BIK on N1 Commercial 5 Seater

Yawlboy · 26-09-2013 8:08pm #1

Hi I'm reposting this here after the guys on the Taxation forum recommended I try and find someone who is running a 5 Seat Discovery (Utility) or Pajero as a company vehicle? If so what BIK are you paying on it i.e. Is it 5% Commercial or Car based BIK?

The LandRover Discovery 4 is definitely an N1 - however the dealers are unable/unwilling to comment on the BIK status. I find it very strange that for VAT, VRT and Motor Tax its treated as a commercial but no one will confirm the BIK status.

The other strange thing is that the dealer reckons it should be NCT'd after 4 years not DOE'd every year!!!

I've also spoken to Mitsubishi about the Pajero Executive 5 seater - they say its N1, VAT reclaimable, low VRT, €333 Motor Tax but full BIK!!!

I am getting conflicting advice from different sources and my accountant is reluctant to commit one way or the other. I've asked my accountant to write to Revenue and get a formal ruling but I would like to know if anyone on here has one and whats the story with BIK.

Thanks in advance
YB

ian87 · 26-09-2013 8:10pm

A friend was looking into one if these last month and his accountant told him he would be paying full bik.

jfarrell32 · 01-10-2013 6:58pm

I have a friend who actually has one of these and pays approx 200 per month which equates to the 5 %.

Can you just ring the revenue and ask them to confirm? brgds John

Drummerboy08 · 01-10-2013 7:12pm

Anyone I have sold a Disco Utility to pays BIK at 5%.

Just as an FYI, but Toyota are doing the same with the Landcruiser shortly, would be a good alternative to the Disco.

jfarrell32 · 01-10-2013 7:34pm

Thanks for the suggestion. Does this work because it is classified as a N1 commercial on the log book? rgds John

R.O.R · 01-10-2013 9:37pm

Drummerboy08 wrote: »

Anyone I have sold a Disco Utility to pays BIK at 5%.

Just as an FYI, but Toyota are doing the same with the Landcruiser shortly, would be a good alternative to the Disco.

If anyone reads the official revenue guide to BIK, it says anything with seats or windows behind the driver is not a Van.

The 5 seat Discovery has both, and therefore, for BIK purposes, is a Car, and liable to full BIK.

http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-05/05-04-04.pdf?download=true

The Dagda · 03-10-2013 6:54pm

R.O.R wrote: »

If anyone reads the official revenue guide to BIK, it says anything with seats or windows behind the driver is not a Van.

The 5 seat Discovery has both, and therefore, for BIK purposes, is a Car, and liable to full BIK.

http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-05/05-04-04.pdf?download=true

What about Crew Cab Pickups?

They have both seats and windows behind the driver and they're classed as commercial.

Theanswers · 03-10-2013 7:28pm

The Irish system is one big mess.

R.O.R · 03-10-2013 9:31pm

The Dagda wrote: »

What about Crew Cab Pickups?

They have both seats and windows behind the driver and they're classed as commercial.

For road tax purposes they are classed as commercial (if used commercially). For VRT purposes, they are either CAT B or CAT C Commercials.

For BIK purposes, if you took one as a company car after the 1st January 2003, then it's classed as a car as it doesn't meet the Revenue definition of a Van.

Prior to Jan 03 they were BIK'd as commercial vehicles, then the loophole was closed by the Revenue definition of a van. If you had an 02 or older, from new, you were still BIK'd on a commercial vehicle for as long as you have/had the vehicle.

Yawlboy · 04-10-2013 1:41pm

Drummerboy08 wrote: »

Anyone I have sold a Disco Utility to pays BIK at 5%.

Just as an FYI, but Toyota are doing the same with the Landcruiser shortly, would be a good alternative to the Disco.

Can you ask them if they got revenue approval in advance?

YB

John.Airwave · 06-10-2013 8:25pm

Yawlboy - I am currently researching this topic also and find the situation very confusing.

The Pajero 5-seat will be available from November and can be taxed commercial for € 333 per year.
However, the Land Rover say the Discovery is liable for private tax at €1492 per year although both vehicles are N1 Commercial ?

What gives ?

R.O.R. - Looking at the revenue rules, there is an exemption for 'work only vehicles'. You could argue that crew cabs (or commerical jeeps) fall into this if you only use them for work purposes

Yawlboy · 06-10-2013 8:35pm

Hi John,

I've heard the same as you:

Mitsubishi Dealer has said Pajero Exec is commercial tax (and DOE) but full BIK

Landrover dealer has said Disco if cc Tax (and NCT) but commercial BIK

Apparently the Road Tax is set by the RSA and the VRT/BIK by the revenue......

