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AIA on taxis other than ' London taxis'

AIA on taxis other than ' London taxis'

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In respect of Taxi Proprietor Sole Traders, I have been claiming AIA on Taxis with wheelchair access through the rear door, which are now very common in Scotland.

The Peugeot Premier costing around £17000 is typical of this type of taxi.

These will always have a 'TAXI' sign attached to the vehicle and carry prominent  advertisements for local businesses.

There will normally be a private use adjustment  and the taxi will be treated separately for CA purposes.

Also, I wonder if HMRC are interested in these claims as there is a balancing allowance once it leaves the business.

I wonder what others are claiming for these vehicles.

Jim Dundee

Replies (19)

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By johngroganjga
06th Feb 2014 08:08

I can't see any issue with your view that AIA is available.  Why do you think might not be?

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By Steve Kesby
06th Feb 2014 08:41

Why can't you see any problem John?

AIA isn't available on cars, and a car is any mechanically propelled road vehicle, other than:

a motor cycle,an invalid carriage,a goods vehicle, ora vehicle of a type not commonly used as a private vehicle and unsuitable for such use.

The fact that the vehicles are used privately, as a matter of fact, rather suggests they are of a type suitable for private use. Decorating it doesn't alter the vehicle's type.

I don't think they qualify for AIA. Whilst HMRC do say that the london type of taxi isn't a car, I think you'd also have difficulty with them if there were private use as a matter of fact.

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By johngroganjga
06th Feb 2014 09:08

My response was based on my understanding that AIA was available on taxis.  Wasn't aware that HMRC distinguished between different types of taxi.  If they do so be it.

What is a London type of taxi by the way?  That's a new one on me.  I am in London regularly and the taxis I see there look just the same as those I see on the streets of the other cities I frequent.  Is there a subtle difference I have missed, and is that, whatever it is, part of the definition that HMRC use? 

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By Steve Kesby
06th Feb 2014 09:30

CA23510

HMRC refer to them as "Hackney carriages (traditional 'London black cab' type vehicles)". There's no actual requirement that they be in London. See CA23510. I can't see anything that distinguishes them particularly, other than that they don't have a front passenger seat. As I say, if there is actual private use, even they seem to me to be at risk of HMRC not accepting an AIA claim.

As the OP suggests, over a few years there may be little difference between claiming AIA up front and having a balancing charge at the end to a handful of WDAs in the early years and a large BA at the end.

I do think there's at least a risk of HMRC taking issue with it though.

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Replying to youngloch:
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By Jim Dundee
06th Feb 2014 10:09

Thanks to all replies. I agree with Steve but i do not think there is a specific law that AIA does not apply if there is private use. There is private use of London taxis.

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By Steve Kesby
06th Feb 2014 11:26

@ Jim

I agree that there is no law that rules AIA out just because there's private use, although the AIA needs to be proportionately reduced where there is private use.

My point is that if you do use a vehicle privately, then you're helpfully providing HMRC with prima facie evidence that the vehicle is of a type suitable for use as a private vehicle. I agree that the point applies equally to black cabs as to any other kind of taxi.

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Replying to Tax Dragon:
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By mackthefork
06th Feb 2014 13:17

The rules on cars are imbecilic

I would say that nearly all Black Hackney Cabs in London or elsewhere are used privately, I assume most are parked at home, so home to work is done daily by most of them, why make a special exemption for one type of car, they should allow AIA on all vehicles used wholly or mainly as 'hackney cabs' or 'private hire vehicles'.  Especially as vehicles are the largest cost to small taxi firms.

There is no more sense to this than specifically disallowing the AIA for combine harvesters on a whim.  Buses, trains, boats even motorbikes get the AIA, why just pick on one type of public transport.  Good work Tony.

MtF

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By DMGbus
06th Feb 2014 14:21

"suitable for private use"

Virtually all road going vehicles are "suitable for private use" a phrase that is either to be read literally so no AIAs on taxis, vans, double-cab pickups, lorries, buses, coaches - which clearly is not the case.  So the phrase needs interpreting.

