EIM23121 - Car benefit: vehicle of a construction primarily suited for the conveyance of goods or burden of any description: judicial comments

The Court of Appeal in Payne & Ors (Coca Cola) v R & C Commrs [2020] BTC19 considered whether three types of vehicle provided to employees by their employer were goods vehicles for the purposes of determining the cash equivalent of the benefit in kind. In doing so, the courts focussed on the meaning of ‘construction’ and ‘primary suitability’ in the context of section 115 ITEPA 2003.

Construction

Here it was confirmed that how a vehicle was used was not relevant when considering the meaning of construction. Further, the appearance of the vehicle or its apparent structure was not determinative. If it were, then the courts’ view was that it would place too much emphasis on the appearance and external features of the vehicle over its suitability. The judgment also agreed that ‘construction’ simply means the manner in which the vehicle has been put together, assembled, or built. The correct approach was therefore to assess the vehicle as a whole at the point that it was made available. So, the original construction or previous iterations did not need to be considered, rather one must look at the vehicle at the point in time and consider its construction in the context of section 115 at that particular time.

Primarily suited

Having decided that the term ‘primarily suited’ as used in section 115(2) ITEPA 2003 envisages that a vehicle may have more than one potential suitability, it was confirmed that one would need to demonstrate that the predominant suitability of the vehicle in question was for the conveyance of goods or burden, in order to be classified as a goods vehicle. The Courts’ view was that this imports something more than marginal, or just about (51% to 49% for example). At paragraph 92 of the judgment, Lady Asplin states,

‘As I have already decided, it is not enough to slip past the post. “Primarily” means something more than a suitability which is first in the list by a whisker. It means first and foremost. It cannot encompass very narrow margins. It is also possible for a multi-purpose vehicle to have no primary suitability at all’ 

The courts also confirmed the mid-section interchangable areas which incorporated removable or fold-down seats were equally suited for either purpose, and therefore represented multi-purpose areas. The Court of Appeal therefore determined that all three of the vehicles were multi-purpose and as such were not primarily suited to any particular use. As a consequence, all three vehicles failed to qualify as goods vehicles and were classified as ‘cars’ for benefit in kind purposes.