Even the best accountants make mistakes over GPs' superannuation these can adversely affect your pension entitlement, so start checking the figures for yourself, urges Dr John Couch
At the end of this month, if you are a GP partner, the PCT will send the details from your 2004/5 superannuation certificate to the NHS pensions agency to be officially added to your pension entitlement. And it is likely that a significant proportion of these details will not be accurate.
You still have time to check them and check them you must, because if you don't you risk any errors becoming set in stone and even perpetuated in subsequent years.
You may think you have a well-paid medical accountant with huge experience who is bound to get the calculations correct. Well think again.
In my own practice, partners are free to use their own accountants for their individual tax affairs. We are split fairly evenly between two of the most renowned GP accountants in the business. Yet mistakes were made by each accountant in two partners' cases, and only picked up because the partners actually checked the forms themselves.
If two of the best-known accountants get it wrong, how many others do too? Many GPs do not even use a GP specialist, so it is safe to assume that large numbers of certificates contain errors. Our pensions and the 20 per cent payment we now have to make are too valuable for mistakes.
Also bear in mind that you probably paid a fee of around £200 for the form to be completed. You should expect absolute accuracy for money like this!
Another heartsink form?
There is no doubt about it, the superannuation certificate looks daunting, but it is worth spending a couple of hours trying to check your figures. As part of this process you will also begin to understand the logic behind the form.
Your task will be aided considerably by printing off a blank copy of the form, the accompanying notes and, vitally, the supplementary explanatory notes (with Q&A) from the NHSPA website at www.nhspa.gov.uk (click on 'library' at bottom of introductory screen then on 'GP forms').
You will also need a copy of your actual superannuation form already sent to the PCT, your tax return to 5 April 2005, and a set of accounts covering 2004/5 if your year-end is 30 March or 5 April or your accounts include the first part of that tax year for instance 1 July 2003 to 30 June 2004.
The form is designed to produce your 'net NHS profit' figure for your GP pension in box 21. This new method started from April 2004 and allows more items than before to be allowed towards your superannuation, eventually translating into a larger pension.
To get to this point the form has boxes that record or calculate all of your NHS related income, private income, practice business expenses, individual business expenses, the proportion of expenses that are deemed private and NHS income that is already pensioned.
These items are dealt with in a sequential manner to get to the final and most important section (boxes 21-25) showing how much superannuation is payable for the year split into employers' and employees' contributions.
This can then be compared with the total amounts that were actually paid monthly or quarterly to the PCT as estimates for 2004/5. The difference is the amount that needs to be paid to, or (if you paid too much), reimbursed by the PCT.
Making a start/spotting errors
Read through the blank certificate, referring to the notes and supplementary notes to get a first feel of the calculations and importantly the definitions of each item. Next, do the same thing again, but this time use the copy of your 2004/5 form.
Check that your name, national insurance number, accounts year end and pension scheme year end (31 March 2005) are correctly entered. Also make sure that box B is ticked unless the accounts that cover this pension year are provisional.
A GP who joined a practice with a year-end other than 31 March and started work during their 2004/5 accounting year may only have provisional figures from their accountants and must therefore tick box A.
You should ensure that, where figures were carried over to the form from your accounts or tax return, they were accurately transferred. For instance, the figure in box 1 (GP share of medically related income) comes from your accounts and box 13 from your tax return (item 4.22 of partnership short page and/or 3.92 of self-employed page of individual return).
There are certain areas that are more likely than others to be completed incorrectly. If you do nothing else, do check these.
Box 6 adds your 'personal non-practice taxable medical related non-NHS (private) income' to your private partnership income to reach a total non-NHS private income. This total is later deducted (box 16) from your taxable profit.
If you work as a doctor on a self-employed basis for an organisation other than the NHS in your own time, and then keep the income personally without it going through the practice accounts, it must be entered in this box and also used in the private expenses calculation (boxes 26-33). Check that any applicable income is entered here.
If you are not sure whether a particular item is NHS or non-NHS, check with your PCT. There has been considerable confusion around this point. Income that is only loosely medically related, such as medical journalism, should not be included on the form at all, sadly for me!
Box 9 should include capital allowances for practice assets so ask if your accountant has included these.
Boxes 10 and 18 allow for interest on loans for professional purposes, usually surgery purchase. If relevant, make sure your interest payments are included.
Notional rent make sure your accountant has included this as practice income and deducted any relevant mortgage interest as an expense, or recorded individual interest payments in box 18 as above. The difference between income and interest is now pensionable.
Box 19 allows for any other NHS income not already pensioned or included already to be entered. This is a vital opportunity for you to double-check that no pensionable income is missing. So if you are a GPSI, GP appraiser, if you work out of hours or do occasional external locums, make sure you ask your accountant if this income has already been included in another box.
Check that your accountant has used the correct method for calculating non-NHS expenses (boxes 26-33). Basically the alternative method must be used if private income is greater than 10 per cent of total income or private income is greater than £25,000 individually or practice expenses are charged to an associated company.
If you do find any errors, check with your accountant. If they are confirmed, contact the PCT pensions officer immediately.
Checking through all this may put you off forms for life, but it is equally likely to make the process clearer to you and I am certain many of you will find errors. Next year I suspect some GPs will feel confident enough to complete the form themselves, reducing errors as well as accountancy fees.
John Couch is a GP in Ashford, Middlesex