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Where Taxpayers and Advisers Meet

Buying a new commercial Vehicle - Allowable Expense

chocolatespatula
Posts:11
Joined:Tue Mar 02, 2021 10:00 pm
Buying a new commercial Vehicle - Allowable Expense

Postby chocolatespatula » Tue Mar 02, 2021 10:15 pm

I want to purchase a new commercial vehicle (VAN) for my business and had a few questions that I was hoping for some help with

- if bought on a lease scheme is the whole monthly cost an allowable expense?
- is the insurance and road tax and allowable expense?
- If I add additional seating, is this a problem at all? - it seems many companies offer this service

Lambs
Posts:1562
Joined:Wed Aug 06, 2008 3:15 pm

Re: Buying a new commercial Vehicle - Allowable Expense

Postby Lambs » Wed Mar 03, 2021 12:31 am

C,

Be careful about adapting your van for additional seating. There was an adverse ruling for Coca Cola vehicles last year in the Court of Appeal, which means that, despite looking, feeling and smelling very much like vans, they were in fact company cars, with a much higher taxable benefit charge as a result. The case(s) spent much time deliberating on the effect of installing additional seating in the mid-rear of the vehicle.

Regards,

Lambs

chocolatespatula
Posts:11
Joined:Tue Mar 02, 2021 10:00 pm

Re: Buying a new commercial Vehicle - Allowable Expense

Postby chocolatespatula » Thu Mar 04, 2021 12:50 am

Just had a read of this - confusing much?

So how is this realised? When a submission is made on a tax return you may stipulate your van type, but what is triggering the discussion around how many temporary seats the van currently has?

Lambs
Posts:1562
Joined:Wed Aug 06, 2008 3:15 pm

Re: Buying a new commercial Vehicle - Allowable Expense

Postby Lambs » Thu Mar 04, 2021 1:15 am

C,

The decision as to the basis of taxation is normally made by the employer on Form P11D when the vehicle is provided by the employer. But it is also subject to adjustment through Self Assessment if, say, the employee then disagrees with the effect of the tax treatment on his or her personal tax position.

Regrds,

Lambs

chocolatespatula
Posts:11
Joined:Tue Mar 02, 2021 10:00 pm

Re: Buying a new commercial Vehicle - Allowable Expense

Postby chocolatespatula » Thu Mar 04, 2021 2:53 pm

so that confuses me in two ways:

1. If coca-cola in this instance specified on the P11D that they had given vans, how would this have arisen as a case? Seems like such a strange thing to have somehow got visibility that a van had an extra seat row?
2. If the van is never given as a benefit in kind, and only used for business purposes rather than as a benefit does the P11D come into account at all?

robbob
Posts:3147
Joined:Wed Aug 06, 2008 4:01 pm

Re: Buying a new commercial Vehicle - Allowable Expense

Postby robbob » Thu Mar 04, 2021 8:19 pm

1. If coca-cola in this instance specified on the P11D that they had given vans, how would this have arisen as a case? Seems like such a strange thing to have somehow got visibility that a van had an extra seat row?
The problem is that legislation as written is often anything but clear cut - the problem is that if there is a dispute between taxpayer and hmrc the outcome is decide on the toss of a coin - oops sorry i meant the balance of probabilities - so there is often uncertainty if something is acceptable practice or not.

It was always only a matter of time before some company got taken to task ref this very item - cola cola were probably in the wrong place at the wrong time - although one may take the viewpoint that they tried their luck and didnt get away with it.
Fleet manager Tom Sayers had told the tribunal in 2017 that employees were offered the choice between a panel van or a vehicle modified by a third-party contractor with rear seats, which could be used for their own private purposes.
It looks like coca cola didn't help themselves here when their own employee advised clients could have a van or "something else" - you would think if you are turning up ata tribunal you would at least use the phrase "modified van" rather than choose not to say it was a "van"
2. If the van is never given as a benefit in kind, and only used for business purposes rather than as a benefit does the P11D come into account at all?
When you say van do you mean car ? - presuming you are talking about the car then as long as it meets the pool car rules you would be absolutely fine - the problem is its highly unlikely that the pool car rules would ever be met so thats unlikely to solve this potential problem

https://www.gov.uk/guidance/use-of-company-pooled-cars-or-vans-480-chapter-15

One solution to the problem is probably go for a vehicle that is less likely to cause hmrc to chuck a wobbly and that is probably a double cab pickup that hmrc officially concede can be classed as a VAN subject to their specific rules in this regard - for some bizarre reason here taxes section are happy to defer to vat! - note the trick with double cabs is to enusre the 1 tonne rule is always met - i think sometimes adding a hardtop option can reduce the available payload - so you need to be very careful even here not to default to preusming it will be ok without checking the fine detail.
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim23150

chocolatespatula
Posts:11
Joined:Tue Mar 02, 2021 10:00 pm

Re: Buying a new commercial Vehicle - Allowable Expense

Postby chocolatespatula » Thu Mar 04, 2021 9:23 pm

Probably explains the rise of the double cab pickups I see everywhere. I was personally looking at a Defender110 Commercial.

So wrong place wrong time comment, essentially someone did a review on a spot check and came to see the specific vehicle in question or asked for photos? seems very unfortunate and I imagine thousands are using converted vans at present, plus if an audit were conducted many would just remove the removable seats?


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