In HMRC v Mercedes Benz Financial Services  EWCA Civ 1211 the Court of Appeal has decided to refer to the Court of Justice of the European Union questions concerning the categorisation of certain hire purchase contracts marketed by Mercedes Benz Financial Services. The Court agreed with HMRC, represented by Owain Thomas and Matthew Donmall, that the question of whether such contracts are supplies of goods or services for VAT purposes was a question of interpretation of the Principal VAT Directive. The case includes the issue of whether, by providing that payment of the final instalment is optional, a contract should be classified as a supply of services because it cannot be said that title will pass “in the normal course of events”.
The reference will seek clarity and guidance from the CJEU of how to categorise these contracts.
Read judgment here.