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HMRC internal manual

Business Leasing Manual

Defining long funding leases: amendments, transfers and assignments: introduction

Most of the guidance in this manual assumes that it will be necessary to consider whether a lease is a long funding lease at the outset (whether inception or commencement). Generally speaking that is the case, but subsequent events may alter this general rule.

Once a lease is in place it may be amended by agreement between the parties to the lease. For this purpose, an ‘amendment’ may alter the terms of the lease, or the number or type of assets leased. Where the parties to the lease remain the same, see BLM22010.

Arrangements may be made which change one of the parties to the lease, including by way of assignment or novation, even though the terms of the lease remain the same, see BLM22035.

There are also rules dealing with

  • an existing lessor under a long funding lease creating a new head lease by selling the leased asset and leasing it back, see BLM22065
  • a change in accounting classification of a long funding lease, see BLM22070
  • an increase in proportion of residual amount guaranteed, see BLM22075.