Car benefit: vehicle of a type not commonly used as a private vehicle and unsuitable to be so used: meaning of type
Section 115(1) ITEPA 2003
EIM23100 sets out the four exceptions from being a car that are prescribed in the legislation. This guidance expands on the second of those exceptions, namely that a vehicle will not count as a car for car benefit purposes if it is:
- a vehicle of a type not commonly used as a private vehicle and
- unsuitable to be so used.
There are three stages to applying this test.
- Identify the type of vehicle, see below.
- Consider whether that type of vehicle is not commonly used as a private vehicle, see EIM23130.
- Consider whether that type of vehicle is unsuitable for use as a private vehicle, see EIM23135.
Meaning of type of vehicle
What counts as a type of vehicle for tax purposes was considered in the capital allowance cases of Bourne v Auto School of Motoring (Norwich) Limited (42TC217) and Roberts v Granada TV Rental Limited (46TC295). Those cases show that a vehicle that has been modified in some way can be a different type from one that has not been modified. It does not matter that they are both of the same basic model. In the Granada TV case the Judge said:
“there may be many different categories, with a vehicle moving from one to the other with comparatively small modifications”.
Modifications that can be accepted as establishing a different type include:
- the addition of fixed, flashing blue lights (see Gurney v Richards, (62TC287) and EIM23140), or
- the fitting of dual controls (see Bourne v Auto School of Motoring (Norwich) Limited, (42TC217)), or
- the addition of a rooftop sign or loud speaker.
However, even if a vehicle has been modified so that it is of a different type, it will not necessarily follow that the vehicle is not a car. You still need to consider whether that type is:
- not commonly used as a private vehicle (see EIM23130) and
- unsuitable to be used as a private vehicle (see EIM23135).
The fact that a vehicle has been painted in a particular way (for example, to include an advertisement for the employer’s products) should not be accepted as establishing a type.