In Payne & Ors v HMRC [2020] EWCA Civ 889, the Court of Appeal found that the VW Kombis and Vauxhall Vivaro were cars and not vans for the purpose of assessing employee car benefits.

There are special rules to value and tax the employment benefit of a Company Car or Company Van if provided by an employer.

For Benefit In Kind purposes, a van is:

  • A vehicle of a construction primarily suited to the conveyance of goods or burden of any description (but not including people) with a weight, which the vehicle is designed or adapted not to exceed when in normal use and travelling on a road laden, below 3,500 kilograms.

Coca-Cola provided a VW Kombi 1, a Kombi 2 and a Vauxhall Vivaro for its technicians.

  • Both had a dual capability of carrying passengers and sufficient payload for carrying cargo, but each had been modified for the technicians. The Vivaro had seats and a window added. Kombi 1 had partitions and Kombi 2 removable racking. Both Kombis already had removable seating as standard.
  • HMRC adjusted the employee's PAYE coding notices for car benefit and assessed the employer for Class 1A National Insurance Contributions (NICs). Coca-Cola and its employees appealed on the basis the vehicles were vans.

The FTT concluded, and on appeal by HMRC the Upper Tribunal (UT) agreed, that:

  • The Kombis were essentially minibuses, designed to carry people and therefore not vans. With modification, they became equally suitable for carrying goods and passengers.
  • The Vivaro was a van: it was more characteristic of a vehicle the construction of which was designed to carry goods.

HMRC appealed the decision on the Vivaro and the taxpayers appealed regarding the VW Kombis.

The Court of Appeal found that both types of vehicle were cars.

  • The vehicles must be looked at in their modified form, not as they were when they came off the production line.
  • As a result, the FTT and UT had not erred in law in treating the Kombis as cars and the Court of Appeal dismissed the taxpayers’ appeals.
  • The lower courts had erred in law regarding the Vivaro. They found "on a narrow balance" that it was primarily suited to the conveyance of goods, which was not enough, as primarily means “first and foremost”. Multi-purpose vehicles such as this may have no primary suitability at all.
  • Having weighed up all the facts the Court found that both types of vehicle were multi-purpose and neither was primarily suited to the conveyance of goods, meaning neither could be a van. There were no significant differences to set the Vivaro apart from the Kombis. HMRC’s appeal was allowed.


Company Cars
Company car tax: How do you work out car benefit? How do you work out car fuel benefit? Are there savings for low emissions vehicles? How do you reduce car benefit? Cars and the tax tribunals and Top Tax Tips.

Vans and Commercial vehicles
What is the benefit in kind charge if you drive a company van? What is van fuel benefit? What is the tax on zero-emissions vans? A guide for subscribers.

Cars & Vans: VAT
What is a car for VAT? What is a van for VAT? What VAT can be recovered on a car that is bought? Leased? What about fuel? Or mileage reimbursements? 

External links

Payne & Ors v HMRC [2020] EWCA Civ 889

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