Landmark case highlights the rules around commercial vehicles

16 February 2021

Many business owners provide their employees with vehicles to help them perform their work duties. But with commercial vehicles attracting a lower level of tax than company cars, the vehicle must meet the criteria set out by HMRC.

HMRC states that a commercial vehicle must be ‘constructed primarily for the conveyance of goods or burden with a gross vehicle weight – fully laden not exceeding 3,500kg’. This statement covers a wide range of vehicles, including two-seater commercial SUV’s, pickup trucks, and even panel vans with two seats. 

HMRC highlighted the importance of this in a recent court case involving global drinks giant, Coca Cola. 

HMRC argued that Coca Cola should have classed the two VW Transporter Kombis and a Vauxhall Vivaro provided to employees as company cars, not commercial vehicles. They claimed that the vehicles were not constructed primarily to convey goods and were multi-purpose vehicles. 

They also claimed that HMRC should consider the vehicles in the state they were given to employees, including any post factory modifications. 

Having won the case, it’s not yet clear whether HMRC will look at past returns, but it’s essential that if you review your fleet in the future. If you have provided these or any ‘multi-purpose’ vehicle to an employee as a commercial vehicle, you will need to treat them as company cars when preparing your P11d Benefit-in-Kind return. 

This change will impact both the employee and the employer, with the employee paying more tax on the benefit, and the company incurring a higher national insurance charge.

You will also need to consider any fuel you have paid to avoid any additional benefit charges.

If you consider purchasing vehicles for your employees, you must consider the use before deciding on a vehicle. If it is a commercial vehicle, ensure that it meets HMRC guidelines, and its sole purpose is the movement of goods. 

Our tax experts would be happy to discuss your options with you.

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