LEASE CASE STUDY - Medium Law Firm

THE CLIENT
A medium sized commercial law firm located in Central London with 5 equity partners and 7 salaried partners.

THE PROJECT
The client needed to relocate at short notice when their landlord unexpectedly decided not to renew the lease on their building. They chose to move to a newly refurbished 7,000 sq ft floor of a nearby building, but the offices needed to be completely fitted out with:-

Partitioned offices
Air conditioning alterations
Tea Points
Lighting
Network Cabling
Electrics

Project Value : £300,000 + VAT
Contract Period : 3 weeks
Project Date : Q1 2004

THE FINANCE PACKAGE
Although the client was a well established and profitable practice, their accounts showed a relatively modest net worth. In order to offer a full solution, Plus Finance syndicated the project between a number funders, with each funder agreeing the credit limit and asset schedule they were comfortable with. The £300,000 total requirement was therefore put in place by spreading the risk. The contractor then simply invoiced each funder for a sum of money corresponding to the value of each leasing agreement.

Commenting on the advantages of using leasing as opposed to a bank loan facility, the senior partner cited the following benefits:-

The whole fit out project could be included on the lease, and was therefore 100% allowable against taxable profits.
Our Auditors did not have to undertake a time consuming analysis of which parts of the fit out qualified for capital allowances, and then an even more time consuming debate with the Inland Revenue justifying their assumptions.
Our bank facilities were left available for other uses.
No additional security was required by the finance companies, other than the assets themselves.
Based on our 40% tax status, and only an estimated 65% of the project qualifying for capital allowances, we calculated leasing saved us around 13% compared with borrowing the money for our bank.