GP Practice Incorporation

Looking for a solicitor to help convert your GP Practice to a limited company?

Most GP practices in the UK operate as partnerships. That’s fine, but it’s not always the most efficient structure – particularly when it comes to tax planning, liability protection and long-term succession. If you’ve been thinking about incorporating your GP practice, I can help you work out whether it makes sense and then handle all the legal work to get it done.

I’m Steven Mather, and I regularly advise GP practices on incorporation. It’s a complex area with real implications for your GMS contract, your CQC registration and your tax position, so it needs to be done carefully and with expert legal guidance.

Two routes to incorporation

There are broadly two ways to incorporate a GP practice, and each has different legal and practical implications.

Route 1 – novating the GMS contract to a new company

The first option is to create a new limited company and transfer (novate) the GMS contract from the partnership to that company. The company becomes the contract holder, takes on the CQC registration, and employs the staff. The partners become directors and shareholders of the new company.

This is the cleaner route in many ways, but it requires the consent of your Integrated Care Board (ICB). That’s not always straightforward, and the ICB may impose conditions or take some time to process the application. You’ll also need a new CQC registration for the company, which adds another layer of administration.

Route 2 – sub-contracting to a limited company

The second option, and one many other lawyers are missing, is to keep the GMS contract in the partnership but create a limited company that effectively runs the practice day to day through a sub-contracting arrangement. The partnership sub-contracts the delivery of its GMS services to the new company.

The advantage here is that ICB consent is not required for sub-contracting arrangements. You simply get the legal paperwork in place and notify the ICB of what you’re doing. Subject to your own tax and accountancy advice, this structure allows partners to benefit from the tax advantages of operating through a limited company – including potentially more efficient extraction of profits – while the GMS contract remains held by the partnership.

It’s an increasingly popular approach, but the documentation needs to be right. The sub-contracting agreement, the company’s articles of association, shareholders’ agreement, and the employment arrangements all need to be carefully structured to make sure the arrangement works legally and commercially.

Route 3 – both of the above

As novation (route 1) can take many months for the ICB to approve, my usual recommendation is that we look to effect a sub-contracting arrangement in the interim period before novation is finally approved. Yes there is an additional cost to this route, but it allows you to benefit from limited company structure almost immeidiately

Which route is right for your practice?

The answer depends on your specific circumstances. Factors that influence the decision include the size and complexity of the practice, the number of partners and their long-term plans, property ownership arrangements, the attitude of your ICB, and of course the tax position – which is something your accountant needs to advise on in conjunction with the legal structure I put in place.

I always recommend that practices take both legal and accountancy advice before committing to a route. I’ll work alongside your accountant to make sure the structure achieves what you need it to.

What’s involved in the legal work?

Whichever route you choose, the legal work typically includes forming a new limited company with bespoke articles of association, drafting a shareholders’ agreement between the partners as shareholders, preparing the sub-contracting agreement or handling the GMS contract novation, transferring partnership assets to the new company under an asset purchase agreement (business transfer agreement), putting employment contracts in place for staff transferring to the new company, dealing with TUPE obligations if staff are moving, advising on property implications if the practice owns or leases its premises, and handling CQC registration matters where relevant.

It’s a substantial piece of work, but it’s a one-off exercise that – when done properly – puts your practice on a much better footing for the future.

How much does GP practice incorporation cost?

I work on fixed fees for incorporation projects rather than hourly rates. The cost varies depending on which route you take and the complexity of the practice, but as a guide, most incorporation projects fall in the range of £6,000 to £15,000 plus VAT. I’ll give you a precise fixed fee after our initial conversation and once I understand the full picture.

Next steps

If you’re considering incorporating your GP practice, the first step is a conversation. Call me on 0116 3667 900 or email steven@stevenmather.co.uk and we’ll talk through your options. There’s no obligation and no charge for the initial chat.