However, on the VAT front, there are strong arguments in favour of granting debt cancellations not only in the event of defaults under the CFP, but also where the market value is lower than the GMFV, given that CFP contracts, which are considered to be supplies of goods for VAT purposes, should also share VAT relief on HP agreements. Financial services VAT expert Darren Mellor-Clark of Pinsent Masons, the law firm behind Out-Law.com, said the court`s decision implies that the exit tax on leasing property under an HP agreement over the duration of the contract is not immediate (34 pages/131KB PDF). The tax treatment of turnover therefore depends on whether the tenant would normally take ownership of the goods at the end of this particular type of contract or whether it is only “a possible eventuality”, he said. With respect to HP agreements, VWFS purchases vehicles from dealers and supplies them on their own behalf to customers for whom VWFS also provides certain related services. The consideration paid by the customer under an HP agreement is divided into two parts: in his judgment, Judge Nugee stated that the Court of Justice of the European Union (ECJ) had not yet been asked to rule on the meaning of these specific words. He stated, however, that the question was whether the “economic purpose” of the contract was for the customer to acquire ownership of the vehicle. .