2010 Lease Accounting and Tax Update Course - 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