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GPs could be substantially worse off if they change their practice's accounting period in a bid to stave off cuts in their pension.

Medical accountants say practices that swap to a March year-end would face tax bills of up to £20,000 per partner now rather than when they retire.

They would also have to pay superannuation contributions earlier, creating 'massive' cash-flow problems.

Hundreds of practices face the dilemma of whether to change after the GPC admitted GPs' final pension could be thousands of pounds lower if they did not have a March year end (Pulse, August 6).

The shortfall is down to

an accounting mechanism, known as a pensions 'overlap', which is designed to ensure NHS earnings are superannuated only once.

Bob Senior, an accountant with BKL Tenon in South-ampton, said the GPC's guidance was a 'shambles'.

He said: 'There are big cash-flow issues. The reason you would change year-ends is to increase superannuation but you would have to pay superannuation and tax earlier so it's not a clear-cut argument.'

Mike Gilbert, partner at R-M-T in Newcastle on Tyne, said practices may have to 'swallow' the loss in final pension. 'Half of my clients without March year-ends have asked about changing but I have resisted so far,' he said.

Dr Andrew Dearden, chair of the BMA's superannuation committee, said issues such as the pensions overlap were 'teething problems'. Practices had to 'choose which pro and which con they want when deciding when to submit their accounts', he added.

Other problems with changing to a March year end cited by accountants included practices having far less time ­ nine months as opposed to 19 for those with a June year-end ­ to find balancing tax payments.

Accountants said they also did not have the capacity to handle every practice moving to a March year-end.

Sue Beaton, an accountant with Coveney Nicholls in Reigate, Surrey, said recent large profit rises were unlikely to be sustained, meaning the effect of the pensions overlap could be less. 'Changing year-ends depends on likely changes to profits,' she said.

By Ian Cameron

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