Double cab pickups are "suitable for private use" - but no debar on claiming AIA on these double can pick ups, nor vans either (there's definitely potential for private use on both van and pick ups).

My conclusion therefore, until it is tested in the Courts, is to regard this "suitable for private use" phrase as being too far reaching to be of practical implication.   A misuse of words.  Too vague.  Needs better defining.

Now, if it said "and commonly used privately" or "and commonly used primarily for private use" then the AIA would start being narrowed down more effectively and sensibly too.  The current wording is, I repeat, too vague / wide-ranging to be of practical application.

 

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By Steve Kesby
06th Feb 2014 14:47

I disagree DMGBus

The test isn't whether it's suitable for private use, it's whether it's not unsuitable (Granada TV Rentals). And there is an and test; of a type not commonly used as a private vehicle and unsuitable for such use.

Not unsuitable for private use has been tested in the courts; Granada TV rentals, Gurney v Richards, Bourne v Auto School of Motoring.

Vans, double cab-pickups and lorries aren't cars, because they're goods vehicles; the private use test doesn't therefore need to be considered.

Buses and coaches are of a type unsuitable for private use, because an ordinary member of the public can't drive them (Gurney v Richards), because there are special licensing requirements.

A black cab and the vehicle to which the OP refers are of a type suitable for private used (evidenced by the fact that they are commonly so used) and don't fall within the categories of motor cycle, invalid carriage or goods vehicle.

I agree with mackthefork that the removal of the qualifying hire cars exception has created an inequity, particularly since HMRC specifically say that Hackney carriages aren't cars.

However, that isn't backed up by specific case law.

Given the removal of the qualifying hire car exception, I think that Hackney carriages are just as vulnerable to attack from HMRC.

So no Basil, I wouldn't want to represent a taxpayer at tribunal on the point, because HMRC's manuals are of little worth on appeal. The fact that reliance had been placed on HMRC's guidance is a matter for judicial review, which is unlikely to ever be worth pursuing on an AIA claim for such a vehicle.

I agree though that including some measure of private use will give the better overall position if an AIA claim is challenged, but nonetheless consider that it makes the AIA claim all the more vulnerable.

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By Steve Kesby
06th Feb 2014 18:06

@ Basil

S. 81 was omitted by FA 2009, and the definition of a car is actually now in s. 268A. The definition is only slightly changed though. It says that a car means a mechanically propelled road vehicle other than:

a motor cycle,a vehicle of a construction primarily suited for the conveyance of goods or burden of any description, ora vehicle of a type not commonly used as a private vehicle and unsuitable for such use.

The generally accepted interpretation (of the tribunals and courts) is that all mechanically propelled road vehicles (other than goods vehicles and motorcycles - and invalid carriages for BIK purposes) are cars, unless that type of vehicle both:

isn't commonly used as a private vehicle, ANDis, as a matter of fact, unsuitable to be used as a private vehicle.

There must be something about that type of vehicle that renders it unsuitable to be used as a private vehicle. In Granada TV Rentals it was explicitly said that ther was no need that it be suitable for private use, merely that it wasn't unsuitable.

Not many people potter about in motor home, for example. Yet a motor home has been held to be a car. See County Pharmacy.

It's not "chickening out"; I iust don't back donkeys.

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Woolpit Gus
By nutwood
06th Feb 2014 19:08

For what it's worth, if you're going to rely on the instruction in CA23510 that inspectors should treat hackney carriages as cars for CA purposes, then you have confer on 'hackney carriage' a definition.

That definition has to be a vehicle approved by the licensing authority (in Greater London the Public Carriage Office of tfl) and licensed to operate as a hackney carriage.  Some other local authorities mirror the tfl specification but I am not sure whether all do.

There is a list somewhere of approved vehicles.  If the cab in question is one of these and is licensed as a hackney carriage and not a private hire vehicle it should not be treated as a car and if HMRC follow their own instructions, it won't be.  If they decide to change their minds then I suspect they would get a much bigger boost to revenues if they attacked pickups!

As to private use - I have seen somewhere, but can't remember where, that if a cab driver lives within the area in which his cab is licensed then there is no 'home to work' private use as he can ply for hire immediately on leaving home.  If he lives outside his licensed area then mileage to get to the boundary would be private. 

