About a month ago now, I visited a large successful practice with a number of partners in their 50s, and another partner in his mid-30s. The younger partner explained his anxiety to me that when the other partners retire, he will be left with the full responsibility and the risk of running such a large practice.

I visited another practice, an excellent well respected practice with three partners approaching retirement, and another younger partner, equally concerned with the risks and responsibilities of being the Last Man Standing.

As all partners know, they are ultimately personally responsible for all the debts of their practice. A limited company is only responsible for the amount of share capital pledged by the owners – and probably less than £100. It is possible for a GMS contract to be novated (“transferred”) from a GPpartnership to a limited company which is owned by the GPs.

Before explaining the process, I should say that this is no panacea, limitedcompanies have their own issues, the directors are employed and have other responsibilities as well as paying more in tax and NIC than partners. There are filing regulations, and strict obligations set out in company law.

However, if it makes the difference between continuing with the practice and it closing, it is worth examining.

The Commissioner will have to agree to novate the contract and that it does not raise a requirement to put the contract out to public procurement. The commissioners will need to be satisfied with the following:

  • Strategy – that there is a clear rationale for such a change Leadership – that there is a robust and comprehensive plan to deliver the strategy
  • Quality – how will services be maintained or improved?
  • Finance – is the viability of the practice clearly demonstrated

Corporate Vehicle – do the constitutional documents explain how the provider will be established, run? What are they risks involved?

Once the support of the commissioner is secured, the practice will need to consider the changes to staff contracts, their CQC status, the relationship with their property owners, as well as their pension status with NHSBSA.

Incorporating and novating the contract is not simple, but might be worth exploring in the right circumstances. Good professional advice, principally from solicitors and accountants specialising in the area will be important. Hempsons have a number of useful articles on incorporation found here.