It is important to note that HMRC’s instruction manuals are based on their interpretation of the legislation and to make sure your returns are filed correctly at HMRC the precedent set by the CoA in this case is likely to carry more weight.
Broadly, a company car is defined under s115(1) ITEPA 2003 as “a mechanically propelled road vehicle that is not a goods vehicle (a vehicle primarily suited for conveyance of goods or burden of any description”). The taxable benefit in kind charge is generally levied where the company car is made available to an employee for private use, based on the car’s list price and its CO2 emission rating.
A company van is defined under s115 ITEPA 2003 as “a mechanically propelled road vehicle that is a goods vehicle (a vehicle of construction primarily suited for conveyance of goods or burden of any description) and has a design weight not exceeding 3,500kg”. A taxable benefit in kind charge generally arises when a company van is made available to an employee, and the employee uses the van for ‘insignificant’ private use. The charge is based on a standard scale charge (£3,960 for 2023/24) and can be cheaper than a car benefit in kind, depending on the cars’ list price and CO2 emission rating.
HMRC guidance at EIM23100 specifically states “note that the test is of construction, not use”. Furthermore, the guidance at EIM23100 states that “actual use of a particular vehicle is irrelevant; the statutory test is a test of construction, not use”. This was tested in a recent case of Payne & Ors v HMRC  EWCA Civ 889:
The FTT concluded, and on appeal by HMRC the Upper Tribunal (UT) agreed, that:
HMRC appealed the decision on the Vivaro and the taxpayers appealed regarding the VW Kombis.
In summary, the Court of Appeal found that the VW Kombis and Vauxhall Vivaro were cars and not vans for the purpose of assessing employee car benefits, based on the following reasons:
The interesting point about the case and the decision arrived at by the Court of Appeal, especially where it said the vehicles must be looked at in their modified form, not as they were when they came off the production line, would seem to go completely against what HMRC’s guidance states at EIM23100 and EIM23110, which as mentioned earlier is their interpretation of the legislation. Therefore, completing P11Ds based on the CoA decision should be more compliant (and ironically possibly provide HMRC with more tax/NI revenue!).
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