Finance Leasing Manual - FLM23.03

Other backing-out arrangements

There are other ways in which a lease may be backed out. For example, if a lessor company knows early enough in its accounting year that there will not be sufficient tax capacity, it may agree to enter into the lease as undisclosed agent for the real lessor. In this case the lessor company would make its profit by charging a fee to the real lessor. As the lessor company will have to collect rents and pass them on to the real lessor such a transaction might be dealt with for convenience in its accounts as if it were an intermediate lessor.