understanding lease agreements can be a minefield.
With a lack of official guidance for schools and other organisations it can be hard to know what to do. We have compiled some Frequently Asked Questions to help you. We will update these regularly as regulations and guidance changes.
If you can’t find an answer to your question here, just get in touch and we will do our best to help.
The mis selling of leases is widespread. Don’t feel lost within the regulations. We can provide impartial advice to help your school or organisation save money.
Questions about your leases? here are some FAQ’s
IS THERE A LEGAL REQUIREMENT TO CHECK OUR LEASES?
In short, yes.
Maintained schools are responsible to the edict of the Local Authority to ensure that they only enter into permitted lease agreements. The Local Authority also has a legal duty to ensure that its schools are adhering to its policies.
Academies also have a legal duty to adhere to their Funding Agreement with the Secretary of State for Education as well as the Academy’s own rules. All these criteria state that Schools and Academies are not permitted to enter into Finance Agreements as they are deemed borrowing.
WE HAVE BEEN TOLD OURS IS AN OPERATING LEASE?
Unfortunately some Suppliers and Finance Companies will use mis-leading information to persuade you that the lease agreement is an operating lease and therefore allowable.
Terms will be used, such as 10% residual to show that it conforms. This displays a typical misunderstanding of a lease agreement and its legal status. The situation is far more complex than this and advice should always be sought.
WHAT ARE THE REPERCUSSIONS IF THE SCHOOL HAS ENTERED INTO A FINANCE LEASE?
In theory the matter could result in sanctions, but this is very unlikely to be the case.
The authorities are aware of the unscrupulous tactics of selling these agreements and also the complexities surrounding them. They are sympathetic to the situation and their main concern is that the matters are remedied.
By undertaking an audit of your agreements, you will be able to demonstrate you have taken reasonable steps to address any issues.
THE FINANCE DIRECTOR STATES THAT ALL LEASES ARE ACCOUNTED FOR CORRECTLY?
This is a common misunderstanding, that we are seeking to show that the accounts are incorrect, nothing could be further from the truth.
We are not looking to challenge the accounting of the lease agreements, but their legal status. That depends on the specification and substance of the agreement, not the accounting of it.
This is why the matter is complex. A lease agreement involves both Accountancy and Legal practices, and both these departments have separate criteria to adhere to.
CAN THEY REMOVE THE EQUIPMENT FROM OUR SCHOOL?
No. This can be a typical bullying tactic from the finance companies who threaten to remove the equipment. This creates worry for the school because if this happens, they cannot operate normally.
No-one is allowed onto the school premises without permission. The only way they can remove the equipment is by getting a Court Order. This would mean going to court, which we would be delighted with as it would enable us to put all our strong legal arguments in front of the Court. This is not what the Finance Companies want!
IN THE PRESS
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