HMRC have issued a statement of practice (SP 3/91) on the way they treat rentals payable by lessees under finance leases entered into after 11 April 1991, with the general accruals recognition principle set out also applicable to finance leases entered into before that date. This statement of practice remains current and its principles are incorporated into the Business Leasing Manual (see BLM32210 etc), updated for subsequent developments. These principles are applicable to finance leases of property as well as of equipment (as confirmed by HMRC’s February 1995 Tax Bulletin) and will also be relevant to any lease accounted for under IFRS 16.

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