You’re probably sat thinking you already know the answer to this, but you may actually be surprised by the definition of a van. It’s important to understand what truly comes under the term ‘van’ and what is classed as a ‘car’ because it can have a large impact on your business when it comes to tax and VAT.
The curiosity around the definition of a van has increased since Coca-Cola supplied what they thought were modified vans to their employees. It later turned out that HMRC had classed these vehicles as company cars. This ended with Coca-Cola having to pay an unknown amount of national insurance, backdated, and the drivers facing ‘benefit-in-kind’ tax bills.
According to HMRC, all road vehicles that are driven by a mechanical means are defined as a ‘car’. The exceptions are:
- A vehicle that is built primarily for carrying goods or burden of any description (also known as a ‘Goods Vehicle’).
- A motorcycle, as defined in Section 185 of the Road Traffic Act, 1988.
- An invalid carriage, as defined in the Road Traffic Act, 1988.
- A vehicle that is not commonly used as a private vehicle or is unsuitable to be used as a private vehicle.
A business can claim back their input VAT on the purchase of a van, but not on a car. This is where business can get in trouble, because they may mistakenly reclaim VAT when they aren’t supposed to. The things that HMRC look at when defining a vehicle to be a van or car are things such as the number of seats, number of windows, the ratio of maximum passengers to maximum cargo and, of course, the main purpose of the vehicle.
Sussex Van Sales
The difference between your vehicle being a van or car could come down to very minor details, as it turned out to be in the Coca-Cola case. It is best to thoroughly check your van against the HMRC guidelines and definitions before reclaiming VAT. As always, we aim to provide the best service possible when it comes to Sussex van sales, and we’d be more than happy to give advice on the definition of the vehicle you’re purchasing from us and how you can avoid run-ins with HMRC.
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