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Crew-cab vehicles are cars for P11D purposes

27-Aug-2020

The Court of Appeal has recently ruled that two types of crew-cab vehicle, namely the Vauxhall Vivaro and VW Transporter Kombi are considered to be cars and not vans for the purposes of benefits in kind. This case has been ongoing since 2017 with Coco-Cola but the recent appeal against the Upper Tier Tribunal decision has been decided in HMRC’s favour. Coca-Cola may well appeal the decision in the Supreme Court as the difference in tax is likely to be significant, however, until that happens the decision is binding and these vehicles should be assessed as cars on your company P11D forms if they are used privately by employees or directors. It is also likely that HMRC would seek to argue that similar vehicles should also be classified as cars and not vans. The crux of the matter was that these vehicles have a second row of seats, windows behind the driver and an enclosed load space, meaning they fall foul of the van definition of being primarily for the conveyancing of goods. The impact for tax and Class 1a National insurance purposes will be significant given the current fixed rate benefit for vans vs the emissions based percentage method on a cars list price when new (not the price you pay) which currently could be as high as 37% on a car with CO2 emissions exceeding 170g/km.

It is important to consider the impact of this ruling now by looking at whether you have these specific vehicles or similar and have treated them as a van for P11D purposes, dating back to the tax year commencing 6 April 2017 when the case was first heard by the First Tier Tribunal. HMRC could seek to collect the additional tax from this year on the basis that if a vehicle is now classified as a car, it has always been so, although the decision upheld by The Court of Appeal did not originally become binding until the Upper Tier Tribunal made its decision during the tax year ended 5 April 2019.

Although unclear at this stage, the decision on these vehicles could potentially have an adverse impact on capital allowances and VAT claims as well.

As one of the main factors of this decision was based on the second row of seats and back windows that these vehicles possess, we considered whether this would impact on double-cab pickups. At the time of writing, HMRC guidance still states the double cab pick-up classification follows the VAT treatment. Under this measure, a double-cab pickup that has a payload of 1 tonne or more is accepted as a van for benefit in kind purposes. This 1 tonne rule only applies to double-cab pickups and not to any other vehicle. One of the main reasons thought to exist for the continuation of the different treatment for a double-cab pickup is that its payload is ordinarily an uncovered flat-bed.

If you are concerned that this may affect you, please contact us to discuss.

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