Coca Cola make cars out of vans

Typically, most employers would prefer to provide a van to their employees over providing a car. This is usually because a ‘fixed value’ is used to value the taxable benefit for a van, being £3,490 for 2020/21. Whereas in the case of a car, a percentage of the list of the car is used and has recently (unless electric/hybrid) increased to be a costly taxable benefit for both the employer and the employee.

So, what is a van? Per HMRC’s legislation (ITEPA 2003 s115), a van is a mechanically propelled road vehicle which:

  • is a goods vehicle, and
  • has a design weight not exceeding 3,500 kilograms, and
  • which is not a motorcycle.

Seems like a simple definition that is easy to fulfil, however a case that has been in the courts since 2017 has finally reached a resolution and may change how employers consider what vehicle to provide to their employees.

The Payne & Ors v HMRC case, more publicly known as the Coca-Cola case, addressed whether a Volkswagen Kombi and a Vauxhall Vivaro would be classified as a van or a car. They are van’s right? Well, after eventually getting this to the court of appeal – HMRC won the case. The final judgement decided that both the Volkswagen Kombi and Vauxhall Vivaro should be classified as cars for BIK (Benefit-in-kind) purposes.

To come to this decision, the court had to consider any modifications that had been made to the vehicles and whether this changed what the vehicle was primarily suited for.

The Vivaro had originally left the assembly line as a panel van, however it had been modified by Coca Cola to add a second row of seats behind the driver, leaving a storage space to the side of them, which could only be removed using tools. Although these seats didn’t span the width of the vehicle, it was concluded that as the vehicle had the ability to act as a people carrier or a goods vehicle then it didn’t have a ‘primary’ use and therefore would be considered a car for benefit in kind considerations.

The Kombi’s had originally been supplied to Coca-Cola as panel vans but with a second row of seats already fitted. This row spanned the width of the vehicle; however, it could be removed without tools and this was a requirement during working hours. It was concluded by the tribunal that the Kombis were equally suited for carrying passengers and moving goods and had no primary suitability, therefore they were also considered cars for benefit in kind purposes!


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