Finance Leasing Manual - FLM31.61

Fourth condition: definition of rental earnings

For any period of account 'rental earnings' are the 'amount which falls for accounting purposes to be treated in accordance with normal accountancy practice as the gross return for that period on investment in respect of a finance lease' (or loan)' (Paragraph 22 Schedule 12 FA 1997).

The references to accounting purposes and practice are subject to Paragraph 28 and the definition of 'accounting purposes' in Paragraph 30(1). The effect is to focus on what is correctly shown as the gross return on investment under SSAP 21. In practice, that will normally be the 'gross earnings' as defined in paragraph 28 of SSAP21. The use of consolidated accounts and those of connected persons is explicitly dealt with in Paragraph 21 of the Schedule - see FLM31.63.