ATT Technical Officer The Association of Taxation Technicians
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Coca-Cola van case overturned at Court of Appeal
iStock_Crew cab van_Tramino

Multi-purpose vehicles with crew-cabs are cars

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The Court of Appeal has ruled that three types of modified crew-cab vehicles are cars rather than vans for tax benefit purposes. Helen Thornley explains what this means for employers and employees.

7th Aug 2020
ATT Technical Officer The Association of Taxation Technicians
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This is the latest episode in a long running saga over the difference between cars and vans, which has now been resolved in: Payne, Garbett and Coca-Cola European Partners Great Britain Ltd v HMRC.  

With potentially thousands of these multi-purpose vehicles used by employees in the UK, the case has potentially significant – and expensive – consequences for employers and employees alike.

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Replies (22)

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By memyself-eye
08th Aug 2020 18:07

where does this put flat bed vehicles such as the Ford Ranger......

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By Paul Crowley
08th Aug 2020 21:45

I have always struggled with the idea that no windows could in any way determine the status of a vehicle. Vans with windows are inherently safer in the hands of any driver.
Would no rear seats but windows still have failed?
Surely the interior capacity should be the critical basis for a reliable and respected legal decision.

The real problem is that Coca-Cola replaced cars with 'vans' at varying levels of customisation for previously higher level managers that had never carried any product or tools. The end result of the customisation was to create people carriers, a vehicle type that is and always has been a car.

I vote we all change to Pepsi

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By unearned luck
10th Aug 2020 00:48

Assuming that this decision is final or is upheld by the SC, the extent to which relevant employers are liability to further class 1A NIC and their employees are liability to further income tax is a matter for the law not the PCRT.

I doubt that HMRC will accept the prevailing practice defence given HMRC's view, as stated in their manual, is that vehicles such as these are unlikely to be vans. This is subject to the proviso that I don't know how long this view has been so expressed.

Given that the pp defence is unlikely to apply, the duty to notify under the PRCT remains live.

Employees with double cab pick-ups with a payload of more than 1 tonne will think this decision a payne, but they should benefit from the prevailing practice defence.

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By PaulHesp
10th Aug 2020 09:39

I may be way off track here, but could this decision also have implications on VAT treatment of vans? I believe that VAT on the purchase of a "van" can currently be claimed back, but if these crew-cab vehicles are no longer vans but cars, does that imply that businesses could not claim back the VAT?

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Replying to PaulHesp:
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By Echo761
10th Aug 2020 09:52

Exactly right Paul! This potentially raises (again) issues over the VAT treatment.

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Replying to PaulHesp:
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By Tri622
10th Aug 2020 11:02

What about when it comes to selling the vehicle? - if its now a car you presumably wouldn't charge VAT on the sale but you would have claimed it on the purchase? Not sure the VAT man will accept that?!

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Replying to PaulHesp:
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By unearned luck
10th Aug 2020 21:24

You and Echo must live in Erewhon where the tax system, at least, looks like someone designed it. We here in the UK are not so lucky. Any claim that the UK tax system is designed hasn't even an ounce of verisimilitude. Often the UK tax system has one definition for a term for tax A and has a different definition for tax B. In this case the two taxes in question start in different places. Broadly, the BIK law defines 'van' and whatever does not fit that definition is a car. VAT law defines 'car' and whatever doesn't fit that definition is a van.

Also the language is different 'primary' v 'mainly'. This difference is what, in effect, sunk the Vivaro.

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Replying to unearned luck:
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By Echo761
11th Aug 2020 09:10
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Replying to PaulHesp:
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By Paul Crowley
13th Aug 2020 18:00

The definitions are different.
There has always been differences VAT vans and BIK vans
Vat has carry weight, BIK carry space

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By johnjenkins
10th Aug 2020 09:53

The only way, as I see it, to avoid all the "benefits" is to have a clause in the employment contract that specifically prohibits private use of these vehicles (they are then not available for PU). Once trackers are fitted it would seem HMRC wouldn't be able to go down the "benefits" road. Contentious?

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By Di
10th Aug 2020 10:09

Will this decision effect AIA claims on crew cab pickups?

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Replying to Di:
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By johnjenkins
10th Aug 2020 10:19

As it stands theses vehicles are classified as cars. Now it would be interesting if someone makes an AIA claim, it's challenged by HMRC and we start the whole process of tribunals again. Surely a SC ruling has to be made.

