This form of agreement enables firms to obtain capital allowances on equipment rather than obtain tax benefits through offsetting lease rentals against profits.
Following receipt of all contracted instalments, title in the equipment is transferred to the customer for a nominal sum, normally paid with the final instalment.
VAT on the purchase price is paid by the customer with the first instalment and is reclaimable by VAT registered customers on their next return. No VAT is charged on the instalments.
