2012 Lease Accounting and Tax Update - Programme

Programme

Lease Accounting

  • Lease classification – summary

  • Lessee accounting

    • Finance lease – requirements of financial reporting standards

    • Example

    • Impact on gearing

    • Operating lease example

  • Lease classification

    • Distinction between finance/ capital leases and operating leases – UK, International, USA definitions

    • 90% test

    • Practical issues of 90% test:

      • Fair value

      • Minimum lease payments

      • Lease term

      • Discount rate

      • Residual value – examples of different allocations of RV risk between lessor and lessee

  • Lessor accounting

    • IAS/ FAS v UK GAAP finance lease income recognition

    • Operating leasing:

      • Income recognition

      • Depreciation

      • Dealing with changes in RV forecasts

    • Manufacturer/ dealer lessors, with example of income recognition for finance v operating lease

  • IASB/ FASB Lease Accounting Project

    • Proposed new approach

    • Current status

    • Timescales

    • Effect on lessees

    • Product impact

Lease Taxation

  • Terminology

  • Why tax is important to UK leasing

  • Example tax computation for lessor

  • Summary of what is/ is not a long funding lease

  • Outline tax treatment of non-long funding leases for lessor and lessee with example calculations

  • Finance lease rental recognition for lessor and examples to demonstrate effect

  • HP tax treatment

  • Capital allowances:

    • Rates

    • 2008 transition

    • Software

    • What is plant and machinery?

    • Non-qualifying assets list/ “integral features” of a building

    • Fixtures

    • Pool

    • Short life assets

    • Examples to demonstrate pooling/ short life asset treatment and effects/ contrasts

    • Time apportionment

    • FYA and AIA

    • Cars – pre and post April 2009 – pricing impact of changes

  • Tax variation

  • Long Funding Leases

    • Tax treatment – lessor/ lessee

    • Leasing company opt-in

    • Definition, with specific comments on:

      • 5-7 year finance leases

      • HMRC view of “reasonably certain” test

      • Assets previously leased

  • Anti-avoidance provisions

    • FA2006 Sch10 sale of leasing companies

    • Sale and finance leasebacks

    • Intermediate lessors in long funding lease chain

    • Long funding leases granted at a premium

    • Short finance leases granted at a premium

    • Disclosure of tax avoidance schemes – the leasing hallmark

    • BMBF v Mawson, defeased sale and leaseback (CAA2001 s225), novation of build contracts to lessor

  • VAT

    • Outline for leasing

    • Outline for HP

    • HP partial exemption

    • Change in rate

  • Lease documentation – tax issues to consider/ address in drawing up lease agreements

  • Lease structuring – tax issues to consider in structuring transactions

Attached documents