My solicitor has written to the Revenue last week and asked for confirmation on the Disco as far as BIK is concerned. I'll post on here as soon as I get confirmation, to be honest I think a lot of people are chancing their arms with the Discos and BIK but I do hope I am wrong.

YB

R.O.R · 06-10-2013 9:38pm

John.Airwave wrote: »

R.O.R. - Looking at the revenue rules, there is an exemption for 'work only vehicles'. You could argue that crew cabs (or commerical jeeps) fall into this if you only use them for work purposes

If you only use it for work purposes (and no private usage at all), why would you need a 5 seat model? A single cab pick up, or 2 seat commercial would do exactly the same job, and quite often would be a better choice.

If you have no personal usage of a vehicle, you have no liability anyway, so you could get a 5 seat commercial, but as long as you leave it at the office overnight, and never pop to the shops for lunch, you'll won't have to pay any BIK.

My LandRover dealer used to tell people it was 5% BIK, that's until I pointed out what the Revenue class as a Van for BIK, is different to the definition of an N1 commercial vehicle.

copacetic · 06-10-2013 10:57pm

Since people are discussing the various issues, can anyone confirm the status of a 5 seat commercial as a private car?

I.e you buy a discovery and you pay the 1200 (now 1452 based on above?) a year. Once you keep taxing it as private all is good? There is no potential issues of rebate of vrt etc? Would it be better to take all risk away and buy a slightly used one?

jfarrell32 · 09-10-2013 7:31am

Yawlboy wrote: »

Hi John,

I've heard the same as you:

Mitsubishi Dealer has said Pajero Exec is commercial tax (and DOE) but full BIK

Landrover dealer has said Disco if cc Tax (and NCT) but commercial BIK

Apparently the Road Tax is set by the RSA and the VRT/BIK by the revenue......

My solicitor has written to the Revenue last week and asked for confirmation on the Disco as far as BIK is concerned. I'll post on here as soon as I get confirmation, to be honest I think a lot of people are chancing their arms with the Discos and BIK but I do hope I am wrong.

YB

thanks, looking forward to hearing their reponse. rgds John

jfarrell32 · 09-10-2013 7:33am

copacetic wrote: »

Since people are discussing the various issues, can anyone confirm the status of a 5 seat commercial as a private car?

I.e you buy a discovery and you pay the 1200 (now 1452 based on above?) a year. Once you keep taxing it as private all is good? There is no potential issues of rebate of vrt etc? Would it be better to take all risk away and buy a slightly used one?

If you buy one privately you get a great utility vehicle for a good price (think it is 55k now). I guess it is up to you whether you tax it commercially or privately? How will the tax office know whether you use it for work or not, so long as the log book gives you the option by designating N1 class. rgds John

Yawlboy · 22-10-2013 6:18pm

My accountant tried contacting revenue in relation to the BIK issue and got the runabout as he could only get answers in relation to VRT and not BIK. However he did speak to the Director of Taxation in Chartered Accountants Ireland and speaking with him he was of the view that by having seats behind the driver, rear doors and glass in those doors it did not meet the Revenue definition of a commercial vehicle for BIK purposes.

:(:( He also sent me this:

Meaning of “van”
A van means a mechanically propelled vehicle which –
· Is designed or constructed solely or mainly for the carriage of goods or other burden, and
· Has a roofed area or areas to the rear of the driver’s seat, and
· Has no side windows or seating fitted in that roofed area or areas.
Where a crew cab or other similar type of vehicle meets all of these criteria it would be regarded as a van rather than a car.

Reading between the lines, the Revenue are saying this is a self-assessment issue. They have provided us with guidance and it is up to us to apply that guidance. Based on my understanding of the above and the results of my discussions with professional colleagues the vehicle should be treated as a car for BIK purposes. There is a huge exposure to the company by way of interest and penalties for an incorrect BIK treatment in the event of a Revenue Audit.

I know this is not the answer you were looking for but in my view it is the correct one in these circumstances.

