DHSC group accounting manual 2021 to 2022: additional guidance, version 2
Updated 22 April 2022
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Introduction
1. The Department of Health and Social Care group accounting manual 2021 to 2022 (GAM) was published in May 2021. The GAM sets the accounting policies to be followed by members of the department’s consolidation group and provides principles-based guidance to DHSC group bodies on how to prepare and complete their annual reports and accounts (ARA).
2. NHS foundation trusts follow the ‘NHS foundation trust annual reporting manual 2021 to 2022’ for the purpose of preparing annual reports.
3. This additional guidance updates the GAM, is mandatory, and must be treated as having the same status as the GAM itself.
4. This document will be updated as additional FAQs arise, so that all additional guidance for 2021 to 2022 will be contained within a single document.
5. This is the second version of additional guidance to be published for the 2021 to 2022 GAM, with an initial update to the 2021 to 2022 GAM published in January.
6. Where an FAQ has been updated since its initial publication the title is supplemented with the term ‘updated’. This applies to FAQ 3. All matters following FAQ 6 are new in this version of the guidance.
FAQ 1: changes in discount rates at 31 March 2022
Background
7. As advised in the GAM (chapter 4, annex 7), Treasury discount rates are revised each year and are notified by means of a public expenditure system (PES) paper.
8. ‘PES (2021) 10 discount rates for general provisions, post-employment benefits, financial instruments and leases (under IFRS 16)’ was issued on 13 December 2021.
GAM application
9. By issue of this FAQ, chapter 4 annex 7 and chapter 5 annex 1, note 1.22 of the GAM are updated in accordance with the following text.
Summary of discount rates to be applied as at 31 March 2022
10. The discount rates to be applied as at 31 March 2022 for general provisions, post-employment benefits and financial instruments are summarised below.
Table 1: summary of discount rates as at 31 March 2022
| Rate type | Rate | Prior year rate |
|---|---|---|
| Nominal general provision discount rates | ||
| Short-term | 0.47% | Minus 0.02% |
| Medium-term | 0.70% | 0.18% |
| Long-term | 0.95% | 1.99% |
| Very long-term | 0.66% | 1.99% |
| General provisions inflation rates | ||
| Year 1 | 4.0% | 1.2% |
| Year 2 | 2.6% | 1.6% |
| Into perpetuity | 2.0% | 2.0% |
| Post-employment benefits discount rate | ||
| Real rate | Minus 1.30% | Minus 0.95% |
| Nominal rate | 1.55% | 1.25% |
| RPI inflation until February 2030 | No longer provided by HMT | 3.22% |
| RPI inflation from February 2030 | No longer provided by HMT | 2.32% |
| CPI Inflation | 2.90% | 2.22% |
| Financial instrument discount rate | ||
| Nominal rate | 1.9% | 3.7% |
| Real rate with reference to RPI until February 2030 | Minus 1.1% | 3.0% |
| Real rate with reference to RPI from February 2030 | Minus 0.2% | 2.1% |
11. The following detail is provided to assist preparers in utilising the various discount rates.
General provisions
12. General provisions discount rates are used to discount future cash flows related to provisions recognised in accordance with IAS 37.
13. Treasury gives rates for short, medium, long-term and very long term general provisions. These are defined as follows:
- short-term rate: a nominal discount rate to be applied to the cash flows of general provisions in a time boundary between 0 and up to and including 5 years from the statement of financial position date
- medium-term rate: a nominal discount rate to be applied to the cash flows of general provisions in a time boundary of after 5 and up to and including 10 years from the statement of financial position date
- long-term rate: a nominal discount rate to be applied to the cash flows of general provisions in a time boundary of after 10 years and up to and including 40 years from the statement of financial position date
- very long-term rate: a nominal discount rate to be applied to the cash flows of general provisions in a time boundary exceeding 40 years from the statement of financial position date
14. Note, it’s the timing of the expected cash flow that governs the discount rate used. The PES papers make no reference to setting discount rates according to the overall term of the arrangement. To arrive at the SoFP balance for a provision with expected cash flows occurring in each year for 60 years, cash flow should first be inflated, then each of the 4 discount rates will need to be applied. It would not be appropriate to discount cash flows at the very long-term rate in the first 40 years simply because the liability is not expected to be wholly discharged until year 60.
