BIM64030 - Measuring the profits (particular trades): Private Finance Initiative (PFI): scope of trade: relevant factors
That a private sector operator engaged in a PFI project is carrying on a trade of providing services is not, generally, in dispute. The scope of that trade is, however, a separate question.
Each case will depend on its own particular facts so it is not possible to provide a definitive checklist of all the factors to consider. The stated intention of the operator, the terms of the PFI agreement, and what the operator actually does in practice, are all relevant factors. For example, whether or not the operator is exploiting, as a source of rent, an interest or right in or over land (see BIM64020) or whether the PFI property provides the setting for its activities, are clearly relevant questions to consider (see BIM64035).
The accounting treatment is of limited assistance in determining the scope of a PFI trade. If FRS5 Application note F is applicable, ownership of the PFI property may not be reflected in its accounting treatment (see BIM64070 onwards). The criteria which determine whether, for accounting purposes, the property is shown as a fixed asset on the operator’s balance sheet are different from those applied to determine whether or not it is a fixed capital asset for tax purposes.