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By Steve Kesby
07th Feb 2014 10:59

@ Basil

The case you most need to review is Granada TV Rental 46 TC 295, which does actually make mention of hackney carriages.

The case concerns itself with whether vans (before they were specifically excluded) were cars for capital allowances purposes. In brief, there were two types of van at issue; one type had the front passenger seat removed and the other didn't.

I presume that (being vans) neither type had any rear seats. The one without the front passenger seat was held to be unsuitable for private use and not a car. The one with the front passenger seat intact was held to not be unsuitable for private use and so was a car.

Now hackney carriages don't have front passenger seats (but they do have seats behind them) and in Granada reference was made to the different rates of vehicle excise duty that applied to different sorts of vehicles, and specific provision was made for hackney carriages.

How a thing is classified for VED purposes usually translates well for capital allowances/BIK purposes, and nowadays a hackney carriage is liable to VED in the same way as other cars.

HMRC identifying hackney carriages as not being cars came into being while we still had a qualifying hire cars exception. They may feel differently now that the qualifying hire cars exception has gone. There certainly seems to be no case law basis for the view expressed in CA23510.

It's also worth noting that once upon a time (SI 1980/442 para 2(d)) hackney carriages weren't motor cars for VAT purposes, but the exception was removed in SI 1992/3122 and SI 1992/3222. You can still recover VAT on a vehicle that is intended to be used primarily as a taxi, but nonetheless, they are now motor cars for VAT purposes.

So anyway, your case is this; Manuel operates his taxi business through his company Sybil Ltd. He's bought himself a second-hand hackney carriage on which he has claimed AIA and he's using a 20% of cost + running costs calculation for calculating his BIK, rather than 35% of original list price.

HMRC have denied Sybil Ltd the AIA and are charging Class 1A on the uplift in the BIK and are charging Manuel tax on that uplift.

HMRC accept that it's not a type of vehicle that is commonly used as a private vehicle, but since the type isn't unsuitable for such use (Manuel does, as a matter of fact, use it for private purposes), both requirements of the exception have not been met, meaning that it falls within the definition of car for AIA/BIK purposes

As I see it, you've got no precedents or parallels on which you can rely. You're strolling up at the tribunal clinging to nothing other than CA23510 and the above helpful information from nutwood. Good luck!

Incidentally, I don't agree with nutwood that to fall within HMRC's instructions the vehicle must actually also be licenced as a hackney carriage, since we are concerned with the type of vehicle in question, rather than the specific vehicle.

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Woolpit Gus
By nutwood
07th Feb 2014 13:30

@Steve Kesby

I know I'm really nit picking but the actual wording in CA23510 is:

Hackney carriages ( traditional ‘London black cab’ type vehicles)

I read that as being a hackney carriage provided it is of the London black Cab type.

In real life that has to be, probably, a TX4 which is also a hackney carriage.

A TX4 straight out of the dealer is not a hackney carriage until it (the individual vehicle) has been inspected by the licensing authority to confirm that it meets the specification they set.  A TX4 without an approved taximeter and other essential fittings, would not be approved, would not receive its licence plate and would not, therefore, be a hackney carriage.

As this definition is quoted by various local authorities, I imagine that is still in force:

"Every wheeled carriage, whatever may be its form or construction, used in standing or plying for hire in any street within the prescribed distance, and every carriage standing upon any street within the prescribed distance, having thereon any numbered plate required by this or the special Act to be fixed upon a hackney carriage, or having thereon any plate resembling or intended to resemble any such plate as aforesaid, shall be deemed to be a hackney carriage within the meaning of this Act; and in all proceedings at law or otherwise the term 'hackney carriage' shall be sufficient to describe any such carriage: provided always that no stage coach used for the purpose of standing or plying for passengers to be carried for hire at separate fares, and duly licensed for that purpose, and having thereon the proper numbered plates required by law to be placed on such stage coaches, shall be deemed to be a hackney carriage within the meaning of this Act." (Section 38 Town Police Clauses Act 1847.) 

