Finance Leasing Manual - FLM36.12

Lease changes: existing operating lease becomes a Part II lease

Where an 'existing' operating lease becomes a finance lease Schedule 12 does not apply unless the lease also falls within Part I Schedule 12 (in which case, see FLM36.16). Part II Schedule 12 does not apply to leases which count as 'existing schemes' even if the terms are changed after 26 November 1996.

Please report to BTD4 Leasing any case where an attempt is made to exploit the protection from Part II Schedule 12 afforded to 'existing' leases by changing the terms of an operating lease to make it a finance lease with a back-loaded rental profile.