BLM32065 | Taxation of leases that are not long funding leases: finance lessees: general issues: lease reclassified - prior year adjustment

In the rare event that a lease which has previously been regarded as an operating lease is subsequently treated as a finance lease, the prior year adjustment needed to make the transition should generally be taken into account for tax purposes as a revenue item for the current period of account. The aim is to allow, at some point, a deduction for all the rentals paid under the lease - but no more than that.