Finance Leasing Manual - FLM36.10

Lease changes: 'new' Part II lease becomes a Part I lease

Where a 'new' lease which is initially within Part II (because it is treated as a finance lease) subsequently becomes a Part I lease, it is treated as falling within Part I from that point. Cumulative excesses at the point of the change in status are recognised for Part I purposes by virtue of Paragraph 14 Schedule 12 FA 1997.