In a significant reversal, HM Revenue & Customs (HMRC) announced on Monday, 19 February 2024, that it will withdraw its updated guidance regarding the tax treatment of Double Cab Pick Ups (DCPUs). The original decision follows a 2020 Court of Appeal judgment which initially led to the guidance change. The updated guidance, slated to take effect from 1 July 2024, would have categorised DCPUs with a payload of one tonne or more as cars rather than goods vehicles for capital allowances and benefit-in-kind purposes. HMRC withdrew its updated guidance during the afternoon of Monday 19 February 2024.
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Payne & Ors (Coca-Cola) v R & C Commrs (2020) (BTC19)
In the case of Payne & Ors (Coca-Cola) v R & C Commrs (2020) (BTC19), the Court of Appeal established that the majority of multi-purpose vehicles, including Double Cab Pick Ups (DCPUs), are to be classified as cars.
The legal dispute was initiated by Coca-Cola, wherein the company argued that the four-seat crew-cab versions of the Vauxhall Vivaro and Volkswagen Transporter vans within its fleet should be subject to commercial vehicle taxation for Benefit-in-Kind (BIK) purposes.
Subsequently, the Court of Appeal sided with HMRC’s determination to classify these vehicles as private cars, thereby laying the groundwork for the recent revision in rules that occurred last week.
The arrangements outlined by HMRC on 12 February 2024, aimed at assisting DCPU owners in adjusting to the proposed guidance alterations, are now deemed unnecessary. This is because the intended alteration in tax treatment, which these arrangements were designed to accommodate, is no longer taking place, as clarified by HMRC.
Government Response to Industry Concerns
The government, having listened to feedback from stakeholders in the farming and motoring sectors, recognised potential adverse impacts stemming from the proposed tax-treatment change. In response to concerns raised, Nigel Huddleston, Financial Secretary to the Treasury, affirmed the government’s commitment to supporting businesses, including vital motoring and farming industries.
Legislative Action for Tax Treatment Consistency
In light of industry feedback and the potential economic ramifications, HMRC has announced its intention to legislate, ensuring DCPUs are consistently treated as goods vehicles for tax purposes. The government will introduce the necessary legislation in the upcoming Finance Bill, following a consultation period to refine the draft legislation and ensure alignment with desired outcomes.
Tax Benefits for Businesses and Individuals
With the withdrawal of the updated guidance, DCPUs will continue to be treated as goods vehicles, preserving historic tax treatment. This decision ensures that employers providing these vehicles to employees will not face increased benefit-in-kind taxes, and businesses purchasing DCPUs for trade purposes will retain full capital allowances in the first year of use.
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HMRC Reversal – Useful for Taxpayers
HMRC’s decision to maintain the current tax treatment of DCPUs underscores the government’s responsiveness to industry concerns and commitment to supporting key sectors of the economy. As legislative measures are pursued to solidify this tax treatment, businesses and individuals can continue to benefit from consistent and favourable tax arrangements.
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If you need HMRC Tax Disputes advice, we are available to aid you at every stage of the HMRC appeals process. Members of our legal team have first-hand experience and working knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations, throughout the HMRC internal review process and in front of the Tax Tribunal. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect including developing a strategy.
We are experts in adeptly presenting evidence and employing bespoke arguments combining the facts of your case, previous cases and current legislation to ensure your appeal is a successful one. We provide urgent advice and representation to clients from our unique expert team of established tax and duties specialist solicitors and barristers with a proven track record of delivering authoritative results. Just call us on 0207 1830 529, or email [email protected].
HMRC APPEAL DEADLINES – WARNING
HMRC decision letters containing penalties or imposing assessments offer time limited deadlines within which to appeal. Often these short deadlines (e.g. 30 days) can run from the date of the letter which means you have less time than you think. Your legal rights will become irreversibly time-barred if you fail to take legal action. Therefore, you should seek specific legal advice about your HMRC tax dispute at the very first opportunity so that you understand the time you have left. Failure to take advice or delay in taking action can be fatal to your prospects of success.