When is a van a car?

24 July 2020

When the courts say it is. A Court of Appeal ruling has recently been issued regarding the status of Vauxhall Vivaro and VW Transporter vehicles used by Coca-Cola for benefit in kind purposes.

At the Upper Tribunal stage of this dispute, the Vivaro was ruled to be a van for benefit in kind purposes and the Transporter a car: Coca-Cola had treated them both as vans, and HMRC considered they both could be cars. As neither party were happy with the result, both appealed the Upper Tribunal ruling.

The outcome of this Appeal was a win for HMRC, the Court of Appeal reaffirmed the decision that the Transporter was a car for BIK purposes and revised the decision on the Vivaro to state that this too was now a car for benefit in kind purposes.

So what might happen next?

While it is possible Coca-Cola will appeal again (there is likely to be a lot of money at stake), HMRC will certainly have good grounds to seek to recover car BIKs with any other employer that provides Transporters or Vivaros to their employees. It is also likely that HMRC will now argue that similar vehicles from other manufacturers should also be re-designated from vans to cars.

What is the potential practical impact of this ruling?

Incidental private use of a van is permitted without a BIK charge arising. Therefore, it is highly likely that the employees driving this type of vehicle may not have any form of BIK tax charge at present as, if their employer has treated their vehicle as a van, it is likely they will have designated it as not being available for private use.

Where private use is allowed, HMRC will be able to identify the van benefit recorded for the employee and can be expected to revisit the position for all employees using these types of vehicle to establish if they should always have been treated as cars. This would trigger much larger benefit in kind figures with significant amounts of tax and NIC to be recovered. Affected employers will need to consider whether or not they wish to challenge HMRC’s interpretation in respect of other vans or help meet the additional tax and NIC costs on behalf of their employees.

Employers may also need to reconsider the current tax treatment of the vehicles for Capital Allowances purposes.  


If you have a “van” fleet and allow employees to use them privately, there is now a significant risk that HMRC will pursue this issue for all tax years in date (on the basis that if a vehicle is a car now, it was always a car). Therefore, it is important to review your van fleets and policies on private use by employees to establish the potential size of the tax and NIC arrears that HMRC may seek.

For help and advice on this or any benefit in kind issue please get in touch with your usual BDO contact or Shawn Healy.

Read the full judgement - Noel Payne & Ors v HMRC

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