Finance Leasing Manual - FLM12.40

No secondary period: non-UK lessor

Cases in which the lessor is resident abroad will require detailed factual investigation. For tax purposes the lessee's depreciation charge should still be written off over the life of the asset. It might be that there is an implicit agreement or understanding that the lessee will keep the asset and this is enough to treat the case just as if there actually were secondary periods. Correct accountancy, as applied by FRS5, might require the lessee to recognise the substance - that the lessee has the asset for life and should depreciate it accordingly.