When is a Van not a Van?!

There has recently been the conclusion to a fairly significant tax tribunal between HMRC & Coca-Cola over how Coca-Cola have been providing their employees with crew-cab vans instead of company cars.

What’s the significance of the case? Well, HMRC are now able to classify crew-vans as cars for tax purposes, which could cause a myriad of changes in how vans are used within companies and the tax effects of having those vans.

Let’s explore the detail.

What’s the issue?

HMRC weren’t happy that Coca-Cola had been providing employees with the option to have a crew-cab van instead of a company car, as vans have different tax rules covering:

Benefits in Kind (company cars carry much high tax liabilities)

Corporation Tax – cars can only have a small % of their cost offset each year, whereas with a van you can write off the whole cost in the year of purchase.

Income Tax – as a result of small Benefits in Kind, the employees were paying less tax.

VAT – Ordinarily, you can reclaim VAT on a van, whereas this is hugely limited on cars.

What’s even worse is that, as a result of HMRC’s win they are potentially able to review this retrospectively to ensure that the rules that have now been agreed have been correctly applied.

What are the implications?

HMRC won the case on the basis that crew-cab vans aren’t made primarily as a ‘goods vehicle’ meaning that they are not ‘a vehicle of a construction primarily suited for the conveyance of goods or burden’.

As a result of this, if you are currently using a Crew-cab van that is provided to you by your company, you will need to reassess the position for your P11D each year moving forward, as well as retrospectively with effect from when the vehicle was provided to you.

The deduction of the cost of the vehicle against profits will also need to be reviewed, along with any VAT that has been reclaimed.

Overall, this could unfortunately lead to additional tax liabilities arising moving forward as well as a retrospective tax charge.

If you’re concerned about the above or would like us to review the position of your company vehicles please just drop us a line and we’ll happily work through your case for you. 


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