The government will consult on the legislative changes required as a response to the introduction of IFRS 16 – the new lease accounting standard which will come into effect from 1 January 2019.
Following an HMRC discussion document in 2016, which set out four possible options for the future tax treatment of plant or machinery lease arrangements, HMRC have today announced the intention is to 'maintain the current system of lease taxation by making legislative changes to enable the tax rules to continue to work as intended'.
Who will be affected?
Businesses with plant or machinery leases who prepare accounts under International Financial Reporting Standards (IFRS), or who report under UK Financial Reporting Standard 101 (FRS101).
The consultation will take place in summer 2017.
Changes will affect different businesses to a greater or lesser extent, depending upon how their lease arrangements are treated under current tax legislation. Affected businesses will need to carefully consider the application to their specific circumstance of the detail of any legislative proposals issued for consultation.
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