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HMRC internal manual

Business Income Manual

From
HM Revenue & Customs
Updated
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Measuring the profits (particular trades): Private Finance Initiative (PFI): commencement of trade

The trade of a private sector operator entering into a PFI project does not commence until the operator is in a position to provide the relevant services and offers to do so, i.e. has an open door for business (see BIM80505 onwards).

  • If the PFI property, e.g. a prison, is a fixed capital asset of the operator’s trade for tax purposes, the trade does not commence until the property is ready, with personnel and other services in place, to receive its first prisoner.
  • If the property, e.g. a hospital, is a fixed capital asset of the operator’s property business, the ancillary support trade does not generally commence until the property is completed and occupied by the public sector purchaser. However, if the contract requires that the operator also provide support services to existing facilities, or the property becomes available in phases, then the trade may commence at an earlier date. That is, when the operator is in a position to provide the services.
  • If the trade includes the provision of design and construction services on trading account, the trade will commence when the operator is able to provide the design and construction services and offers to do so. That is, the trade commences before the date the property opens for business, since building the property is part of the trading activity. In practice, it may be convenient to adopt the date on which the PFI agreement is signed, since the contracts with the sub-contractors, who will provide many of the relevant services, are often signed at the same time.