On of the biggest merchant banks is seeking to pioneer the leasing of computer software in the UK. The move will potentially enable software companies who charge only one-time licences to win more business, and enable users to improve their cash flow by spreading the time over which they can pay for their software. Bristol-based Pallas Leasing Ltd, a subsidiary of S G Warburg Securities and until now primarily a writer of leases on photocopiers for the likes of Canon, Ricoh and Minolta is offering the lease contracts on software. The Inland Revenue said it wants to review the situation with its internal specialists before commenting on the matter, but Pallas insisted it has clearance for the move: up to now it has been uneconomic for leasing companies to finance software contracts because a leasing company could not prove ownership of software, which normally has only a licence to use attached to it. Pallas has launched a scheme under which it buys software licences from software houses or hardware manufacturers and sub-issues them to specified customers under a lease agreement. Pallas is planning to write leases on a wide range of mainframe, mini and micro systems and applications software but was not prepared to name any products. It said that it has already done lease deals with users – in a pilot scheme last year, the average value of contract was UKP75,000 – , but again refused to name any customers at this stage. Although one of the most tempting areas of business for Pallas would be system software on IBM mainframes, IBM made it clear that it does not allow the issuing of sub licences for its software and has not signed any agreement with Pallas.