GPs reassured there's still a role for limited companies
GPs will still be able to use a limited company to save tax on their private income under the new contract, the GPC says.
The advice came after some medical accountants warned the contract could end the growing trend for GPs to establish companies in order to take advantage of the higher corporation tax threshold.
Accountants had feared new requirements for them to certify a practice's NHS profits might require GPs to put their non-GMS income through the practice's accounts. Such a move would defeat the object of having a private limited company.
GPC negotiator Dr Peter Holden said GPs would have to provide evidence of their private income in the practice accounts, but could still put the earnings through a separate company.
Accountants would need evidence of private income in order to exclude it and related expenses from their calculations of the practice's NHS profit, he added.
'You are going to have to keep accurate records on GMS and non-GMS and [accountants] will have to adopt Chinese walls [between them]. Then you can tell what the gross is and how you can apportion expenses,' he said.
Dr Holden said GPs could 'deliberately game the system' if accountants were not told GPs' private income and expenses when certifying the practice's NHS profits.
Arthur Dixon, senior partner, private clients, at Deloitte & Touche, said accountants could easily calculate a practice's NHS profits from a set of accounts which included details of private income.
Rosemary Smith, an accountant with Sandison Easson, said the fact that more of GPs' income would be superannuable 'raised the level of scutiny' required before GPs set up limited companies.
Dr Holden added the contract could mean it will be more profitable for GP principals to put any locum payments they earn through their practice accounts rather than a limited company because that income would be pensionable.
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