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April 14, 1988


By CBR Staff Writer

ECS International Ltd, the Richmond-upon-Thames subsidiary of ECS SA, Paris, France – the IBM hardware leasing company controlled by the French bank Societe Generale SA – is moving into the software leasing market. The company has unveiled a scheme under which it says users will be able to benefit from tax concessions to get lower software leasing terms. Currently capital allowances apply only to hardware purchases but users have been able to bundle software with hardware and claim tax concessions on the cost of both. But according to ECS finance director George Wirgman under such a scheme there is always the risk that the claim may be rejected. Now ECS is offering a scheme where users negotiate a licence with the software maker, then lease software through ECS which then claims tax concessions, passing on the benefits – in the form of lower lease payments – to users. ECS also intends to negotiate contractual terms under which it deals with the software vendors in order to establish a clear relationship between ECS and its customers. The company says all too often leasing company don’t have contracts with software houses they buy from. ECS will concentrate on the IBM Silverlake market and is wooing IBM agents with its proposals. ECS said users should find cheaper software leases particularly attractive since software costs now make up 60% of the total cost of an installation. The ECS scheme follows the launch last month by Bristol-based Pallas Leasing Ltd, subsidiary of the merchant bank S G Warburg, under which the company buys licences from software houses or hardware makers and sub-issues them to customers under a lease agreement (CI No 885). Pallas claims to have signed up three customers and to be negotiating with 12 software publishers. ECS managing director Antoine Colboc said the company’s scheme effectly gets rid of the ambiguity in users’ tax positions – whether or not a tax claim on software disguised as part of a hardware purchase will be accepted by the Inland Revenue – giving them peace of mind or, as he put it, enabling users to sleep on both ears. ECS arrived in the UK in l986 and now employs 25 staff for a UKP50m turnover in 1987. It has plans to move into third party maintenance for IBM mid-range hardware this year.

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