For many years now, businesses, particularly builders, have provided their staff with twin cab pick-ups, instead of cars, to take advantage of the more generous tax regime. Such vehicles have previously been taxed as a van, resulting in more favourable capital allowances, VAT, NIC and benefit in kind treatments. The distinction between a car and van has previously been based on the following key test:
- The ability to carry a payload of at least 1,000 Kg (or 1,045 Kg if a back hardtop is fitted). HMRC even provided a list of which vehicles do and don’t qualify as a van: list. In a long running disagreement between HMRC and Coca-Cola, which recently reached the First Tier Tax Tribunal, HMRC won their case that the distinction should be based on a new test:
- Whether the vehicles were purchased primarily for the transport of goods or of persons. HMRC have yet to clarify whether this Court decision will be applied by them generally (even retrospectively). In the meantime, this uncertainty is not helpful.