Inflation assumptions
15. The central inflation assumptions offered above paragraph 10 have been provided by HM Treasury. They are based on what is judged to be the most statistically reliable measure of inflation (the Office of Budget Responsibility Consumer Price Index (OBR CPI) forecasts).
16. The OBR CPI inflation rates should be applied across the following time frames:
- year 1: applied on cash flows up to and including 1 year from the date of the statement of financial position
- year 2: applied on cash flows from after 1 and up to and including 2 years from the date of the statement of financial position
- into perpetuity: applied on cash flows from after 2 years from the date of the statement of financial position
17. HM Treasury consider the presumption to use OBR CPI inflation rebuttable only in certain instances. It’s for each entity to assure itself over the reasonableness of the judgements made against the following criteria provided by HM Treasury as to when it’s considered acceptable to rebut the presumption of inflating cashflows using OBR CPI.
18. Where no legal or other requirement prohibits the application of OBR CPI inflation, entities must satisfy themselves that:
- there is a logical basis for not applying OBR CPI inflation rates, in that the proposed alternative inflation rates would be clearly more applicable to the underlying nature of the cash flows
- the proposed alternative inflation rates must be free from management bias – an indication of this may be an independent or professional assessment of the proposed alternative inflation rates, such as by a committee, third party or other experts
- the inflation rates instead applied should be based on logical and relevant calculations and reasonable underlying assumptions – for example, they may be comparable to existing financial indices or based on historical trends
19. Where a legal requirement exists prohibiting the application of the OBR CPI rates or requires an adjustment to the rate applied:
- an inflation rate specified by statute or by the courts can be applied instead of OBR CPI inflation
- OBR CPI can be adjusted where this is required by statute or by the courts, for example in the case of legally enforceable public pension caps
- where OBR CPI cannot be applied by statute or by the courts, but an alternative rate or adjustment is not prescribed, a comparative inflation rate must instead be applied and must fulfil conditions as set out above
20. The below is an excerpt from annex C of PES (2021) 10 which provides combined OBR CPI inflation and discount rates for up to 50 years after the statement of financial position date. Annex C offers combined rates for up to and including 200 years. This is available on request from the GAM inbox.
Table 2: 50 year excerpt from annex C PES (2021) 10
| Year | Inflation rate | Inflation cumulative | Discount rate | Cumulative rate |
|---|---|---|---|---|
| 1 | 4.0% | 104.0% | 0.5% | 103.5135% |
| 2 | 2.6% | 106.7% | 0.5% | 105.7080% |
| 3 | 2.0% | 108.8% | 0.5% | 107.3178% |
| 4 | 2.0% | 11.0% | 0.5% | 108.9521% |
| 5 | 2.0% | 113.2% | 0.5% | 110.6112% |
| 6 | 2.0% | 115.5% | 0.7% | 110.7655% |
| 7 | 2.0% | 117.8% | 0.7% | 112.1955% |
