SCHEDULES

SCHEDULE 14Leases: changes to accounting standards etc

PART 2Long funding leases

9The lease payments test: interest rate implicit in lease

1

Section 70O (the lease payments test) is amended as follows.

2

In subsection (4), for paragraph (b) substitute—

b

if a rate cannot be determined in accordance with paragraph (a), the interest rate implicit in the lease is taken to be 1% above LIBOR.

3

After that subsection insert—

5

For this purpose—

a

LIBOR means the London interbank offered rate at the relevant time for deposits for a term of 12 months in the applicable currency,

b

the relevant time is the inception of the lease, and

c

the applicable currency is the currency in which payments under the lease are payable.