Vauxhall Motors Ltd v Revenue and Customs [2006] UKVAT V19425 (18 January 2006)
19425
MOTOR VEHICLE – Vauxhall Crew Van – whether car because of folding rear seats – held commercial vehicle – appeal allowed

LONDON TRIBUNAL CENTRE					               

	VAUXHALL MOTORS LIMITED	Appellant

	- and -

	HER MAJESTY’S REVENUE AND CUSTOMS	Respondents

			Tribunal:	Adrian Shipwright (Chairman)
					Mrs L M Salisbury

Sitting in public in London on 19 and 20 September 2005

Leslie Allen and Mitchell Moss of Whitney & Dorsey for the Appellant

Ian Hutton, Counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2005

DECISION

Introduction
1.	This is an appeal by Vauxhall Motors Limited (“VML”) against a decision of HM Customs and Excise as they then were (“HMRC”).  The parties agree that the decision is contained in correspondence dated 16 July 2004.  HMRC decided that the Combo Crew van (“the Crew Van”) was a motor car and not a van or commercial vehicle for the purposes of VAT.
Issue
2.	In essence, the issue in this case is whether or not the Crew Van is a motor car within the meaning of Article 2 of the Value Added Tax (Cars) Order 1992 (“the Order”).
The Legislation and Authorities
3.	Article 2 of the Order insofar as relevant provides:
“ Motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either: 

(a)	is constructed or adapted solely or mainly for the carriage of passengers; or 
(b)	has to the rear of the driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows; 
but does not include: 

(i)	  vehicles capable of accommodating only one person; 
(ii)	vehicles which meet the requirements of Schedule 6 to the Road Vehicles (Construction and Use) Regulations 1986 and are capable of carrying twelve or more seated persons; 
(iii)	vehicles of not less than three tonnes unladen weight (as defined in the Table to regulation 3(2) of the Road Vehicles (Construction and Use) Regulations 1986);
(iv)	vehicles constructed to carry a payload (the difference between a vehicle’s kerb weight (as defined in the Table to regulation 3(2) of the Road Vehicles (Construction and Use) Regulations 1986) and its maximum gross weight (as defined in that Table)) of one tonne or more;
(v)	caravans, ambulances and prison vans;
(vi)	vehicles constructed for a special purpose other than the carriage of persons and having no other accommodation for carrying persons than such as is incidental to that purpose;…”
4.	A bundle of Authorities was produced.  This contained reports of the following cases:
Commissioners of Customs and Excise v Jeynes (trading as Midland International (Hire) Caterers) [1984] STC 30
Chartcliff v Commissioners of Customs and Excise [262]
Bolinge Hill Farm v Commissioners of Customs and Excise [4217]
A L Yeoman Ltd v Commissioners of Customs and Excise [4217]
Chichester Plant Contractors Limited v Commissioners of Customs and Excise [6575]
Stan Compton trading as Stan Compton Electrical Engineers and Contractors v Commissioners of Customs and Excise [10259]
R C Lucia v Commissioners of Customs and Excise [5776]
Royscot Leasing Limited v Commissioners of Customs and Excise [1999] STC 998
Intercraft UK Romania v Commissioners of Customs and Excise [13707]
The Evidence
5.	An agreed bundle of documents was produced.  Certain other documents were produced during the course of the hearing.  No objection was taken to the admission of any of these documents, all of which were admitted.
6.	Oral evidence was given by Philip Richard Harwood, Project Manager – Vans for Vauxhall, Tony John Goodwin, an analyst employed by VML and David Webb, an HMRC Senior Policy Advisor.   Witness Statements were produced for each of these witnesses.
7.	We were also taken to the VML facility in Luton to inspect examples of the Crew Van, other vans in the Combo range and other Vauxhall vehicles.  We were also given the opportunity to sit in the Crew Van.  In addition we were given a test drive in the Crew Van.  We sat on the rear folding seats and Counsel for HMRC sat in the front passenger seat during this test drive.
Findings of Fact
8.	From the evidence, we make the following findings of fact:
(a)	the Crew Van is a vehicle sold under the Vauxhall Badge.
(b)	It is a variant of the Combo Van (“the Combo Van”) also sold under the Vauxhall Badge.
(c)	A vehicle is constructed as a Crew Van from the start. It is not a Combo Van which is first constructed and then modified or adapted. It is a Crew Van that it is constructed from the start.
(d)	The difference between the Combo Van (which HMRC accept is a commercial vehicle) and the Crew Van is that the Crew Van has rear seats which can be opened up to provide accommodation for up to three passengers.  When folded flat there is almost no compromise on load carrying ability, as compared with the Combo Van.  The load space volume comparisons are as follows:
	SAE Method (cu.m)	VDA Method (cu.m)	
Combo Van
(without optional flex cargo)	2.76	2.39	
Crew Van
(with seats down)	2.70	2.32
	
