Her Majesty’s Revenue and Customs (HMRC) has won a court case in the UK regarding whether Coca-Cola’s vehicles should be treated as cars or vans for tax purposes.
The case involving the drinks brand focused around its use of a Vauxhall Vivaro and two Volkswagen Kombis.
The first Volkswagen Kombi was fitted with a removable three-person bench seat in the van’s mid-section as standard, which meant no goods could be carried there with it in place. The rear cargo section was approximately 3cu metres and separated from the mid-section with a central partition.
The second Volkswagen Kombi had three removable seats in the mid-section, and was modified with a fixed partition to separate it from the 3cu metre rear cargo area.
The Vivaro also featured a number of modifications including a second row of removable seats. With the seats removed, the load volume was virtually unchanged at 5cu metres. With them in place, this fell to around 4cu metres.
The Court of Appeal suggested that if a van has a second row of seats, then it indicates the vehicle has a dual purpose and that “the taxpayer is required to demonstrate that the predominant suitability of the vehicles in question is for the conveyance of goods or burden”.
HMRC’s appeal was allowed and all three vehicles are cars for the purposes of income tax.
HMRC has however, remained silent about the future tax status of thousands of vehicles in the UK.
According to media reports in the UK, three judges declared the vehicles should have all been classified as ‘cars’, increasing the amount of tax due from both the employer – Coca-Cola European Partners Great Britain – and the employees.
There has been no reports on whether or not Coca-Cola plans to appeal the decision, but if the company does not further challenge, the ruling could set a legal precedent impacting the amount of National Insurance Contributions (NICs) paid by fleets and the level of benefit-in-kind (BIK) tax incurred by drivers in the UK.