Theanswers · 22-10-2013 6:26pm

Yawlboy wrote: »

My accountant tried contacting revenue in relation to the BIK issue and got the runabout as he could only get answers in relation to VRT and not BIK. However he did speak to the Director of Taxation in Chartered Accountants Ireland and speaking with him he was of the view that by having seats behind the driver, rear doors and glass in those doors it did not meet the Revenue definition of a commercial vehicle for BIK purposes. :(:( He also sent me this:

Meaning of “van”
A van means a mechanically propelled vehicle which –
· Is designed or constructed solely or mainly for the carriage of goods or other burden, and
· Has a roofed area or areas to the rear of the driver’s seat, and
· Has no side windows or seating fitted in that roofed area or areas.
Where a crew cab or other similar type of vehicle meets all of these criteria it would be regarded as a van rather than a car.

Reading between the lines, the Revenue are saying this is a self-assessment issue. They have provided us with guidance and it is up to us to apply that guidance. Based on my understanding of the above and the results of my discussions with professional colleagues the vehicle should be treated as a car for BIK purposes. There is a huge exposure to the company by way of interest and penalties for an incorrect BIK treatment in the event of a Revenue Audit.

I know this is not the answer you were looking for but in my view it is the correct one in these circumstances.

A crew cab has glass and seats behind the driver - yet it is classed as van.

4x4s are designed to haul goods... That's what there drive chain is designed for (Heavy and rugged) therefore it could be argued that this is not a car but a 4x4 designed primarily for the haulage of goods. That is why the manufacture removed the two rear seats making it a five seater. The seven seater it could be argued is the car version. The five seater N1 Commercial is the Van Version.

Could one panel off the furthest rear windows and say this is the goods area?

They seem to want their cake and eat it.

R.O.R · 22-10-2013 9:57pm

Theanswers wrote: »

A crew cab has glass and seats behind the driver - yet it is classed as van.

Not for BIK purposes it's not - unless you've had it since 2002.

Theanswers wrote: »

4x4s are designed to haul goods... That's what there drive chain is designed for (Heavy and rugged) therefore it could be argued that this is not a car but a 4x4 designed primarily for the haulage of goods. That is why the manufacture removed the two rear seats making it a five seater. The seven seater it could be argued is the car version. The five seater N1 Commercial is the Van Version.

4x4's are designed to go off road, on various different surfaces. I've been in a 5 Seat Disco - that is not designed to haul goods

Theanswers wrote: »

Could one panel off the furthest rear windows and say this is the goods area?

Could do, won't make a blind bit of difference to the BIK you pay, but would seriously de-value the vehicle. Unless you remove all the seats and glass behind the drivers seat, it doesn't meet the revenue classification of a VAN for BIK purposes.

Theanswers wrote: »

They seem to want their cake and eat it.

Who? The driver's who want a €67,000 vehicle, but only want to pay BIK at 5% and are willing to sacrifice 2 seats for it?

Yawlboy · 13-02-2014 11:50am

I have posted this in the Pajero Thread as well but I got a few PM's on the subject so I'm reposting here.

My accountant finally got a response from Revenue and its not good

How the vehicle is treated depends on whether it falls within the definition of a 'car' or the definition of a 'van'.
Essentially, a 'car' means; any mechanically propelled road vehicle designed, constructed or adapted for the carriage of the driver or the driver and one or more persons other than (a) a motorcycle, (b) a van or (c) a vehicle not commonly used as a private vehicle and unsuitable to be so used. The definition of a car includes motorcycles over 410kgs.
A van means a vehicle which was designed or constructed solely or mainly for the carriage of goods or other burden, and which has a roofed area or areas to the rear of the driver's seat and no seats or side windows in that area.
Adapting say a four - seater crew cab (e.g. taking out the back seats) would not change the vehicle from being a car to a van, as subsequent adaptation cannot alter the original purpose of design or construction. Even with the back seats removed, the vehicle would still be classed as a car for benefit in kind purposes having regard to the original construction. If the vehicle does fall into the definition of a van, the vehicle is not automatically excluded from the benefit in kind charge. There will be no charge to tax, where all of the following conditions are satisfied:
the van is supplied by the employer to the employee for the purposes of the employee's work,
the employee is required by the employer to bring the van home after work,
apart from travelling from work to home and back to work, other private use of the van by the employee is forbidden by the employer, and there is in fact no other private use,
in the course of his or her work, the employee spends at least 80% of his or her time away from the premises of the employer to which he or she is attached

R.O.R · 13-02-2014 12:40pm

So - pretty much as I stated all along?

Yawlboy · 13-02-2014 1:00pm

R.O.R wrote: »

So - pretty much as I stated all along?

I just wanted to relay what the Revenue had officially said to my accountants not disagreeing with you in any way.

brownestone · 24-06-2014 11:07pm

Is there any way around paying the higher BIK? I have done around 24,000 km for work so far this year so I am looking at getting a car for work because I think it would make more sense. Usually I would do over 40,000 km a year, work 80% or more away from the office and will be using my own car for my personal mileage.