(e)	When the doors are closed the Crew Van is indistinguishable from the rest of the Combo range.
(f)	There are no rear windows in the Crew Van. Rear windows can be installed as an extra for an additional price.  Such vehicles are not in issue.
(g)	There are no side windows to the Crew Van behind the front doors.
(h)	There are sliding rear doors on both sides to allow better loading access. We were told this also assists with the construction of a Crew Van.
(i)	Seats can be opened up behind the driver and front passenger seats. These seats meet the requisite legislative requirements as to safety.  There is a special bulkhead to allow the carriage of cargo in the dual use area.
(j)	These seats are low and not very comfortable. The access to them is not particularly easy or convenient. It is not as easy or convenient as getting into a conventional car particularly because of the lip it is necessary to get over. We concluded after a test drive that we would not wish to travel long distances on these seats.
(k)	There is a high roof space above the rear seat position as a result of the need for payload space.
(l)	The vehicle is not particularly noisy when travelling in the rear seats.
(m)	Our overall impression from having been driven in the Crew Van whilst sitting in the back was that it was like being in a commercial vehicle. The relative dark because of the lack of rear and side windows and the position of the seats were major contributors to this.
(n)	 The Crew Van is treated as a commercial vehicle for the purposes of British National Type Approval, the DVLA and insurance purposes. These do not apply exactly the same test though as for VAT.
(o)	We concluded that there were various parts of the vehicle whose use was fixed (eg. The engine compartment).  One area did not have such a fixed use.  This is the dual use area behind the front seats and in front of the fixed use cargo areas.
(p)	We asked for various measurements to be taken.  These included the overall length of the vehicle including the engine compartment.  The measurements for the front compartment where the driver sits, the middle area which could be used for cargo or when the rear seats were up for carrying passengers and the fixed cargo area at the back were taken.
(q)	Mr Goodwin gave unchallenged evidence which we accept that the measurements were as follows:
A.	the overall length of the vehicle was 			4,323 mm
B.	front compartment length (seat forward)		   660 mm
C.	length of dual purpose area				1,000 mm
D.	length of permanent cargo area			   980 mm
E.	width of vehicle					1,685 mm
F.	front passenger door to central area of controls	   520 mm
(r)	This may be illustrated diagrammatically as follows:

E

A

   Goods
       D

 Dual Use
      C

    Driver
        B

      F

Engine

9.	A number of calculations were made by Mr Goodwin which we have recalculated and restate as follows:
(i)	Front compartment and dual purpose area as percentage of overall vehicle:
This was calculated as B + C %
                                         	    A
ie	660 + 1,000 % = 38.4% (approx)
	       4,323

(ii)	Dual purpose area as proportion of it and fixed cargo area:
This was calculated as      C %
                                                  C + D
ie	 _1,000 %_  =  50.5% (approx)
	1,000 + 980

(iii)	 Proportion of interior space potentially available for passengers, ignoring driver space:
available for passengers: 
	(B x F) and (C x E) %
	  (B + C + D) x E

	(660 x 520) + (1,000 x 1,685)
(660 + 1,000 + 980) x 1,685

	(343,200 x 1,685,000)
      (2,640 x 1,685)

	2,028,200   = 45.6% (approx)
       	4,448,400
Accordingly, 54.4% (approx) would not be available for passengers.

