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Lifecycle Management Group Ltd
Unipart House,
Garsington Road,
Cowley, Oxford,
OX4 2PG

Tel: 01865 340 800
Fax: 01865 340 829
E-mail: info@lifecycle.co.uk


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60-second briefing

What do we need to do about IFRS 16? A guide for the NHS.

In January 2016, the International Accounting Standards Board (IASB) issued the final version of IFRS 16 (Leases). This standard will replace IAS 17 for financial years beginning on or after January 2019. However, until recently, HM Treasury had not issued any guidance meaning public sector bodies such as the NHS had not been able to adequately plan.

What changes?
The main change is how you’ll be required to report leases in your accounts. IAS 17 defined a Finance Lease; any lease not meeting this definition was to be considered an Operating Lease which is neither capitalised nor the liability reported on the balance sheet. For lessees IFRS 16 removes the distinction between the two types of lease so, with a few exceptions, leases must be reported on the balance sheet. Although final guidance is yet to be issued by HM Treasury, exceptions are likely to include:

  • Leases with less than 12 months to run following transition
  • Any lease with a term of 12 months or less
  • Low value leases

Are only leases affected?
No. Any arrangement that creates a ‘Right of Use Asset’ must also be properly reported. This will include Managed Service Agreements or other asset supported ‘service’ contracts. Again, there are some exceptions. For example, an underlying asset that cannot be ‘identified’ – perhaps because the owner has the right to control or substitute the asset.

Will Operating Leases still be available?
They won’t be called ‘Operating’ Leases, but residual-based leases will still be available and commercially attractive – they will still deliver lower periodic costs than other forms of funding.

We’ll continue to provide advice and support to ensure our clients obtain the most attractive funding in every instance. And, where that involves a lease, we’ll continue to protect your interests by ensuring you achieve the best commercial terms.

How can Lifecycle help?
We’re working with our customers to evaluate their entire lease portfolio and to support all the balance sheet entries they’ll need at transition. We’ll also help with any issues of interpretation of the standard as they arise. If you’d like more information on how we can help, just call Neil Marriott on 01865 340800.


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Let’s unearth the opportunities

We offer a free opportunity assessment for NHS Trusts. We’ll work with you to quickly identify any opportunities and outline how we can exploit them. Just let us have your contact details and we’ll be in touch as soon as possible to arrange a brief introductory meeting.

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Subscribe to our 60-second briefings.

We produce a series of easily digestible 60-second briefings on a range of topics – from procurement regulations to changes in accounting treatment for finance arrangements. Subscribe now and we’ll send you the latest briefings.


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Online Regulation 84 portal.

We have partnered with Mills and Reeve, the leading procurement lawyers, to create a guided wizard that makes certain you’re compliant with Regulation 84. It also includes a wizard to help you select the correct procedure for any procurement.

The portal is in the final stages of production and will be launched soon. If you’d like free access, just let us have your details and we’ll send you a link as son as it’s done.


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Tell me more

If you’d like to find out how we can help your Trust, or your department, develop robust and effective replacement planning for medical devices, just complete the form and we’ll be in touch to explain how we can help.