Incorporation: narrower than you think, and less fatal than you fear
The deed is the control
Where a partnership deed is silent or badly drafted, a practice can end up with a single remaining partner holding the contract and every liability attached to it, including the lease. That risk sits quietly for years and then arrives all at once, usually alongside a departure nobody planned. Reviewing the deed while everyone is on good terms costs a fraction of resolving it when they are not.
Joining and leaving
Before a change, the accounts should establish what the outgoing partner has drawn against their actual profit share, what tax and superannuation remain reserved against it, and what the incoming partner is actually buying — which is rarely as simple as a share of net assets. Doing that beforehand is straightforward; doing it afterwards is where partnership disputes come from.
Common questions
Can our practice incorporate its NHS work?
For GMS, legally yes — but within a narrow share-ownership constraint. At least one share must be owned both legally and beneficially by a general medical practitioner, and every other share held by a medical practitioner must be held by a general medical practitioner or a specified NHS-employed practitioner. That is what makes GMS incorporation narrow: outside investors and non-clinical shareholders are largely excluded. PMS and especially APMS are far more permissive, so the first question is always which contract you actually hold rather than what is theoretically possible.
Would incorporating destroy the NHS pension?
No — and this contradicts the assumption most partners arrive with. NHSBSA publishes a Limited Company Annual Certificate of Pensionable Income precisely for this situation, and states that from 1 April 2006 dividends received from a company qualifying to hold a GMS, PMS or APMS contract, and satisfying the employing authority criteria, may be pensioned provided they are wholly in respect of NHS work. The certificate computes an NHS income ratio, the NHS element of salary and a maximum actual pensionable dividend.
What is last-man-standing risk?
Where a partnership deed is silent or badly drafted, a practice can end up with a single remaining partner holding the contract and all its liabilities, including the lease. It is a risk that sits quietly for years and then arrives all at once, usually alongside a retirement or a departure nobody planned. The deed is the control, and reviewing it while everyone is on good terms costs a fraction of resolving it when they are not. If your deed has not been looked at since the current partners joined, it is almost certainly out of step with how the practice actually operates.
What should happen when a partner joins or leaves?
The accounts need to establish what the outgoing partner has already drawn against their actual profit share, what tax and superannuation remain reserved against it, and what the incoming partner is buying — which is rarely as simple as a share of net assets. Doing that properly before the change is straightforward. Doing it afterwards is where partnership disputes come from, because by then both sides have formed a view and the numbers are being used to support it rather than to settle it.