Enter Your E-mail

HMRC have published a new Business Leasing Manual, covering the leasing of plant and machinery, lease accounting, and the sale of leasing companies.

The manual provides guidance on the taxation of leasing transactions, particularly those involving plant or machinery.

In common with many other aspects of taxation the taxation of many leasing transactions depends wholly or in part on the accounting treatment. The manual therefore gives guidance on lease accounting but it does not attempt to replicate the level of detail that might be found in accounting textbooks.

According to HMRC, the creation of the manual has been prompted, in part, by the introduction in FA 2006 of rules for identifying and taxing long funding leases. These rules are complex and HMRC admit that the manual may not yet offer all the necessary guidance. The need for further guidance may emerge as issues arise in practice. When these issues are identified the manual will be updated as necessary.

The main contents of the manual are as follows:

• Introduction to leasing and basics of lease accounting and lease taxation;
• Lease accounting;
• Defining long funding leases;
• Taxation of leases that are not long funding leases;
• Taxation of income and expenditure under long funding leases;
• Anti-avoidance: Schedule 12 FA 1997; and
• Anti-avoidance: sale of lessor companies and similar arrangements

Link

HMRC: Business Leasing Manual