Although PCP agreements are a little more complicated than HP agreements, von Revenue`s offerings for PCPs are not as extensive as PS`s. Prior to the COVID crisis, comments from the automotive industry indicated that less than 2% of PCP customers exercised the (i) hand-back option, which could indicate that the issue of debt relief is still present in a necessary volume, at the request of the industry, to advise on these issues and update their advice on THE PCP accordingly. The Irish Revenue Guidance on VAT and hire purchase agreementsvi finds that financial institutions are entitled to proportionate debt relief for leasing transactions when a default occurs with respect to the VAT element of arrears. When a lease-sale contract is terminated prematurely and the car is returned to the financial home, a debt refund may be invoked with respect to the VAT component of the unpaid payments (subject to the application of forms to remove the value of the interest of the amounts paid to date and the amounts remaining to be paid for determining the value of the security tax). Financial institutions that supply cars on PCP are entitled to a total deductibility in relation to 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. “If the possession of goods is transferred… according to agreements expressly anticipating that the property will continue to be in the future (determined or identifiable by the agreements, but in all cases at the latest when the goods are fully paid)… so, it`s… delivery of goods.” In the wake of the COVID 19 crisis, the global automotive industry is facing an unprecedented challenge. Trying to manage reduced household budgets, many people struggle with their monthly car payments as part of their hp or PCPs agreements. While credit institutions and “financial institutions” responded by offering their customers payment fees for up to three months, arrears being offset by the spread over the remainder of the pcp period, the extended period of three additional months or the increase in the final payment of balloons and the extension of these facilities to HP agreements.
it is likely that the volume of customers who are late beyond the three-month vacation period, as they have difficulties in meeting the monthly payment terms, will probably increase. This article provides only an overview of some of the effects of standard operations and vehicle removal under HP or PCP agreements.