From that you will see that if a vehicle is not plated as such it is not a hackney carriage.

From the OP's description, the vehicles he is talking about would not pass muster with the wording of CA23510.

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Replying to nutwood:
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By Graham Handley
05th Jul 2018 15:14

It seems that HMRC's definition needs updating. More and More taxis are other than the "Traditional" London taxi TX4, LTi, etc but are nevertheless specifically built as Hackney Cabs. Is there a general view as to whether the Peugeot E7 would qualify for AIA?

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By Steve Kesby
07th Feb 2014 14:53

@ Nutwood

Thank you. I think you may have persuaded me to take Manuel's appeal myself.

Can you tell me whether anyone can drive a licenced hackney carriage? or does the individual also need some special licence themself.

My point was that the legislation doesn't concern itself with the specific vehicle in question, but with the type of vehicle. The type of vehicle must be unsuitable for use as a private vehicle (ie by an ordinary member of the public, per the decision in Gurney v Richards).

In my mind, a TX4 is a TX4 and the fixing of the hackney plate does nothing to alter its type to be such an unsuitable vehicle (as was the case for the fitting of blue flashing lights in Gurney v Richards).

However, if the fitting of the hackney plate means that it can then only be driven by somebody suitably licenced I would accept that it will have altered the type of the vehicle (to one unsuitable for use as a private vehicle), putting it squarely within the Gurney v Richards decision.

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Woolpit Gus
By nutwood
07th Feb 2014 17:11

@ Steve Kesby

To get a licence drivers must pass a special driving test and undergo an enhanced CRB check. Convictions or cautions for various sexual and violent offences are fatal.  Different local authorities have other requirements which they tack on including a test of the driver's knowledge of taxi law, the council's byelaws etc. and of course, in London, 'The Knowledge'.

I believe that it is illegal for anyone other than a driver with the appropriate hackney licence to drive a hackney carriage on the public highway, otherwise why go to all that trouble to ensure the safety of the travelling public if anyone can masquerade as a cab driver? 

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By Gone Sailing
17th Jul 2014 12:35

Nothing brewing

Also chasing this - client has Mondeo.

Just spoken to an Inspector and HMRC are still standing by CA23510 (black cab), which obviously is guidance only.

He said we were perfectly allowed to self assess and see what happens ...

Personally I think it's the sheer variety of "taxis" these days which will cause a shift to "licenced by a local authority as a hackney" (but exclude private hire)

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By traceywag
04th Aug 2015 16:27

AIA

Hi

My name is Tracey Kirk, I am the fleet manager for two car hire companies in Swindon which only rent out plated Private Hire Taxi’s. They are not hackney carriages (London black taxi’s), but are normal saloon/estate cars which have gone through local authority checks and are licensed for use exclusively as private hire vehicles. You may only drive the vehicles if you have a taxi driver license, again issued by the local authority.

One of the firms I work for is quite unique in that it has around 70 vehicles of this nature. My understanding is that many of the other people in this business have much smaller fleets. With this is mind, I’m sure you can appreciate the 8% allowance for AIA on cars makes it almost impossible for the company to continue to trade, the company heavily invested in replacing old vehicles in the last tax year and so is going to be hit with a large tax bill this year as we are unable to write off the cost of the vehicles purchased against tax.

My question is, what was the outcome in the case of your clients, did you find a way of claiming more than 8%? Or, did you deem that private hire vehicles don’t count as ‘cars’?

I look forward to your response.

Regards

Tracey

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By moonmamun
28th Aug 2015 02:49

Licensed Private Hire Vehicle (car)

Client is a self-employed private hire driver (slightly less than a taxi), owner driver, bought a Mercedes for 28k, 158G/KM, expected to use 5 years. I am aware cars are not allowed, yet due to the nature of his business (using purely for business, having company sign displayed on the vehicle, licensed and regulated by council, equipment fitted etc). It is in nature a taxi car. I rang HMRC for advice on that explained I want claim this as AIA for my client... but HMRC Technical Advice was very clear NO CARS allowed for AIA.

Now, my question here how do I really account for this 28k for tax purpose which is legal, just, equal to AIA and fair? 

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