Finance Leasing Manual - FLM12.56

Why has leasing transaction been undertaken?

Having begun to examine the transaction and having obtained basic documentation, one question that should always be considered is why the transaction has been carried out in the particular way that it has - in particular why lease? Examining the lease agreement may help to answer this question, in particular any payment schedule it includes.

Finance lease agreements often include a schedule setting out all the various payments. It will highlight features like the timing and amount of tax repayments. Details of how tax repayments have been factored into the lease calculations can be particularly significant. Not only do they assist in determining how the lease functions, but they also enable you to determine if the arrangements are likely to be viewed as at all offensive (see FLM41.01 onwards).