BLM70415 - Schedule 12 FA 1997: definition of a Part I lease: the five conditions

In outline the five conditions to be satisfied by a FA97/Sch12/Part I lease are:

1. the lease must be treated as a finance lease for accounting purposes (Paragraph 3(1) - paragraphs see BLM70426);
   
   
2. the leasing arrangements must be such that under them the lessor is capable of receiving a sum which is not rent and which for accounting purposes represents in part the lessor's investment in the lease and in part the lessor's return on that investment (Paragraph 3(2) - see BLM70516);
   
   
3. not all of the return on investment element (see previous bullet) of that lump sum will be brought into account as 'normal rent', that is rent taxable apart from Schedule 12 (Paragraph 3(3) - see BLM70551);
   
   
4. the accountancy rental earnings (the 'interest' on the 'loan' described as 'gross earnings' from the lease under SSAP 21) must have exceeded the 'normal rent' for a current or previous period (Paragraph 3(4) - see BLM70561); and
   
   
5. there must be a real possibility that: