Is this the end of Personal Contact Purchases (PCP)?

8th April 2019

Following an investigation by the Financial Conduct Authority (FCA) into auto finance, they have revealed their findings which does not make for comfortable reading. (read report here)

Could this spell a whole new ‘PPI’ type scandal?  The report found that in some instances, ‘information to consumers on websites and in contract documentation was not sufficiently prominent or easy to understand’. It also went on to state that ‘if not properly managed, some of the commission arrangements in place could provide incentives for dealers to arrange finance at high interest rates’.

Adding another nail in the coffin for PCP is the fact that on 27 February, HMRC published a change to the treatment of VAT on PCP which sets out the scenarios covering when a PCP is deemed to be nothing more than a lease, and when it is a purchase of goods (taxable) with a separate supply of finance (VAT exempt). (read report here)

Businesses must ensure they are compliant with the new regime no later than 1 June 2019. Talk to our advisers today to review your processes and ensure you are ready for the changes.