Car or Van

VAT Treatment & Income Tax treatment

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The company purchased a Land Rover Defender available to the director for private use.

Customs accepted it was a commercial vehicle for private use & VAT was recovered.  For P11D purposes, is that good enough?  Do we report a van benefit?  Looking at the make & model & the HMRC views on what constitites a car, tis particular model would appear to be a car.

Is it possible to be a van for VAT purposes but a car for tax purposes?  And if so, why?

 

 

Replies (24)

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By mrme89
24th May 2017 11:30

Is it possible to be a van for VAT purposes but a car for tax purposes?

Yes.

And if so, why?

Because it is different legislation.

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By Tim Vane
24th May 2017 11:41

It's a car for income tax purposes.

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By mrme89
24th May 2017 11:51

I might disagree. It could be a van. We are not given enough details to determine whether it is a van or car for either purpose.

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By Dick Stastey
24th May 2017 11:53

What's the class of vehicle per the V5? M1 or N1? M1 = car, N1 = van, for direct tax purposes.

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Replying to Dick Stastey:
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By Wall1690
24th May 2017 11:52

N1.

So a van then? But is it as simple as that?

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Replying to Wall1690:
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By Dick Stastey
24th May 2017 11:54

Yes.

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By justsotax
24th May 2017 11:52

has it got seats in the rear....back windows...is its main purpose carrying goods or passengers...answer those and you are likely to have your answer.....

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By Wall1690
24th May 2017 11:54

Yes seats & rear windows. It seems to meet the car requirements to me.

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By Dick Stastey
24th May 2017 11:55

Seats and windows are only releavnt for VAT purposes, and those tests are trumped when the maximum payload exceeds one tonne.

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By justsotax
24th May 2017 11:57

so is the payload over 1 tonne...? Not seen mention of that...

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Replying to justsotax:
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By Dick Stastey
24th May 2017 12:03

Might that be because you didn't ask? The OP did say that it had been accepted by HMRC (implicitly) as not being a car.

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By justsotax
24th May 2017 12:10

indeed Dick...I didn't....which kinda makes your statement regarding the payload trumping the other factors irrelevant until we know the facts....

I just wanted to clarify the 'facts'....the implication is that this has been accepted by C&E...but is that because the VAT return has not been queried...only the OP can answer that...

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Replying to justsotax:
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By Dick Stastey
24th May 2017 12:13

But the OP has provided the information that confirms that it is a van.

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By justsotax
24th May 2017 12:19

has he...? I guess it depends on OP's definition of 'customs accepted'...in writing as a response to a direct question or merely an assumption on the basis that the respective VAT return was not queried....I guess you must have a better crystal ball than me....

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By Wall1690
24th May 2017 12:23

It has 7 seats & rear windows.

As far as I can see it meets the definition of a car.

I'm not sure about the payload - but is that relevant & if so why?

When the vehicle was purchased, we treated it as a commercial vehicle. Customs queried it, we maintained it was a commercial vehicle & Customs said OK. But there is nothing on record to suggest why we took that view or why Customs accepted it.

It's come to me to look at the P11D reporting & I can't see anything to suggest it is a van. Other than the vehicle classification - but I don't see how this determines once & for all that it should be a van?

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Replying to Wall1690:
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By Dick Stastey
24th May 2017 12:30

Wall1690 wrote:

It has 7 seats & rear windows.

I'm not sure about the payload - but is that relevant & if so why?

Yes. Because the VAT legislation says so.

Are you sure about the N1 classification? What you are describing sounds like M1

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Replying to Dick Stastey:
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By Wall1690
24th May 2017 12:35

Definitely N1 vehicle category on the V5. Does that categorically make it a van for VAT purposes?

If so, can it still be treated as a car for BIK purposes - because it meets the definition of a car?

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Replying to Wall1690:
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By Dick Stastey
24th May 2017 12:38

It's the other way around. N1 classification means that it is a van for direct purposes "of a construction primarily suited to the conveyance of goods or burden".

The fact that it is N1 would also suggest a payload in excess of one tonne though, which would make it a van (or rather not a car) for VAT purposes.

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Replying to Dick Stastey:
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By Wall1690
24th May 2017 12:49

N1 means "Vehicles designed and constructed for the carriage of goods and having a maximum mass not exceeding 3,5 tonnes".

The definition of a car is any mechanically propelled road vehicle except:

(a) a goods vehicle (a vehicle of a construction primarily suited for the conveyance of goods or burden of any description), for example, a lorry- estate cars and off-road recreational vehicles count as cars

The important word here is "Primarily" so I don't think the N1 classification makes it a van for BIK purposes. Maybe for VAT purposes - if it's possible for it to be a van for VAT purposes but a car for BIK purposes.

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By justsotax
24th May 2017 12:45

sounds like a car....what details were provided to the VAT office to support the VAT claim - was the vehicle model accurately detailed....

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By Dick Stastey
24th May 2017 12:55

I give up!

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By DMGbus
24th May 2017 13:27

I would like to think that the DVLA classification was decisive,

ie. DVLA say M1 = its a car for tax purposes
DVLA say N1 = its a van for tax purposes

But I have seen indications that HMRC are not prepared to accept the above definition for BIK purposes, and instead are looking at a 1 tonne payload benchmark figure to determine car or van.

Some vehicles that have a payload of less than 1 tonne are classified as N1 by DVLA but being less than 1 tonne payload sets HMRC off on saying therefore it is a car and liable to BIK as a car rather than a van.

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By justsotax
24th May 2017 14:04

DVLA definition is not tax legislation....

if its primary function is to carry people then its probably a car (unless one of the exceptions apply) - what did you actually say to VAT office about the vehicle to give them the impression it was a van....

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Replying to justsotax:
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By Wall1690
24th May 2017 14:20

Nothing. We simply said it was a commercial vehicle & they agreed.

As far as I can see the definition of a car for VAT purposes is any motor vehicle of a kind normally used on public roads which has three or more wheels and either - is constructed or adapted solely or mainly for the carriage of passengers, or has to the rear of driver's seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows.

But does not include;

vehicles of not less than three tonnes unladen weight.

As per the V5 the maximum permissible mass is 3050 so for VAT purposes it is not a car & must therefore be a commercial vehicle.

But for P11D purposes, it is a car as it meets the criteria to be a car.

Is that correct?

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