New guidance on accounting rules for the private finance initiative could cost the NHS up to £342m a year.

The Treasury has indicated it will press ahead with reforms that are likely to force NHS organisations to declare their PFI debts - and pay a charge on them.

The National Audit Office, which has expressed concerns about PFI debts being hidden 'off balance sheet' in the past, said the move to the new regime - known as international financial reporting standards - could have 'significant' cost implications.

NAO director of health financial audit Claire Rollo told HSJ that until the Treasury had finalised its rules it was not clear whether the move would involve extra costs to the NHS. But in the worst case scenario trusts would be liable to pay the 3.5 per cent capital charge on the£9.8bn debt, equating to£342m.

Both the NAO and Audit Commission consider that the move to the new regime will mean the majority of the£9.8bn of hidden PFI debts will need to be declared. The NAO used a report this week on the NHS's 2006-07 accounts to state: 'The introduction of the international standards provides an opportunity for the Treasury to introduce new guidance to provide a more consistent approach to PFI accounting.'