(iv)	Dashboard to rear, driver space included as passenger, 62.9% would then be available for passengers and driver.
	__(B + C) x E_%
	(B + C + D) x E

ie	 ___(660 + 1,000 x 1,685__   
	660 + 1,000 + 980) x 1,685

ie	2,797,100 %     = 62.9 (approx) %
	4,448,000

(v)	Dashboard to rear, ignoring driver space:

	__(B x F) + (C x E)__
(B x F) + (C + D) x E

	___(660 x 520) + (1,000 x 1,685)__
(660 x 520 + (1,000 + 980) x 1,685

	(343,200) + (1,685,000)
 (343,200) + 3,336,300
ie	2,028,200     = 55.1%
	3,679,500
Appellant’s Submission
10.	The Appellant’s main submission was that the Crew Van was not “constructed or adapted mainly for the carriage of passengers.”
11.	This was for the following reasons:
(a)	the Crew Van was built as such from scratch and was not an adaptation.  The rear seats were included as part of the production process.
(b)	the Crew Van is constructed partly for the carriage of passengers and partly for the carriage of goods.
(c)	The issue depends on the comparative importance of theses two uses.
(d)	The overall attributes of the Crew Van are those of a van like the others in the Combo Van range.
(e)	More than half of the Crew Van is available for carriage of goods.
(f)	The space between the front seats and the permanent goods carriage area is a dual purpose area ie goods, or if the seats are opened up, passengers. 
(g)	The rear seats fold away and the evidence before the Tribunal is that the majority of customers typically have the seats down most of the time.
(h)	When all of its physical attributes are considered together, the Crew Van cannot be said to be constructed mainly for the carriage of passengers for the following reasons:
(i)	the proportion of the working space used for the carriage of passengers over the life of the Crew Van will be significantly less than half;
(ii)	the proportion of payload of the Crew Van used for the carriage of passengers is less than half of the available payload;
(iii)	the Crew Van cannot compete either in comfort or price with other vehicles intended mainly for the carriage of passengers;
(iv)	the Crew Van has features specifically designed for the carriage of goods in the space where the rear seats go unfolded (ie the bulkhead); and 
(v)	other agencies considering the physical attributes of the vehicle have concluded that it is suitable primarily for the carriage of goods, not passengers. 
12.	It is common ground between the parties that:-
(a)	the Crew Van does not fall within any of the exceptions to the definition of “motor car” at (i) to (vi) in the definition at article 2 of the Input Tax Order;
(b)	the Crew Van does not meet the condition at (b) in the definition of “motor car” at article 2 of the Input Tax Order; and 
(c)	the Crew Van is not constructed or adapted “solely” for the carriage of passengers.  
Respondent’s Submission
13.	Mr Hutton, who appeared for HMRC made essentially two submissions.  These were as follows.
(a)	Adaptation
The Crew Van  was an “adaptation” of the Combo Van.  The adaptation was mainly for the carriage of passengers and so the Crew Van was really a car.
(b)	Constructed mainly for the carriage of passengers
(i)	Insofar as the adaptation argument is not accepted then the vehicle was constructed “mainly for the carriage of passengers” as more than half the vehicle was for the carriage of passengers.  
(ii)	“Mainly” here means more than half (see Lord Maton of Herrington in Fawcett Properties Ltd v Buckingham County Council [1961] AC 636 AL 669). 
(iii)	With the seats up, more than half the vehicle was for the carriage of vehicles as 2/3’s of the available space (ignoring the engine compartment) was for carrying passengers.  
(iv)	In this context, it is the Commissioners’ position that the fact that the seats can be folded down cannot be relevant.  It would be absurd to allow a difference of tax status merely because the seats could be folded down.  The position must be considered with the seats up.
Discussion 
14.	The submissions raise two matters to be considered in deciding whether the Crew Van is a motor car within the meaning of the Order.
These are:
(i)	Is the Crew Van an adaptation?  (“the Adaptation Point”); and 
