Tax & Accounting News

New Rules On Leasing May Hit Small Firms

04/08/2009

Thousands of smaller businesses could see an increase in their administration costs if new accounting rules on leasing come into effect, it has been claimed.

According to the Finance and Leasing Association (FLA), proposals set out in a discussion paper by the International Accountancy Standards Board would mean all leased equipment – including vehicles, machinery and office equipment – being added to firms’ balance sheets.

The FLA, together with the Forum of Private Business, has urged that a more sensible approach be adopted, which takes into account the cost to small businesses of including all leased equipment on their balance sheets. The groups would like to see an optional, simplified procedure made available to all but the largest users of leased equipment.

FLA director-general Stephen Sklaroff said: “We are not against leased equipment appearing on balance sheets, but the standard-setters need to follow the European Commission’s advice to ‘Think Small First’ and consider whether the compliance regime is too onerous for small businesses.

“Surely we should differentiate between large corporates with millions of pounds of leased equipment and small businesses that rent a fax machine and photocopier? Britain’s businesses will be the catalyst to economic recovery, so we need to give them all the help we can.”