Asset financing has been a feature of the British economy since the early days of the railways. As a result, case law is well established.

Finance leasing, operating leasing and hire purchase are well understood by lawyers specialising in this area and documentation is usually standard and hopefully easy to understand. As in all jurisdictions the more complex the proposed transaction the more voluminous the paperwork and this is particularly true in a country such as Britain where there is no commercial code.

Britain already anticipates most of the essential aspects of the soon to be introduced International Accounting Standards in its Statement of Accounting Practice 21 which defines the various forms of asset financing. Unlike most continental countries finance leases are shown as obligations on the balance sheet of the equipment user and only operating leases relieve the user of the equipment from this obligation.

Taxation is complex in Britain and the accounts prepared for the Inland Revenue are often significantly different from those prepared for financial reporting. As a general rule the user of the equipment enjoys the taxation benefits of ownership of the equipment if the contract is a hire purchase, but not for finance or operating leases. It is recommended that appropriate professional advice be sought.

Lawyers and accountants who are associate members and specialise in leasing may be contacted via the Finance and Leasing Association website which also contains valuable information on various aspects of the leasing market in Britain  www.fla.org.uk