Finance Lease vs Operating Lease
After some advice please.
We have just taken out a lease for some equipment. The Lease Agreement specifically says that ownership of the equipment remains with the Leasing Agency and that we cannot claim Capital Allowances on it.
I rang the leasing company and they advised that all payments including a large (£20k) deposit all go through the P&L.
Is this correct? We are liable for insuring the asset and can pay a nominal fee at the end of the leasing period to transfer ownership to us.
What do you think the treatment should be of it? Should I actually put it through the P&L or on the BS (Dr Fixed Assets Cr Obligations Under Finance Lease) - and then at what point would I reclaim the input VAT.
Any advice much appreciated.