IFRS ACCOUNTING STANDARDS
Genmed contracts meet both HMRC and IFRS test requirements for IFRICS 4 and the forthcoming IFRS16 to be introduced in 2019.
HMRC compliance of contracted out services and the benefit of VAT refunds is especially helpful for NHS tax planning. However the introduction of International Financial Reporting Standards, (IFRS) could render assets within a managed service on balance sheet if the contract and the structuring is not appropriate and fails the necessary tests.
This can have a material impact on a NHS Trust's financial status.
Many Trust's face pressing issues with availability of capital thus the need to assess revenue options in addition to managing limited head room in their Capital Resource Limit, (CRL). IFRICS 4 under current regulation permits an operating lease to be off balance sheet. However this is only to 2019. Then IFRS16 will apply superseding IFRICS 4, SIC21 and IAS17 and all operating leases will go on balance sheet automatically. Lease rents also incur VAT which is not recoverable.
The test for off balance sheet treatment is narrowly drawn. A Trust’s CRL issues can often be critical and the asset provision in either managed service or lease cannot go on balance sheet.
Our Trust customers settled on Genmed for its innovative managed service approach and capabilities and willingness to address the wider operational issues facing the Trust as a whole and as an organisation.
Genmed draft managed service contracts also tackling CRL issues in full by meeting IFRICS 4 and IFRS16 thereby permitting the Trust to go ahead with major projects while satisfying this critical metric.