The High Court upheld a decision of the special commissioner ((2005) Sp C 495) that a motorhome provided to a taxpayer by reason of his employment as managing director of a company and used as a mobile office was a ‘car’ within the meaning of the Income and Corporation Taxes Act 1988, s. 168(5)(a).

Facts

The taxpayer (‘M’) appealed against an assessment made on discovery and against an amendment to his self assessment as a result of the alleged omission from his tax returns of the benefit of a car and fuel made available to him by reason of his employment with the taxpayer company (C).

The Revenue took the view that a motorhome provided by C and available for private use by M was a ‘car’ within the meaning of ICTA 1988, s. 168(5) so that M was liable to pay tax on the car and fuel benefit, whilst C was liable to pay additional Class 1A National Insurance contributions in respect of the benefits. M argued that the motorhome was not a car. He proposed that the benefit of the vehicle to him should be taxed either on the basis that the motorhome was a van or as an asset made available to him by his employer. In both situations his tax liability would be significantly less than an assessment based on the rules for car and fuel benefit.

M used the motorhome principally as a mobile office where he kept the business records for C. He was unable to access the office at the shop premises because of his difficulties with climbing stairs. The office which was above the rear of the shop was later converted into a storeroom. M's normal routine would be to work from the motorhome in the morning when it was stationary outside his home. At 1.30pm he would drive the vehicle a short distance and park it at the rear of the company's shop where he continued his work. The vehicle was also used for the weekly visit to the cash and carry to obtain stock for the business. M occasionally used the vehicle for leisure purposes and it was insured and taxed for private and business use. M accepted that his company did not prohibit him from using the vehicle for private use and that he made no financial contribution to C for his personal use of the vehicle. The fuel for the vehicle was charged to the company account.

The taxpayer accepted that some measure of taxable benefit applied to him by reason of the motorhome being available to him, but alleged that the benefit should not be calculated according to the rules relating to car benefits in the Income and Corporation Taxes Act 1988. A special commissioner held that the motorhome qualified as a ‘car’ for income tax purposes ((2005) Sp C 495).

The taxpayer appealed, contending that the commissioner had erred in reaching that conclusion and that, if the car benefits rules were applicable, there should be some apportionment to reflect the fact that he had only used the motorhome for two weeks in the relevant tax year.

Issue

Whether the motorhome provided by C and available for private use by M was a ‘car’ within the meaning of ICTA 1988, s. 168(5)(a).

Decision

Park J (dismissed the appeal) said that the taxpayer had failed to show, on the balance of probabilities, that the motorhome was not a ‘car’ as defined in ICTA 1988, s. 168(5)(a) to avoid paying the additional tax due by the application of s. 157 and 158 to the provision of the motorhome and the fuel to him by his employer. The motorhome was a mechanically propelled vehicle and the taxpayer had failed to show that the vehicle fell within one of the exceptions to s. 168(5)(a).

The exception in s. 168(5)(a)(i) related to a vehicle of a construction primarily suited for the conveyance of goods or burden of any description. On the facts the construction of the motorhome was primarily suited for leisure purposes and was ill-equipped for the conveyance of goods. Exception (i) dealt with the vehicle's construction rather than the actual use the specific vehicle was put to by its owner. Therefore the exception in s. 168(5)(a)(i) did not apply.

Exception (ii) excluded vehicles which were of a type not commonly used as private vehicles and unsuitable to be so used. That exception applied to ‘the vehicle in the condition in which it was provided to the taxpayer and in which it was expected to be used by him’. On the facts found, the motorhome was of a type commonly used as a private vehicle and suitable to be so used and available for private use. Therefore the provision of the motorhome to M did not meet the criteria of exception (ii).

Accordingly the commissioner had not erred in reaching the conclusion he did and the tax liability to be imposed was a full year's benefit which could not be scaled down to reflect the personal use of the motorhome by the taxpayer for a brief period.

Chancery Division. Judgment delivered 8 March 2006.