Jones v Revenue & Customs

Factual and Procedural Background

The Appellant is a mobile technician employed by Company A who was supplied with a specially modified Land Rover Discovery vehicle by his employer. The vehicle was modified to carry engine components and tools necessary for his work. Previously, under a different employer, the vehicle had been treated as a van for tax purposes due to a special dispensation granted by HM Revenue and Customs (HMRC). However, after the contract for providing roadside assistance services transferred to Company B, HMRC treated the vehicle as a car, resulting in a higher tax liability for the Appellant. The Appellant objected to his Notice of Coding for the 2011-12 tax year, challenging the classification of the vehicle as a car rather than a goods vehicle (van). The dispute proceeded to the First-tier Tribunal, where the vehicle was inspected and the parties presented their positions.

Legal Issues Presented

1. Whether the specially modified Land Rover Discovery provided to the Appellant constitutes a "goods vehicle" within the meaning of section 115 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), or whether it should be classified as a "car" for tax purposes.
2. Whether the prior special dispensation granted to the previous employer regarding the vehicle's tax treatment applies to the current employer and the Appellant's circumstances.

Arguments of the Parties

Appellant's Arguments

• The vehicle had been specially modified to carry tools and engine components, rendering it primarily suited for the conveyance of goods or burden.
• The rear seats were made unusable by the modifications, and the Appellant was not permitted to remove the modifications.
• The prior special dispensation granted by HMRC to the former employer should continue to apply despite the change in employer.
• It is unfair that the vehicle was reclassified as a car, resulting in a higher tax burden, given the functional use and modifications of the vehicle.

Respondents' Arguments

• The vehicle is not a goods vehicle as defined by section 115 ITEPA because the modifications are not sufficiently permanent or substantial to alter the vehicle’s original construction.
• According to HMRC guidance, the presence of side windows behind the front doors indicates the vehicle is unlikely to be a goods vehicle.
• The primary purpose of the vehicle’s original construction was not the carriage of goods, and therefore it falls within the statutory definition of a car.
• The prior special dispensation was an agreement specific to the previous employer and did not transfer to the current employer.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Tribunal examined the statutory definitions in section 115 of the Income Tax (Earnings and Pensions) Act 2003, which distinguishes between a "car" and a "van" (goods vehicle). The key criterion is whether the vehicle is of a construction primarily suited for the conveyance of goods or burden. The Tribunal acknowledged that while the Land Rover Discovery had been modified to carry tools and equipment, these modifications did not fundamentally alter the vehicle’s original structure, which remained that of a passenger vehicle. The presence of side windows behind the front doors further supported the classification as a car under HMRC guidance, though the Tribunal noted that such guidance represents HMRC's view and not necessarily the law itself.

The Tribunal also considered the history of a prior special dispensation granted to the previous employer following a successful appeal in 1999. This dispensation was a compromise agreement and did not constitute a binding legal precedent transferable to the current employer. Since the current employer was not party to that agreement, the Tribunal was required to determine the vehicle's classification based on the statutory definition alone.

Given that the vehicle’s construction was not primarily suited for carrying goods and that the modifications were not permanent or fundamental, the Tribunal concluded that the vehicle is a car within the meaning of section 115(1) ITEPA.

Holding and Implications

The appeal is dismissed.

The Tribunal held that the Land Rover Discovery supplied to the Appellant by his employer is properly classified as a car for tax purposes under section 115 ITEPA. As a result, the Appellant's Notice of Coding for 2011-12, which treated the vehicle as a car, was correctly determined by HMRC. This decision directly affects the tax liability of the Appellant but does not establish any new legal precedent beyond the application of the existing statutory definitions to the facts of this case.