| 8 | 2.0% | 120.2% | 0.7% | 113.6439% |
| 9 | 2.0% | 122.6% | 0.7% | 115.1110% |
| 10 | 2.0% | 125.0% | 0.7% | 116.5970% |
| 11 | 2.0% | 127.5% | 1.0% | 114.9245% |
| 12 | 2.0% | 130.1% | 1.0% | 116.1199% |
| 13 | 2.0% | 132.7% | 1.0% | 117.3277% |
| 14 | 2.0% | 135.3% | 1.0% | 118.5480% |
| 15 | 2.0% | 138.0% | 1.0% | 119.7810% |
| 16 | 2.0% | 140.8% | 1.0% | 121.0269% |
| 17 | 2.0% | 143.6% | 1.0% | 122.2857% |
| 18 | 2.0% | 146.5% | 1.0% | 123.5576% |
| 19 | 2.0% | 149.4% | 1.0% | 124.8428% |
| 20 | 2.0% | 152.4% | 1.0% | 126.1413% |
| 21 | 2.0% | 155.4% | 1.0% | 127.4533% |
| 22 | 2.0% | 158.6% | 1.0% | 128.7790% |
| 23 | 2.0% | 161.7% | 1.0% | 130.1184% |
| 24 | 2.0% | 165.0% | 1.0% | 131.4718% |
| 25 | 2.0% | 168.3% | 1.0% | 132.8393% |
| 26 | 2.0% | 171.6% | 1.0% | 134.2210% |
| 27 | 2.0% | 175.1% | 1.0% | 135.6170% |
| 28 | 2.0% | 178.6% | 1.0% | 137.0276% |
| 29 | 2.0% | 182.1% | 1.0% | 138.4529% |
| 30 | 2.0% | 185.8% | 1.0% | 139.8929% |
| 31 | 2.0% | 189.5% | 1.0% | 141.3480% |
| 32 | 2.0% | 193.3% | 1.0% | 142.8182% |
| 33 | 2.0% | 197.1% | 1.0% | 144.3037% |
| 34 | 2.0% | 201.1% | 1.0% | 145.8046% |
| 35 | 2.0% | 205.1% | 1.0% | 147.3211% |
| 36 | 2.0% | 209.2% | 1.0% | 148.8534% |
| 37 | 2.0% | 213.4% | 1.0% | 150.4017% |
| 38 | 2.0% | 217.7% | 1.0% | 151.9661% |
| 39 | 2.0% | 222.0% | 1.0% | 153.5467% |
| 40 | 2.0% | 226.5% | 1.0% | 155.1438% |
| 41 | 2.0% | 231.0% | 0.7% | 176.3817% |
| 42 | 2.0% | 235.6% | 0.7% | 178.7297% |
| 43 | 2.0% | 240.3% | 0.7% | 181.1090% |
| 44 | 2.0% | 245.1% | 0.7% | 183.5199% |
| 45 | 2.0% | 250.0% | 0.7% | 185.9629% |
| 46 | 2.0% | 255.0% | 0.7% | 188.4385% |
| 47 | 2.0% | 260.1% | 0.7% | 190.9470% |
| 48 | 2.0% | 265.3% | 0.7% | 193.4889% |
| 49 | 2.0% | 270.6% | 0.7% | 196.0647% |
| 50 | 2.0% | 276.1% | 0.7% | 198.6747% |
Post-employment benefits provisions
21. The real discount rate applicable on 31 March 2022 is minus 1.30% (the previous year’s rate was minus 0.95%). This rate is calculated as net of CPI measured at 2.90%.
22. The rate is applicable for all provisions for continuing obligations arising from previous employment service.
23. HM Treasury consider that schemes for which RPI is a material assumption are limited and consequently will no longer provide rates that take account of RPI inflation.
Financial instruments
24. The financial instrument discount rate is used for some financial instruments in accordance with the requirements of the financial reporting manual (FReM).
25. The FReM states:
Where future cash flows are discounted to measure fair value, entities should use the higher of the rate intrinsic to the financial instrument and the real financial instrument discount rate set by HM Treasury (promulgated in PES papers) as applied to the flows expressed in current prices.
26. To reflect the upcoming changes to RPI in 2030 HM Treasury have provided real rates for before and after February 2030. Accordingly, the real financial instrument discount rate to be applied at 31 March 2022 is minus 1.1% (indicative prior year rate 3.0%) until February 2030 and minus 0.2% (indicative prior year rate 2.1%) after February 2030. These rates can be applied where the instrument is index linked to RPI.
