Recent ruling highlights confusion surrounding commercial vehicle classification

The leading used van dealer in the UK, Blackwood, South Wales

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A recent tribunal has highlighted the need for HMRC to clarify how it classifies company vans and cars.

The taxable benefit on company cars is significantly higher than on vans, therefore HMRC's recent assessments of commercial vehicles could see employers receiving penalties and bills for back-dated national insurance. Employees could also be lumped with large, unexpected BiK (benefit-in-kind) tax bills for retrospective unpaid tax.

The first-tier tribunal, of which details can be found here, was the result of an appeal surrounding three vehicles supplied by the Coca-Cola European Partners GB Ltd to its technician employees, and whether the vehicles (a Vauxhall Vivaro and two Volkswagen Transport T5 Kombi vans) should be classified as “goods vehicle” for the purposes of tax. Coca-Cola issued estate cars to its technicians until 1997, but due to the increased amount of equipment and machinery to be carried, they switched to Vivaro, Kombi 1 and Kombi 2 models. Despite the DLVA and insurance companies classifying the three vehicles in question as vans, therefore limiting their drivers to 60mpg in a 70mph zone, HMRC believed that these vehicles should be classified as cars due to their second row of seats.

Tribunal judge Guy Brannan ruled that as the mid-sections of the Volkswagen Transporters were equally suitable for carrying goods and passengers, they could not be regarded as goods vehicles. However, Brannan ruled the Vivaro was a goods vehicle as it was “primarily suited to the conveyance of goods”.

Read the full story here.

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