Under the judgment of the Court of Justice in the Mercedes Benz Financial Services (MBFS) C-164/16 (see VATSC10172), certain contracts that may be called lease-sale contracts are processed for VAT purposes, which are considered rental and service transactions (not as deliveries of goods and separate delivery of credit). This is the personal purchase of contracts (PCPs) or similar agreements for which the contract provides for an optional material payment. These discretionary payments can be set at different levels: financial institutions that deliver cars to the PCP are entitled to a full deductibility of their car purchases. Where the assessment of the terms of the PCP indicates that the contract constitutes a delivery of goods, exempt debt financing affects the financial company`s ability to deduct VAT from overhead. As with the HP agreements, the method of allocating VAT between these costs will be the subject of the agreement with Revenueiv. Leasing contracts benefit from another business tax advantage – you can deduct interest back with taxable profits. This means that you do not pay taxes on the costs of a lease. If the total cost of your contract is z.B $1,101 USD, you are not required to tax this amount. It`s an acceptable effort. But you have to claim it to get it. It is not HMRC`s role to pick it up for you. Here too, you can only deduct the interest on the company`s profits if the lease-purchase agreement on which interest is charged applies to a commercial purpose. You cannot charge your personal car z.B via corporate accounts.
The guidelines do not concern the position of customers who do not pay the GMFV, but in cases where VAT has already been accounted for in advance of the full value of the car, or where there is early termination of the PCP agreement or the processing of resales. Leases have tax advantages for businesses and make expensive appliances affordable by distributing costs. Call us on 01234 240 155 or email us at email@example.com to arrange a rental purchase. Thank you very much. The ECJ rejected HMRC`s arguments. In order to be a contract for the supply of goods under Article 14, it must be concluded that “ownership of the goods must be automatically acquired by the lessor if the performance of the contract is normal over the duration of the contract” (stand ). This contractual result (the transfer of ownership) is “incompatible with a real economic alternative for the taker” (stand ). If, as here, the lessor has a real option not to exercise the purchase option at the end of the period, it is a service contract.