I get the impression that from the above I would have to pay 12% BIK if I get an N1 Commercial to carry equipment and 2/3 others, and also my usual expenses for my own car that I would use at the weekend.

Thanks

R.O.R · 25-06-2014 11:52am

brownestone wrote: »

Is there any way around paying the higher BIK? I have done around 24,000 km for work so far this year so I am looking at getting a car for work because I think it would make more sense. Usually I would do over 40,000 km a year, work 80% or more away from the office and will be using my own car for my personal mileage.

I get the impression that from the above I would have to pay 12% BIK if I get an N1 Commercial to carry equipment and 2/3 others, and also my usual expenses for my own car that I would use at the weekend.

Thanks

Based on what you say, you'd be hit with BIK - as far as I'm aware, there is no way to avoid it, unless there is no personal usage at all, and that involves leaving the vehicle at the office overnight, every night. As you work 80% of the time away from the office, that doesn't sound practical.

Over 40,000km per annum on business (but less than 48,000km), on an LR Discovery Utility would mean you'd be taxed on an extra €510 or so per month (12% BIK, Metallic as the only option).

As you'd be paying for personal usage of the vehicle (from a BIK point of view), I'd use the company vehicle at the weekend instead of your own. Either sell your current car, or swap it for something more fun.

25-06-2014 1:07pm

R.O.R wrote: »

Based on what you say, you'd be hit with BIK - as far as I'm aware, there is no way to avoid it, unless there is no personal usage at all, and that involves leaving the vehicle at the office overnight, every night. As you work 80% of the time away from the office, that doesn't sound practical.

Over 40,000km per annum on business (but less than 48,000km), on an LR Discovery Utility would mean you'd be taxed on an extra €510 or so per month (12% BIK, Metallic as the only option).

As you'd be paying for personal usage of the vehicle (from a BIK point of view), I'd use the company vehicle at the weekend instead of your own. Either sell your current car, or swap it for something more fun.

Surely all this having to drop it back to the office etc is almost unenforceable?

Its not uncommon for people to drive "pool" vehicles as their main vehicle for both business and private use and I've never heard the people I know who did it/are doing it get any hassle at all over it.

R.O.R · 25-06-2014 2:01pm

Opal Sticky Mermaid wrote: »

Surely all this having to drop it back to the office etc is almost unenforceable?

Its not uncommon for people to drive "pool" vehicles as their main vehicle for both business and private use and I've never heard the people I know who did it/are doing it get any hassle at all over it.

What happens and what should happen, are quite often different things. How some people evade tax is up to them, but I wouldn't like to be on the receiving end of a Revenue Audit (which does happen).

Drummerboy08 · 25-06-2014 3:26pm

By right a log of who had the pool vehicle, when and how long for has to be kept.

I've heard nasty cases of Revenue catching people on that one.

vibe666 · 25-06-2014 3:46pm

I was very interested in getting in on the BIK action with the Pajero Executive, but my accountant was told directly by revenue, that if there's anything even remotely resembling seats behind the driver and passenger seats, you can forget it.

I was also told by a mate who was looking at the land cruiser equiv. that when he was enquiring about them, the sales guy told him that they had only sold two of the new shape 7 seater LC's in the whole country. :eek:

Marcusm · 25-06-2014 3:48pm

Brownestone

When you say you are away 80% of the time, do you mean 80% of nights away? If yes, and you genuinely do not use your vehicle privately, I see little reason why you need to incur BIK. You may need to modify your home-work base travel on the other weekday or investigate whether you can genuinely have a home work base. That together with a detailed log and an agreement from your employer that you are not entitled to private use may get you there. If you are part if a union, you ahold engage with them for advice or directions. If your financial circumstance permit, seek tax advice. However, BIK mitigation strategies such as this are more commonly familiar to HR, in house tax managers and unions.

AeroKid · 03-07-2014 12:23pm

Hi guys, just wanted to throw a query out there. I currently have a commerical jeep supplied from work and as I have private use I pay BIK. What I was wondering is if the company was to convert the jeep to a 5 seat commerical does my bik increase?

Thanks

buzz11 · 18-08-2014 10:55am

Does this shed any light on the topic;

http://www.independent.ie/business/farming/savings-of-10000-likely-as-new-rules-unveiled-for-jeeps-30340286.html

BIK on N1 Commercial 5 Seater

Comments