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GPs should keep a sizeable chunk of this year's bumper profit in reserve to deal with 'huge liabilities' from pension contributions.

Medical accountants are warning GPs not to be seduced by 30 per cent-plus profit increases because of continuing uncertainty over superannuation costs.

GPs and accountants have also advised practices to prepare for hefty tax bills in 2006.

Paul Kendall, a partner at accountants Dodd & Co in Penrith, Cumbria, said he had seen 'huge increases in profits' based on figures from June to September last year.

He said: 'But the big problem is superannuation contributions, with practices facing a huge liability.'

Rosemary Smith, GP liaison manger at accountants Sandison Easson & Co in Wilmslow, Cheshire, said the highest increase in profits she had recorded was 35 per cent.

But she added: 'These big rises carry a nasty sting in the tail with frightening tax bills in the short-term.

'The advice is don't spend the quality points money and ensure you are keeping money back to cope.'

Under new GMS and PMS contracts, superannuation con- tributions are based on practices' profits ­ but GPs have still not been told how these will be worked out.

The GPC also failed last October to secure full funding for superannuation costs. The Government's pledge of an additional £88 million is just two-thirds of the sum required.

Bob Senior, vice-chair of the Association of Independent Specialist Medical Accountants, said he believed larger practices in particular would face bigger contributions.

He said this was because calculating contributions on actual profit, rather than by uplifting fees and allowances to create intended average net income, meant they would lose the benefit of economies of scale.

He said: 'This could be around £5,000 per partner per year.'

Dr Rob Barnett, Liverpool LMC secretary, said practices that had not kept back money would struggle. He added: 'PCTs have withheld a certain amount of money to cover

superannuation but there will be a significant payment from practices.'

By Joe Lepper

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