ago I got the HMRC PAYE policy advisor to say that double-cab vans could follow the same rules as double-cab pickups, provided the vehicle met the VAT rules for N1 classification. Sadly this was only verbal, and by 2008 the wording of the relevant guidance on the HMRC website changed to make it clear that a van for VAT purposes was no longer the same as Income Tax. Until a few years ago HMRC would answer email queries about specific vehicles and we tested them on a range of Transporters, Dualiners etc. In all cases the response was effectively "Looking at the manufacturer's website, this vehicle is clearly designed with the comfort of passengers in mind. It does not make any difference that it has a large load area and carrying capacity." So since then we have shown any van with a second row of seats as being liable to company car tax, unless it follows the double-cab pick-up exemption for a dual purpose vehicle.

We have had lots of worried double-cab panel van drivers contact us and, although I suspect there are many out there being taxed as vans, we can only publish the information given to us by HMRC which is to suggest that company car taxation will apply. However if you can supply some information on exactly which Transporter was treated as a van we would love to pass on any info that you feel comfortable doing so.

Thanks (0)
avatar
By JimFerd
08th Feb 2016 11:39

How dare van owners drive in comfort - a pox upon them!

I say part of the definition of a van for capital allowances purposes, should mean that physical pain must be inflicted upon the driver and all passengers before AIA can be claimed - possibly be replacing normal seats with some kind of "torture chairs".

Thanks (0)
Replying to paul.benny:
avatar
By lechiffre
08th Feb 2016 12:33

Thank you for your contibution

Really?

I'll pass your comments on to my client and the Inspector.

Thanks (0)
avatar
By InnovationPSL
10th Feb 2016 13:42

Car or van
Looking at the photo it is clearly a car
The question is to look at the legislation for an argument to the contrary
I would say your clients best bet is to accept it is a car going forward but on condition they accept it is a van historically given the clear uncertainty that exists

Thanks (0)
Replying to drtoctoc:
.
By pacta
11th Feb 2016 13:22

VAT

InnovationPSL wrote:
Looking at the photo it is clearly a car The question is to look at the legislation for an argument to the contrary I would say your clients best bet is to accept it is a car going forward but on condition they accept it is a van historically given the clear uncertainty that exists

 

But is it a car for VAT purposes? 

Thanks (0)
Replying to spel2k:
avatar
By lechiffre
11th Feb 2016 13:31

But is it a car for VAT purposes?

No, we have already established there is a different treatment for VAT and Income Tax

Thanks (0)
avatar
By WESTA
10th Feb 2016 13:46

EIM23110 - Car benefit: car or van - summary

Section 115(1) ITEPA 2003

This page is designed to be issued to taxpayers wanting guidance on the difference between cars and vans for tax purposes.

In deciding whether or not a particular vehicle counts as a car for car benefits purposes, the starting point is the definition in Section 115(1) Income Tax (Earnings and Pensions) Act 2003 (ITEPA). This works by exception: every mechanically propelled road vehicle is a “car” unless it is

(i) a goods vehicle (a vehicle of a construction primarily suited for the conveyance of goods or burden of any description),(ii) a motor cycle (as defined in Section 185 Road Traffic Act 1988),(iii) an invalid carriage (also as defined in that Act), or(iv) a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used.

Thanks (1)
Portia profile image
By Portia Nina Levin
11th Feb 2016 15:06

Pictures

This is a picture from the manufacter's website for the equivalent VW crew cab (taken from the rear quarter, which foreshortens the crew area). :)

Thanks (0)
By Tim Vane
11th Feb 2016 15:22

That settles it then. Clearly a van, for the purpose of transporting migrants across international borders in safety and comfort.

Thanks (0)
avatar
By womp
02nd Mar 2016 14:24

Same problem
We had the same problem and approached the HMRC several times for justification on a double cab vans, long wheelbase, N1 class, over 1 ton payload and have been told that the inclusion of seats prove it is a car and no evidence exists to show its primarily suited to carrying goods.

We argued that the long wheel base version has a higher cubic meter than passenger volume therefore primarily suited to carrying goods

We also argued the payload above 1ton meant the van Is manufactured to primarily carry goods, this includes the fitment of suspension that decreases the comfort levels for passengers therefore proving the vehicle design is primarily for carrying goods and passengers secondary.

We also argued that no clear definition of a vehicle primarily for carrying load was available from the income tax policy maker therefore it would be reasonable to take the justification of other authorities / professional bodies into account when making our decision. Eg VAT definition, vehicle class (N1), IT classification of similar vehicles in particular dual cab pickups with the same properties but a lower carrying goods capability.

Some background here
https://www.accountingweb.co.uk/anyanswers/question/car-or-van-bik-not-v...

We are also awaiting a test case or a change in policy, in the mean time I'd also be interested to hear more about any ADR judgements

Thanks (0)