27. Where the financial instrument is not linked to an inflationary index, and a nominal rate is required, 1.9% (previously 3.7%) may be used.
Leases
28. For group entities such as limited companies, that prepare statutory accounts following EU adopted IFRS in accordance with the Companies Act 2006, IFRS 16 was effective from 1 April 2019.
29. PES (2021) 10 confirms that the HM Treasury incremental borrowing rate (a nominal rate) of 0.95% is to be applied for leases commencing, transitioning or being remeasured in the 2022 calendar year under IFRS 16. For leases commencing or remeasured in the 2021 calendar year, the incremental borrowing rate is 0.91%. As the DHSC Group account is following IAS 17 for 2021 to 2022, the leasing rates will not be replicated in the 2021 to 2022 GAM.
FAQ 2: injury costs recovery revenue, probability of non-recovery
Background
30. Paragraphs 4.88 – 4.97 of the GAM describe the treatment of injury costs recovery (ICR) revenue.
31. When estimating lifetime expected credit losses in relation to ICR receivables, the GAM instructs NHS providers to include an amount within the credit loss allowances for contract receivables to reflect income that is not expected to be recoverable. Each year, the compensation recovery unit (CRU) advises a percentage probability of not receiving the income.
32. The updated figure for 2021 to 2022 is 23.76%. By issue of this FAQ, paragraph 4.95 of the GAM is amended to reflect this figure.
GAM application
33. If it’s material, 23.76% of accrued ICR revenue should be used to calculate expected credit losses. However, where NHS providers are in a position to make a reliable estimate of their own percentage, they should use their own local information to inform the expected credit loss position.
34. The above instruction aligns to the IFRS 9 simplified approach to impairments as mandated by the HM Treasury adaptations and interpretations to the standard.
FAQ 3 updated: minor updates to the 2021 to 2022 GAM
Background
35. This FAQ collates various clarifications required to update the 2021 to 2022 GAM.
GAM updates and corrections
36. This FAQ removes the reference and hyperlink to Sustainable Development Unit guidance in regards to performance reporting requirements regarding the provision of information on environmental matters referenced as part of paragraph 3.37 of the GAM.
37. This FAQ removes text from paragraph 2.97 regarding the quality report.
38. Reference is made to the UK Health Security Agency (UKHSA) as an executive agency of the Department which was established as of 1 April 2021. References to UKHSA are added as Public Health England demised on 30 September 2021.
39. This FAQ provides further clarification of the approach to pensions disclosures in the remuneration report for opted out individuals.
40. For the avoidance of doubt, the pension disclosures in the GAM and detailed in the Greenbury guidance follow the approach to opted out individuals detailed in guidance provided in Section 13 of the Employers Pension Guidance.
41. The GAM follows the FReM. The FReM requires the use of the format and methodology defined by the Cabinet Office in Employer Pension Notices for the purposes of compiling remuneration reporting for annual report and accounts, which for the 2021-22 financial year is detailed in EPN647. EPN647 refers to Section 13 of the Employers Pension Guidance, to provide guidance concerning the disclosure of salary, pension and compensation information.
42. The Employers Pension Guidance confirms that where a member has opted out of the pension arrangements for the whole of the year, no pension figures should be reported and a footnote should be included stating “X chose not to be covered by the pension arrangements during the reporting year” (if someone opts out or opts in during the year, they should be treated in the same way as a leaver or joiner).
43. By order of this FAQ the following guidance is inserted into the 21-22 GAM at paragraph 3.96.
Where a member has opted out of the pension arrangements for the whole of the year, no pension figures should be reported and a footnote should be included stating ‘X chose not to be covered by the pension arrangements during the reporting year’. If a member opts out or opts in during the year, they should be treated in the same way as a leaver or joiner.
