IFRS 16 leases ― the tax implications

Produced by Tolley in association with

Corporation Tax

Guidance

Overview of IFRS 16

International Financial Reporting Standard 16 (IFRS 16) came into force for accounting periods beginning on or after 1 January 2019, replacing International Accounting Standard 17 (IAS 17). The adoption of IFRS 16 applies to all entities which apply International Financial Reporting Standards or Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101).

Prior to IFRS 16, lessees and lessors were required to make a distinction between finance and operating leases. Where the lessee had substantially all the risks and rewards incidental to the ownership of an asset, it had to recognise a finance lease asset and liability on its balance sheet. Where the lessee did not have substantially all the risks and rewards incidental to the ownership of the asset, it recognised lease payments as an expense over the lease term and was considered to have an operating lease. This treatment continues under FRS 102 up until accounting periods ending on or before 31 December 2025, after which time FRS 102 (2024) will align with IFRS 16 for the accounting

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Malcolm Greenbaum

Director and Principal Trainer at Greenbaum Training and Consultancy Limited

Malcolm is a UK Chartered Accountant and Chartered Tax Advisor winning the John Wood Medal in the November 1995 CIOT sitting for the best paper on business taxation.He was previously Director of Finance and Taxation Programmes at BPP Professional Education and has delivered IFRS, US GAAP, UK Tax and VAT training (at all levels from an introduction to the complexities of IAS 39) to a multitude of organisations world-wide since 1992.Malcolm has particular experience in delivering bespoke training programmes to multi-nationals in the financial services, transport and energy sectors as well as delivering UK tax and VAT update programmes to accounting and law firms.He is passionate about training and his enthusiasm ensures that the participants enjoy the learning experience whilst gaining knowledge through their engagement in the sessions and through encouraging them to ask questions and discuss practical issues they may have.Malcolm also provides consultancy services to companies and accounting firms, including provision of VAT advice, reviewing accounting policy manuals and advising on accounting treatments of various transactions.In his spare time, Malcolm enjoys flying having gained a Private Pilot's Licence in 2014.

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