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HMRC internal manual

Business Leasing Manual

HM Revenue & Customs
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Defining long funding leases: basic definition: when to seek advice

If in doubt as to whether a transaction should be accounted for ‘as a lease’, seek advice from your advisory accountant.

You should seek advice from CTIS (CT&BIT) if you come across arrangements under which plant or machinery is made available by one party to another party where all the following conditions are met:

  • the transaction is not accounted for as a lease
  • the provider claims capital allowances
  • the arrangement is not a PFI contract
  • the expenditure on plant or machinery exceeds £1m in any year
  • the arrangement is not the short term hire of the asset

This means that you will need to seek advice if you come across an arrangement between private bodies that is accounted for as a service concession under UK GAAP - see BLM21045. Other arrangements may also meet these criteria.