44. Chapter 3 Annex 2 provides additional guidance regarding the compilation of the single total figure table and the pension benefits table. By order of this FAQ the following guidance is inserted into Chapter 3 Annex 2 at paragraph 3.155.
Instances in which members have opted out of pension schemes
Where a member has opted out of the pension arrangements for the whole of the year, no pension figures should be reported and a footnote should be included stating ‘X chose not to be covered by the pension arrangements during the reporting year’. If a member opts out or opts in during the year, they should be treated in the same way as a leaver or joiner.
December updates of the 2021 to 2022 FReM
45. There are various updates in the 2021-22 FReM that are required to be reflected in the GAM. Of note are further updates to the revised fair pay disclosure requirements and various updates to the interpretations and adaptations of IFRS 9 and IAS 19.
46. There are also a number of updates to the 2021 to 2022 FReM relating to the performance reporting of departments who compile an outcome delivery plan. These changes will not be reflected in the GAM.
47. By order of this FAQ the following updates to the GAM are made to reflect the various amendments made in the 2021 to 2022 FReM.
48. The revised fair pay disclosure requirements no longer incorporate a requirement to present percentage changes in non-cash benefits (benefits in kind). Accordingly bullet point 3 of paragraph 3.108 has been removed and paragraph 3.110 updated. This does not affect disclosure requirements in relation to the single total figure table.
49. The FReM describes how the percentage changes in respect of the highest paid director and employees of the entity should be calculated. Consequently paragraphs 3.111 and 3.113 of the GAM now read as follows:
The calculation for 3.109 (a) for salaries and allowances shall be based on the mid-point of the band for each salary and performance pay and bonuses payable.
The calculation for 3.109 (b) for salary and allowances shall be the total for all employees on an annualised basis, excluding the highest paid director, divided by the full-time equivalent (FTE) number of employees (also excluding the highest paid director).
The calculation for 3.109 (b) in respect of performance pay and bonuses payable shall be the total for all employees, excluding the highest paid director, divided by the FTE number of employees (also excluding the highest paid director).
50. Clarification has also been received from HM Treasury that pay ratios are only required on total remuneration (pay and benefits excluding pension benefits) for the 25th percentile, median and 75th percentile. Alongside these ratios the entity is required to set out for the 25th, median and 75th percentile amounts for:
- total pay and benefits
- the salary component of total pay and benefits
51. By order of this FAQ paragraphs 3.116 to 3.118 are revised to read as follows:
[Quoted section begins]
Pay ratio information
Entities are required to disclose:
- the range of staff remuneration
- the 25th percentile, median and 75th percentile of total remuneration (excluding pension benefits), expressed as amounts, for the reporting entity’s staff (based on annualised, full-time equivalent remuneration of all staff (including temporary and agency staff) as at the reporting date)
- the 25th percentile, median and 75th percentile of the salary component of total remuneration (excluding pension benefits), expressed as amounts, for the reporting entity’s staff (based on annualised, full-time equivalent remuneration of all staff (including temporary and agency staff) as at the reporting date)
- separate ratios for the 25th percentile, median and 75th percentile of staff total remuneration (excluding pension benefits) against the mid-point of the banded remuneration of the highest paid director, for which an illustrative table is provided below which identifies the derivation of the pay ratio and the nature of the prior year comparative
Table 3: illustrating pay ratio disclosure and derivations
| Year | 25th percentile pay ratio | Median pay ratio | 75th percentile pay ratio |
|---|---|---|---|
| 202x-2x | X:1 (X being the mid-point of highest paid director/25th percentile of employee remuneration) | Y:1 (Y being the mid-point of highest paid director/50th percentile of employee remuneration) | Z:1 (Z being the mid-point of highest paid director/75th percentile of employee remuneration) |
| 202x-2x | X:1 (Prior year comparative is best practice for 2021-22) | Y:1 (Prior year comparative is mandatory) | Z:1 (Prior year comparative is best practice for 2021-22) |
- an explanation for any significant changes in the ratio between the current and prior years
All DHSC group bodies must include a narrative highlighting the reasons for any variance in year-on-year ratios in order to:
- describe the purpose of including the ratios, and what they mean
- ensure transparency in executive remuneration
- allow the public to hold government to account for their use of public funds
- provide an opportunity for entities to monitor their own remuneration and note any adverse or anomalous trends
The narrative should be concise and clearly linked to the figures disclosed in the remuneration report and use terms that are easily understandable by the public. The narrative must be introduced by the following text:
Reporting bodies are required to disclose the relationship between the total remuneration of the highest-paid director / member in their organisation against the 25th percentile, median and 75th percentile of total remuneration of the organisation’s workforce. Total remuneration of the employee at the 25th percentile, median and 75th percentile is further broken down to disclose the salary component.
