It is important that any GP Partnership obtains professional advice when looking to change the composition of the partnership or deal with the surgery premises. This includes both financial and legal advice from properly qualified individuals with wide experience of dealing with NHS partnerships and property.
Most practices are aware that whenever there is a change to the partners making up a partnership, it is essential to properly document those changes to ensure liabilities are clear between the ongoing partners, new partners and any retired partners, and to avoid lengthy and usually costly disputes from arising following such changes.
Any formal partnership agreement in place between the partners will often contain provisions specifically relating to the treatment of surgery premises upon changes to the composition of the partnership. It is important to consider the application of those provisions where any change occurs, to avoid missing deadlines and potential disputes.
SDLT Liability and partnership assets –
Where the surgery premises is a partnership asset, the property documents dealing with any change in partners will not follow the usual form for a transfer of property ownership and poorly drafted documents can lead to the uncertainty around tax treatment of the asset and unnecessary liability arising in respect of Stamp Duty Land Tax (SDLT). It is extremely tricky, if not impossible, to unpick a transaction that has been completed using incorrectly drafted documentation, and therefore very difficult to avoid the associated SDLT liability that can arise.
Whilst obtaining financial advice from a properly qualified and experienced accountant can assist in mitigating SDLT liability, properly drafted legal documentation can help avoid unnecessary liability arising in the first place. Your professional advisors should be working closely together to ensure the best outcome for the partners.
SDLT Liability and partnerships –
The Finance Act 2003 sets out particularly complex SDLT rules in respect of transfers of property in or out of a partnership. These rules will need careful consideration at the outset of any transaction involving a partnership and transfer of property. Such prior consideration is absolutely crucial where the property does not comprise a partnership asset and therefore the transfer reflects a transfer in shares in the property, which will carry value.
In an NHS setting, this is most often the case where a separate property owning partnership exists in respect of the surgery premises. A property owning partnership will often arise where retired partners continue to hold the surgery premises as an investment and permit the clinical partnership to occupy for the purposes of running the practice.
Wherever any surgery premises transfers from a property owning partnership into the clinical partnership, perhaps where the retired partners choose to dispose of their shares, very careful treatment and planning will be required from a legal perspective.
Obtain Early Specialist Advice –
We have found over our decades of advising GP practices on their legal requirements, that surgery premises is very often overlooked when changes occur within a GP partnership, or very often shelved to be dealt with at a future date. We have advised countless partnerships experiencing the fallout of undocumented partnership changes or inappropriate advice from advisors with insufficient NHS experience.
It is imperative that partners consider the effects that any change in the partnership will have on the ownership, occupational arrangements or lending criteria of any loans secured against the surgery premises.
We would urge any partnership that is planning for any upcoming retirements or admissions, or any changes in property ownership to obtain advice at an early stage from qualified professionals experienced in dealing with NHS partnerships. If you would like to speak to one of our specialists regarding any partnership or property matters, please contact the team.
