May 27, 2021


As we have reached the end of the 2020/21 tax year, thoughts turn to reporting benefits in kind provided to employees. These must be reported to HMRC on form P11D and the deadline for doing this is 6 July 2021. Employers are also required to supply employees who are in receipt of benefits with a copy of their P11D, by this time.

What is a benefit in kind?

Typical benefits that you may be familiar with include company cars or vans, health insurance or staff loans.

The 2020/21 tax year was far from normal, because of the pandemic. If staff were on furlough the normal benefits they would have received may have stopped or changed, but new ones may have arisen because of different working practices. Careful consideration must therefore be given to the preparation of forms P11D’s for the 2020/21 tax year.

Changes in the definition of what is classed as a van

There has been a recent tax case (the “Coca Cola” case) which was won by HMRC. The outcome of this case changes the categorisation of certain crew cab vans as cars. This may yet go to appeal through the courts but based on the current case this will result in changes to the way certain vehicles are treated for P11D purposes for the 2020/21 tax year.

What type of vehicles are affected?

In the Coca Cola case the two vehicle types in question were:

  • First or second-generation VW Transporter T5 Kombis and
  • Vauxhall Vivaros.

Coca-Cola asserted that all these vehicles were vans, whilst HMRC argued that they should all be classed as cars. Vans are more beneficial for tax purposes than cars. The First Tier Tribunal found that, as Kombis are multi-purpose, they do not meet the criteria to be considered as vans and, therefore, should be classed as cars.

The First Tier Tribunal found that the Vivaro, however, could reasonably be classed as a van, but only on very specific grounds. If the second row of seats do not span the width of the vehicle as they do in the Kombi, then the vehicle could be classed as a van due to the extra load space in the centre of the vehicle. The Upper Tribunal agreed with this judgement.

The Court of Appeal, however, has stated that all three types of vehicle are multi-purpose vehicles as they are able to carry both goods and people, and none of them are ‘van-like’ enough so must be taxed in the same way as cars.

For tax year 2020-21 onwards, employers must remember the outcome of the case when preparing P11Ds. Companies may need to carry out reviews of the company vehicles that they provide and should also consider the implications of the ruling of the case when purchasing any additional company vehicles.

This case changes the rules that apply to these vehicles and a review of your fleet should be undertaken to assess if you have any of the affected vehicle types.

If you require any further information on this subject, please contact me or your usual Albert Goodman contact.


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