The proposal for a European financial transactions tax (FTT), outlined in a draft Directive published by the European Commission last October, has taken a new turn after a series of policy announcements and reversals by governments of key EU member states.

In its original form, the proposed FTT appeared likely to have affected the asset finance market, through forcing the taxation of all transactions involving broadly defined financial institutions within the EU. Although “primary” finance agreements with credit customers would have been exempted, it seemed that all lease funding transactions, securitizations and other sales of receivables or assignments of leases, from one finance company to another, would have been caught by the proposed tax (see AFI report, October 16, 2011). However, no wide ranging tax of that kind now seems likely to be adopted. 

Philip White

Syscap, the UK-based provider of IT equipment and finance, has called for action to drive out  malpractice by equipment dealers in the vendor leasing market. Syscap's comments focus particularly on the schools sector, where it is among the leading players in IT equipment finance, following recent publicity on abuses in that market (see AFI report, January 18, 2012).

Syscap points out that in the majority of cases rogue sales personnel introducing misleading and fraudulent leasing deals have been within small firms at the fringes of the information and communications technology (ICT) industry, and mainly in the reprographics and telecoms sectors. Philip White, CEO of Syscap, has called for a stricter use of preferred supplier lists for schools' ICT equipment procurement.

Mike Sweeney

The US equipment lessor EverBank Commercial Finance is among many in the industry expressing some concern about how lessees will cope with the coming changes in lease accounting. The US healthcare sector, where EverBank Commercial Finance plays a leading role, is seen as one area where leasing customers will find the new rules challenging.

Mike Sweeney, general manager for the healthcare platform at EverBank Commercial Finance, said: “When contracts presently classified as operating leases have to be brought on to the lessee's balance sheet, many obligors may be placed in technical breach of loan covenants on bank credit facilities. For bankers often impose restrictions on borrowers' leverage or debt/ equity ratios.

Julian Rose

HM Revenue & Customs (HMRC) has this month released details of draft tax legislation to be enacted in next year's Finance Bill. Some parts of this relate to tax announcements made in last month's Autumn Statement by the Chancellor of the Exchequer. Others follow on from “anti-avoidance” proposals trailed earlier this year. 

Within the package comes news of a relatively small but significant success for representations by the leasing industry, affecting manufacturer-captives' leases of low emission business cars. Those cars with CO2 emissions below 60 grams/ km qualify for 100% first year allowances (FYAs), which permit either lessors or owner-users to write off the entire purchase cost against their taxable profit in the year of acquisition.