The principal targets of the catching-up charge in
FA97/Sch12/Para13 are 'existing' finance leases (which would come
within Part II if they were 'new' leases) where the leasing
arrangements are changed late in the term of the lease to enable
the lessor to be partly paid out by a 'major lump sum' rather than
by means of rentals. A major lump sum is a sum which is regarded
for accountancy purposes as comprising not only the repayment of
the lessor's investment but also 'interest' on it (see
BLM70516 onwards). If Part I was simply
applied to 'accountancy rental earnings' accruing prior to the
change in the arrangements which caused the lease to come within
Part I, a substantial amount of rental income accruing prior to the
change could be turned into capital.
