Finance Leasing Manual - FLM28.20

Income-into-capital schemes: borrower carries all the tax risks

An important condition of most finance leasing schemes is that the Borrower carries all the tax risks. If there is new legislation which reduces the Bank's profit, the Bank maintains its turn by charging the Borrower extra. This has an important practical consequence: Part I of Schedule 12 is directed at the Bank but will hit the Borrower.