17 November 2000



If you plan to buy a doublecab

pick-up and fit a hard-top to it, you

may well find you cant reclaim the

VAT on it. David Cousins asked

VAT expert Dave Brown to answer

some of the key questions

relating to what is an increasingly

murky area of tax law

&#42 Whats the background to this?

When doublecab pick-ups first appeared in the UK a few years ago, they looked like a useful vehicle for farmers who wanted a bit more room to cart people around and didnt need quite such a large payload area.

But HM Customs and Excise decided that since they had rear seats and rear side windows they were technically a car. So you couldnt reclaim the VAT unless you could prove that the vehicle was 100% used for business, and "demonstrably unavailable for private use".

While some farmers were able to reclaim the VAT on this basis, they were in a minority and there was always the danger that an eagle-eyed VAT inspector might see the pick-up doing the school run and demand the VAT back. But on Dec 1 1999 Customs & Excise finally brought in its much-heralded ruling that you could reclaim the VAT from a doublecab, provided its payload was more than 1t.

At the time, some models already had payloads above that figure, while others fell frustratingly just below it. But a flurry of activity by makers saw most models beating the 1t threshold.

&#42 Whats the problem now?

The change in law in December 1999 was a welcome (and sensible) burst of generosity by the powers that be. But in July a new ruling came out of the blue. As a result of a trade agreement with the Society of Motor Manufacturers and Traders (SMMT), Customs & Excise announced that if you used a hard-top with your doublecab pickup, you had to deduct 45kg from the payload. So if your pick-ups payload was 1035kg, for instance, you had to mark it down to 990kg. That puts it below the 1t VAT threshold and is likely to prompt a bill from the VAT man asking for some or all the VAT you reclaimed back again.

&#42 But I only use the hard-top once a month. It spends the rest of the time at the back of a shed!

Customs & Excise have said that the mere act of buying a hard-top means that you have altered the pick-up and have to deduct 45kg from the payload. It doesnt matter whether the hard-top was bought with the pick-up as a package or whether you bought it at some point later.

&#42 What if I build something myself. Will that be classified as a hard-top?

Bit hard to know, since there is no written-down description of exactly what constitutes a hard-top. It depends on what your local VAT inspector decides. If you make something that looks just like a commercially available hard-top, its a fair bet it wont wash. If its a more temporary-looking and lightweight structure, or even a slide-in, slide-out mini-container that is part of the load rather than the vehicle, then who knows? Its a risk though.

&#42 I bought a doublecab pick-up with a hard-top in May. Surely this new ruling wont be applied to me retrospectively?

Yes it will. Customs & Excise is likely to take a hard line on this. A sympathetic local VAT man might decree otherwise, but dont hold your breath. The amount of VAT youll have to pay back is tied to the market value of the vehicle at the time you bought the hard-top.

&#42 Does the weight of towbars, winches etc have to be deducted from a doublecab pick-ups payload?

No, Customs are only targeting hard-tops.

&#42 My pick-up dealer says hes never heard of this change. Whys that?

He should do. A spokesman for the Society of Motor Manufacturers and Traders (SMMT), which agreed the change with Customs & Excise, said that all pick-up manufacturers were notified and should in turn have passed the information on to their dealers. In practice, says Dave Brown, many dealers dont seem to know about it.

&#42 What can I do?

Though ordinary mortals can feel that VAT officers enjoy powers normally only accorded to Roman emperors, there is some scope for redress. If you get assessed (ie hit for the VAT you reclaimed on your doublecab pick-up and hard-top) you can write a letter contesting it to the local VAT office. That could lead to a VAT tribunal, where an independent chairman will decide who is right and wrong. However, VAT tribunal rulings are not precedent-setting, so just because one tribunal says the new ruling is unfair, it doesnt mean others will do the same.

&#42 Which pick-ups have a payload of more than 1045kg?

The list is a bit limited and appears to consist of Fords Ranger (1068kg), its sister-under-the-skin Mazda B2500 (1099kg) and Land Rovers 110 and 130 doublecab pickups (1080kg and 1489kg respectively). If you dont need 4WD, the 2WD versions of Vauxhalls Brava and Tatas Loadbeta come in comfortably above the 1045kg threshold.

A lot of vehicles seem to fall just under it, like Toyotas Hilux (1035kg or 1020kg, depending on model), Mitsubishis L200 (1025kg or 1005kg, depending on model), Nissans pick-up (940kg), Vauxhalls Brava (965kg) and Tatas Loadbeta (1010kg).

&#42 Is it fair?

Emphatically not, believes Dave Brown. He concedes that where pick-up and hard-top are bought in one package, there is some logic to Customs & Excises assertion that fitting a hard-top alters the vehicle itself. But to imply that a hard-top bought later on (and maybe used once a month) amounts to a permanent change to the vehicle seems to fly in the face of reason and fairness, he says.

Dave Brown is Director of VAT Services at Francis Clark Chartered Accountants, based in Newton Abbot, Devon.

Ford Ranger/

Mazda B-Series doublecab (top) and Land Rover Defender 110 doublecab are currently the only ones that exceed

the 1045kg payload threshold.

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