The Upper Tax Tribunal
has ruled that hire purchase agreements are not necessarily to be
considered as supplies of goods at the moment they are made. The
economic purpose of Mercedes-Benz’s ‘Agility’ programme was not
to result in a transfer of ownership, although that might happen.
Output tax on the hire of goods under an HP agreement was due over
the lifetime of the contract, rather than right away. The tax
treatment of the transaction would therefore depend on whether the
hirer would normally take ownership of the goods at the end of that
particular type of contract, or whether this was merely one possible
eventuality.
Mercedes-Benz Financial Services UK Ltd v Revenue And Customs [2014] UKUT 200 (TCC) (02 May 2014)
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