Combi-vans: are they really cars?

For many years now the Combi-van has been purchased by businesses with the additional attraction that it can be used personally to run the family around with only a small benefit in kind.

Back in August 2017 there was a court case between HMRC and Coca Cola where HMRC challenged the tax treatment of three Combi-vans.

The outcome of the case was that two of the vans were to be treated as cars rather than vans for tax triggering significant benefits in kind on the employees who had the personal use of these vehicles. The outcome of this case was appealed by Coca Cola in February 2019 with no success.

HMRC does have a list of car derived vans and combi-vans available through its website, however this has not been updated since 2015 and seems to omit far too many vehicles including the Volkswagen Transporter.

Factors to consider include, but are not limited to:-

  • The vehicle’s primary purpose, bear in mind if there is no primary purpose it will be treated like a car.
  • The vehicle’s payload
  • Windows in the back with the second row of seats
  • Modifications to the vehicles including bulkheads
HMRC's website has not been updated since 2015 and seems to omit far too many vehicles.

HMRC has conflicting legislation on the treatment of these vehicles for VAT purposes as they do for direct taxes which means you could still be able to claim the VAT on purchase however you may find you have a significant benefit in kind triggered by the high list price and CO2 emissions and you will lose out on the Annual Investment Allowance.

These vehicles are not treated like double cab pickups where HMRC`s guidance is much clearer, linking them to the one tonne payload.

Our advice would be not to enter into any agreements for a Combi-Van without seeking professional advice as the tax costs can be hefty.

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