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FA 12: Recharacterisation of amounts derived under hire purchase agreements
or “Tax rules for hire purchase sales treat them as loans with immediate property transfer”
You could also call this:

“How hire purchase agreements are treated as sales for tax purposes”

When you’re selling something under a hire purchase agreement, the amount of money you’re lending is worked out using section EW 32. This section helps figure out how much the agreement is worth.

If you’re buying something under a hire purchase agreement, the amount you’re paying is figured out using section EW 32 and section EW 33. These sections help work out the value of what you’re getting in the deal.

These rules are part of how the government decides what counts as income for tax purposes. They help make sure that hire purchase agreements are treated fairly for both the buyer and the seller when it comes to taxes.

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Next up: FA 14: Deductibility of expenditure or loss under hire purchase agreement

or “Rules for tax deductions on items bought through hire purchase”
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Part F Recharacterisation of certain transactions
Recharacterisation of certain commercial arrangements

FA 13Agreements recharacterised as sale with finance provided

  1. For a seller under a hire purchase agreement, the amount of the loan is determined under section EW 32 (Consideration for agreement for sale and purchase of property or services, hire purchase agreement, specified option, or finance lease).

  2. For a buyer under a hire purchase agreement, the amount to the buyer is determined under sections EW 32 and EW 33 (which relate to the value of consideration under the financial arrangements rules).

Compare
  • 2004 No 35 ss FC 10(1)(a), OB 1 consideration, lessee’s acquisition cost, lessor’s disposition value