VAT – Is it a car or a van?
HMRC have released new guidance to clarify their interpretation of the definition of a motor car for VAT purposes. This is especially relevant in the context of ‘car-derived vans’ as there are different VAT rules for cars and vans.
Historically, it has been quite easy to distinguish between cars and vans. For example, vans usually have no rear seats, metal side panels to the rear of the front seats and a load area which is unsuitable for carrying passengers. However, HMRC have noticed that a number of new vehicles are appearing on the market which makes it less obvious whether the vehicle is a car or a van.
The new guidance draws attention to this fact and reminds VAT registered businesses that HMRC publish a list of car-derived vans on which VAT may be deducted (subject to the normal rules) as they are not seen as cars for VAT purposes. If a ‘van’ is not listed then it is the purchaser’s responsibility to obtain confirmation in writing from the supplier that the vehicle meets the technical criteria to be classified as a van for VAT purposes.