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HMRC internal manual

Business Leasing Manual

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HM Revenue & Customs
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Lease accounting: accounting standards: introduction

Lease accounting is a complex subject. The accounting standards and the accompanying Guidance Notes are complex. Lease accounting also commands much coverage in leasing text books. The principal standards are SSAP 21 for accounting periods beginning before 1 January 2015 and FRS102 for accounting periods beginning on or after 1 January 2015 for UK GAAP and IAS 17 and FRS101 for IFRS, but there are others that you may need to consider, see BLM10015 onwards.

The paragraphs that follow do not attempt to repeat all that detail, merely to explain enough to enable you to understand the way in which leasing transactions are presented in accounts. If the situation is unusual, particularly if it relies on accounting treatment to avoid tax, and you think the accounting treatment may be incorrect, you should seek the advice of your local advisory accountant.

The accounting treatment of leasing differs markedly according to whether the lease is a finance lease or an operating lease.

In most aspects of lease accounting there are few practical differences between UK GAAP and IFRS. Differences are mentioned where appropriate.

In case of difficulty you should seek advice from your local advisory accountant.