8.63 Prior to considering the incorporation of donated land, buildings or other assets in a PPP Scheme, NHS Bodies should ensure that donors have not placed restrictions on the assets which would preclude such use. The treatment of a donated asset depends on whether it is:
• The disposal of an asset which had previously been donated to the Body to the private sector in order to obtain a reduction in the unitary charge;
• The injection of cash or other assets from parties other than those directly connected with the PPP scheme in order to obtain a reduction in the unitary charge.
8.64 For the avoidance of doubt, Bodies should note that once a previously donated asset passes out of the control of an NHSScotland body, it is treated as a disposal. If the disposal results in the creation of a prepayment or deferred asset, then these will attract a 3.5% cost of capital charge.
8.65 The required accounting treatments therefore follow the examples given in :
• paragraph 30 - 43 (land exchanged for a reduction in annual unitary payments);
• paragraph 54 (land leased to Project Co);
• paragraph 56 - 57 (buildings not integral to the PPP Scheme); and
• paragraph 58 - 61 (buildings integral to the PPP Scheme.)
8.66 Adjustments to the donated asset reserve will complement those to the donated asset account. The above treatment for general donated assets which the Body has decided to incorporate into the PPP Scheme can be contrasted with the treatment of funds raised and donated by third parties specifically to the Scheme in paragraph 66 below.
8.67 Often, cash or other assets may be donated to a Body for use in a PPP Scheme by a third party, such as the National Lottery, business sponsors, or raised through public appeal. For the avoidance of doubt, cash injections of this nature must satisfy the NHS definition of a donated asset being: "a disinterested transfer of economic benefit from an organisation or individuals to the NHS."
8.68 Where cash donated by a third party to the Body has the effect of reducing the unitary charge, a prepayment should be recognised. However, since this injection of capital has not been financed through public funds, it is inappropriate for the resulting prepayment to be subject to 3.5% cost of capital. Thus, on recognition of the prepayment, a corresponding entry should be made to deferred income. The prepayment should be written off over the shorter of the primary lease period or the period over which the reduction in payments is obtained. Corresponding releases from deferred income should ensure that the effect on the NHSScotland body's Operating cost statement is neutral.