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By dmmarler
10th Aug 2020 11:27

Why did everyone waste so much time and money on this? The original statutory instrument which defined cars from vans said quite clearly that vehicles with side windows behind the driver were cars and not vans - I recall having to check this definition years ago and won an EY brownie point over KPMG in a litigation matter. If it was repealed by mistake, HMRC would have hung onto the definition as it so straightforward.

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Replying to dmmarler:
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By johnjenkins
10th Aug 2020 11:43

I'm not so sure that HMRC would win a case against one of these vehicles that was used exclusively for work (I'm not talking about employed tax payers). We could certainly have a situation where the vehicle is "taxed" as a car yet AIA could be claimed. Surely the crunch is what the vehicle is used for and not what the "tax" criteria is.

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By Ralph-gab
10th Aug 2020 12:39

DVLA have a vehicle category of "Van with side windows", which would suggest that side windows do not preclude a vehicle with side windows from being a van. Many people converting vans to motor caravans have had their application to classify as a motor caravan refused and classed as a van with side windows.

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By Mallock
10th Aug 2020 13:21

HMRC's Employment Income Manual on S 115(1) ITEPA 2003 states:

"From 2002/03, when deciding whether double cab pick-ups count as cars or vans, HMRC will interpret the legislation that defines car and van for tax purposes in line with the definitions used for VAT purposes. The position in respect of earlier tax years remains unchanged.

Under this measure, a double cab pick-up that has a payload of 1 tonne (1,000kg) or more is accepted as a van for benefits purposes. Payload means gross vehicle weight (or design weight) less unoccupied kerb weight (care is needed when looking at manufacturers’ brochures as they sometimes define payload differently)."

This case, as far as I can see, applies to panel vans which have been converted to carry some passengers and not qualifying double cab pick-ups.

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Replying to Mallock:
Ivor Windybottom
By Ivor Windybottom
10th Aug 2020 15:30

Yes, exactly, but the risk is that HMRC may say that this is non-statutory and so taxpayers must follow the Coca Cola ruling and define (most) double cab pick-ups as cars.

All this stems from ill-defined law. Surely a measurable definition, such as the VAT 1 tonne threshold or the V5 category, would have provided a better way of organising the tax system.

Where is the Office for Tax Simplification when you need them??!

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Replying to Mallock:
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By unearned luck
10th Aug 2020 21:45

I don't think that is correct to describe these 'crew cab vans' as converted.

The only difference I can see between these 'vans' and double cab pick-ups is a roof over the payload area. Even that difference disappears when a hard-top is fitted.

If you compare the manual to the C0A's view (summarised in the article) you will see that the manual is hopelessly wrong in saying that it is difficult to tell (hence the payload criterion which can give rise to different treatments simply by the weight of the hard-top fitted. A vehicle must overwhelmingly be constructed for carrying goods for it not to be a car.

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By Paul Crowley
13th Aug 2020 18:18

This whole discussion demonstrates that the law is only what the latest judgement decides: until the next one. The one before that had a different opinion.
If a van can not be defined adequately in words then it is not in any way defendable to say ' the law states....'
We have had 100 years of vans and only now do we have a legal ruling on what a van is? Or has every other ruling been right at the time but wrong now?

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By AndrewV12
14th Aug 2020 10:47

Makes you think, do now or in the future van manufactures take into account the tax rules when designing vehicles.

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Replying to AndrewV12:
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By Paul Crowley
14th Aug 2020 15:39

They do and they did. Vans sold as standard are vans satisfying both definitions.
It was Coca Cola (quite a big firm, so I hear) that chose Coke designed customisation that made these vehicles not vans. Some customisation resulting in kerb weight failed van rules but if you saw any of the Combies as designed by Coke, you would not think they were vans, 100% people carriers and as BMW people would say, fully loaded.

VW did what they were paid to do, change a van into a car

All the employees had cars and good old USA Coke thinking decided to make a mockery of the UK tax 'loophole' they thought wrongly to have discovered.

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By Paul Crowley
20th Aug 2020 17:33

'Multi-purpose vehicles with crew-cabs are cars'

Disagree with the statement. Lorries have crew cabs

That case was all about modifications from standard vehicles

John has chosen to guide from Double cab pickup to here. Did you discuss that link and agree that it was a good idea?

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