From 9 October 2007 sale and finance leasebacks are, subject to some exceptions, brought within the long funding lease rules. Any finance lease within a sale and finance leaseback is not a short lease so is no longer automatically exempt.
This means that all funding leases within a sale and finance leaseback, other than those specifically excluded as background plant or machinery for a building, or plant or machinery of a low percentage value leased with land, will fall to be treated as long funding leases.
However, an election can be made by both parties (the lessor and the seller/lessee) in cases where the lease would not be a long funding lease had the lessor acquired the plant and machinery other than by a sale and finance leaseback.
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