HMRC consultation: Plant and machinery lease accounting changes

Released 01 December 2017

HMRC are seeking comments on legislative changes required to ensure leasing rules continue to work as originally intended for the new lease accounting standard IFRS16.

Leasing: Tax response to accounting changes looks at the accountancy and tax interaction of leasing; in particular in relation to plant or machinery, but also in relation to the wider impact of the accounting change by the new International Accounting Standards Board (IASB) lease accounting standard under which lessees using International Financial Reporting Standard (IFRS) 16 would no longer classify their leases as “finance” or “operating” leases but instead would have a “right of use” asset and a lease liability on their balance sheets. Current tax law relies on the finance lease/operating lease distinction at various places, but the accounting changes will impact principally on long funding leases and anti-avoidance provisions. Following a consultation exercise in 2016, the Government decided to maintain the current system of lease taxation by making legislative changes so that the rules continue to work as they do currently. The current consultation (Chapter 3 onwards) now focusses on the tax legislation that will need to change to enable the rules to continue to work as currently intended. The consultation closes at 11:45pm on 28 February 2018. Responses can be submitted:

by Email to: jon.clarke@hmrc.gsi.gov.uk

in writing to: Jon Clarke, Business, Assets & International, HMRC, 3/64, 100 Parliament Street, London SW1A 2BQ.

For more information and to view the consultation document, see Open consultation Plant and machinery lease accounting changes.

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