(ii)	Is the Crew Van constructed mainly for the carriage of passengers? (“the Construction Point”)
The Adaptation Point
15.	The Crew Van is constructed with the rear seats in place.  They are not a later modification to a Combo Van so as to adapt it for the carriage of passengers.  We have found already that a vehicle is constructed as a Crew Van from the start.  We find, as a matter of fact, that the Crew Van is not an adaptation.
The Construction Point
16.	No single test emerges from the case law as to what constitutes construction mainly for the carriage of passengers.  It is a question to be decided in the light of all the circumstances and on the basis that it is something one knows when one sees it.
17.	The cases cited to us are interesting illustrations but do not cover this case.  Accordingly, in approaching this case we have asked ourselves the question whether the ordinary person would consider the Crew Van to be constructed for the carriage of passengers?
18.	We have found that the Crew Van is essentially a Combo Van, accepted as a commercial vehicle that has folding seats in it.  Is the presence of folding seats enough to change the Crew Van into a car?
19.	This requires us to consider the overall attributes of the Crew Van.  We consider that overall, having regard to its physical attributes, the Crew Van is a commercial vehicle and not a car within the meaning of the Order.  It is a commercial vehicle that if and when the rear seats are opened up can carry passengers in the dual use space.  It remains primarily a commercial vehicle.  We considered that the ordinary person would not consider the Crew Van to be constructed for the carriage of passengers.  
20.	This is for a number of reasons but for particularly the result of having inspected the Crew Van and had a test drive in it.  In addition we consider the following relevant:
(a)	there are no rear windows
(b)	there are no side windows for the rear seats
(c)	the seats fold away almost completely without really reducing the load capacity
(d)	the load bearing capacity and axles are the same to all intents and purposes as those in any other Combo Van which is accepted as a commercial vehicle.
(e)	The Crew Van is accepted as a commercial vehicle for vehicle licensing and insurance.
21.	The useful calculations also show that essentially the vehicle is mainly available for the carriage of goods.  This seems to fit in with what might be imagined to be the likely use for which the Crew Van was constructed.  This was to take workers to the site in the morning, carry loads during the day and then take the workers back in the evening.  There was no direct evidence on this but we consider this is more than probably the use for which the Crew Van was constructed.  The calculations are not determinative but are useful illustrations.  We have not adopted a purely measurement based approach.  We do not think it would be right to do so.  We consider that they are part of the attributes of the vehicles.  As was said in Jeynes (above) it is “only the physical attributes of the vehicle” that we are required to have regard to.   
22.	That it is a commercial vehicle is reflected in the Crew Van’s construction and appearance.  It has essentially three elements apart from the engine compartment.  These are the driver and front passenger compartments, the dual use area and the permanent carriage area.  The dual use area is exactly that.  We see no reason why we have to consider that area to be seating and look at the vehicle solely with the rear seats unfolded as the Respondent suggested.  We consider that too restrictive.  We have considered the folding seats as one of the overall attributes of the Crew Van.
23.	Accordingly, we find as a matter of fact that the Crew Van is a commercial vehicle and not a car within the meaning of the Order and that the ordinary person would consider this to be the case.
Conclusion
24.	The appeal is therefore allowed.  In the circumstances we consider that the Appellant should be entitled to its costs.

ADRIAN SHIPWRIGHT

CHAIRMAN
RELEASE DATE: 18 January 2006

LON/2004/1230