The banded remuneration of the highest paid director / member in [the organisation] in the financial year 202x-2x was £xx (202x-2x, £xx). The relationship to the remuneration of the organisation’s workforce is disclosed in the table below.
Table 4: pay ratio information table
| 202x-2x | 25th percentile | Median | 75th percentile |
|---|---|---|---|
| Total remuneration (£) | |||
| Salary component of total remuneration (£) | |||
| Pay ratio information | X:1 (for calculation see 3.116) | Y:1 (for calculation see 3.116) | Z:1 (for calculation see 3.116) |
| 202x-2x | |||
| Total remuneration (£) | PY comparative is best practice | PY comparative is mandatory | PY comparative is best practice |
| Salary component of total remuneration (£) | PY comparative is best practice | PY comparative is best practice | PY comparative is best practice |
| Pay ratio information | PY comparative is best practice | PY comparative is mandatory | PY comparative is best practice |
In 202x-2x, xx (202x-2x, xx) employees received remuneration in excess of the highest-paid director / member. Remuneration ranged from £xx to £xx (202x-2x £xx-£xx).
Total remuneration includes salary, non-consolidated performance-related pay, benefits-in-kind, but not severance payments. It does not include employer pension contributions and the cash equivalent transfer value of pensions.
Entities should consider providing the percentage change reporting required by paragraphs 3.108 to 3.115 after the disclosures relating to pay ratio information.
[Quoted section ends]
52. The Hutton guidance referenced in annex 4 of the FReM has also been updated to reflect the revised requirements introduced for 2021 to 2022. Accordingly paragraph 3.123 of the GAM has been updated to reflect this.
53. The IFRS 9 adaptation which identifies that balances held with certain types of organisations and entities are excluded from stage 1 and stage 2 impairment recognitions. This has been updated to identify the Government Banking Service as an entity in scope of this adaptation. Consequently bullet point 1 under paragraph 4.271 of the GAM and Chapter 4 annex 1 have been updated.
54. A new IFRS 9 adaptation has been provided in the 2021 to 2022 FReM in relation to accounting for financial guarantees below fair value and where no active market or observable equivalent exists. Accordingly chapter 4 annex 1 has been updated and an additional bullet point under paragraph 4.271 reads as follows:
Where an entity issues a financial guarantee below fair value and where no active market or observable equivalent exists such that it would follow B5.1.2A section (b), then it should instead measure the financial guarantees at initial recognition, and at reporting period end, at an amount equal to lifetime expected credit loss (ECL) in accordance with the requirements of IFRS 9. Initial measurement and subsequent measurement are to be recognised through profit and loss. For the purpose of applying the interpretations of IFRS 9, and for the purpose of determining suitable disclosures under IFRS 7, the entity shall treat the ECL as if they are an appropriate proxy for fair value. If it can be evidenced that the intrinsic rate cannot be reliably determined, then the HM Treasury financial instrument rate should be used.
