Finance Leasing Manual - FLM31.15

First condition: lease must be a finance lease

Nearly all leases to which Schedule 12 applies will be treated as a finance lease under SSAP 21 in the accounts of the lessor. In such cases it will be immediately clear that the first condition is satisfied. Conversely, the vast majority of leases which are not treated in the accounts as finance leases will be outside the scope of Schedule 12. But the provisions have been drafted to try to ensure that a lease which is not presented in the accounts in this way also satisfies the condition in the relatively exceptional case where in essence it would be treated as a finance lease if UK accounting standards were applied to it.