Newsletter June 2021 – Ballards
In Primary Care there has certainly been a push to working at scale over the last few years. There has been an ever-increasing move for the GP Practices to work together through Federations, Super Partnerships and PCNs.
We are now receiving more queries as to how Consultants can emulate their colleagues and practice at scale. This tends to be a group of surgeons/physicians working together as a group providing a particular speciality, such as anaesthetists, orthopaedics or plastics. We are also seeing the beginnings of thoughts of developing MTDs of Consultants.
There are many benefits for the Consultants through working at scale, both financial and others. The financial benefits include using shared resources such as administrative staff, bookkeepers and accountants, and solicitors. They may also obtain economies of scale through negotiating group indemnity policies. Other benefits include supporting each other in the private sector as well as considering training, CPD and revalidation.
Working at scale allows for the development of contracts and SLAs which individual Consultants would not have the ability to negotiate on their own. For example, tendering for new contracts such as providing anaesthetists for specialist clinics, and bidding for large NHS contracts. This is in addition to being able to perform private practice work at scale.
For the individual Consultant, working at scale provides the ability to be able to reduce costs through economies of scale, and the ability for financial planning. The correct financial structure could also help in reducing potential Annual Allowance pension charges and mitigate tax liabilities. This can be achieved through the use of a corporate or LLP structure which allows for monies to be retained within a separate legal entity to the Consultant, until such time as it is efficient for them to withdraw the funds through dividends or salaries, or indeed on liquidation. This allows the Consultant to delay the timing of personal tax and make full use of personal allowances.
The type of financial structures that are being used include the use of joint companies and LLPs, with shareholders/ members being individual companies. We are also seeing the use of different types of shares in the joint companies which allow for individual allocations of income. A typical structure would be as follows:
Working at scale does bring its own challenges such as the potential for VAT liabilities on recharged expenditure and non-clinical administration charges, and the interaction of the “agency legislation” and potential IR35 issues. However, these have not proved insurmountable and the potential benefits of working at scale, including from a financial perspective, can outweigh these challenges.
Ultimately, it’s worth a chat with your advisor to discuss the options and potential benefits as each case is individual. As always, I can be contacted on 07961 048 736 if you would like an informal discussion about your situation.
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Remember, Ballards provide a complimentary tax query support hotline for OTSIS members. If you have any sort of accountancy or taxation query you would like discuss at no cost, simply call the hotline number, which is:
Tel: 01905 794 504
or call Steven Jones directly on: 07828 198 918