55. The interpretation of IAS 19 that has historically clarified when formal valuations will be undertaken has been revised. Chapter 4 annex 1 is updated as follows:
IAS 19 requires the present value of defined benefit obligations and, if applicable the fair value of the plan’s assets to be determined with sufficient regularity that the amounts recognised in the financial statements do not differ materially from those determined at the reporting period date. This shall be interpreted to mean that the period between formal actuarial valuations shall be 4 years, with approximate assessments in intervening years. The results of the actuarial valuations may not necessarily feed into the annual report and accounts in the same financial year due to timing differences. Instead, entities must ensure the IAS 19 paragraph 58 requirement of amounts recognised being materially correct is met. Acceptable approximations shall include adjusting full valuation results using the latest available membership data.
FAQ 4: year end reduced reporting requirements no longer in force
56. As part of the COVID-19 pandemic response HM Treasury introduced reduced reporting requirements that were in place for 2019 to 2020 and 2020 to 2021. This FAQ services as a reminder to preparers that these requirements are no longer in force, as reflected in the GAM since initial publication.
57. Entities should take particular care to explain trends in the performance analysis when this section of the performance report has not been provided in previous years.
FAQ 5: pension contribution treatment
Background
58. The process established in 2019 to 2020 by which NHS England made contributions towards the pension contribution increases continues to be employed in 2021 to 2022.
59. NHSE and NHSI guidance on this process remains in place and per the 2019 to 2020 FAQ 6, accounting for the employer contribution in full and on a gross basis is in line with application of IAS 19, no adjustment will be made to disclose pension costs in chapter 5 of the GAM.
FAQ 6: revision to partially completed spells guidance in the GAM
Background
60. This FAQ updates guidance provided in chapter 4 of the GAM in relation to partially completed treatment spells. The guidance is identical to that provided in FAQ 12 of the 2020 to 2021 additional guidance to the GAM.
61. By order of this FAQ paragraphs 4.98 to 4.99 of the GAM provide the following guidance:
Where NHS providers and commissioners transact via block contract arrangements, the provider’s entitlement to income does not vary based on the treatment of individual patients. As such, no partially completed spells balances are expected to arise at the year end.
Chapter 4 annex 10 of the GAM provides guidance on accounting where the maternity pathway is in operation. Where this is not in operation as a payment mechanism, this guidance will not apply and no prepayments/deferrals will arise.
FAQ 7: Public Dividend Capital (PDC) dividend calculation update
62. The existing policy is being supplemented with further detail regarding the approach to the temporary relief as part of the pandemic response.
63. As the temporary relief has been withdrawn and to ensure the opening net relevant asset position includes all PDC received for COVID-19 assets in 2020-21, no adjustment should be made to the opening net relevant assets.
64. By order of this FAQ the following text is inserted into the 2021-22 GAM replacing paragraph 4.299 as follows.
Providers are required to ensure the 2021-22 opening net relevant asset position includes all PDC received in 2020-21 for COVID-19 assets, and no adjustments should be made to the opening net relevant assets. This will ensure the dividend relief is only applied in the year the PDC was drawn which was the intention of the original policy announcement to provide temporary relief during the pandemic response. Relief will only apply to any new PDC issued for COVID-19 assets in 2021-22 so providers should remove these from their closing relevant asset position. These are PDC awards accompanied with Memorandum of Understanding (MOUs) containing reference numbers with High Consequence Infectious Disease (HCIDS), Test and Trace Capital (TTCAP) or Vaccinations 2020 to 2021 (VACCS).
Providers should not make any adjustments to this year’s opening net asset position in respect of revenue PDC drawn in 2020-21. If any new revenue PDC is drawn in 2021-22, providers should add this to their closing relevant asset position before calculating the dividend charge.
65. The worked examples included relief for PDC issued for COVID-19 assets. With the removal of the temporary relief for 2020-21 COVID-19 assets, reference to the relief has been updated in the worked examples from paragraph 4.301 onwards. The worked examples made reference to the interim debt adjustment. This is no longer relevant so has also been removed by order of this FAQ.