Mercedes' 'Agility' HP contract not a supply of goods

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)