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At the heart of general practice since 1960

VAT means extra GP accountancy fees

Practices face hikes in accountancy fees of about 10 per cent to deal with new VAT registration requirements and could be landed with much bigger penalties if they get it wrong.

Under new tax legislation practices whose taxable income from medical reporting work for insurance companies and other third parties exceeds £61,000 will have to register

for VAT.

The change from 1 May is

expected to affect practices with six or more partners. It is still not clear which aspects of medical reporting work will be exempt from VAT, adding to the bureaucratic headache.

Tax experts have recommended practices outsource the work unless they have a competent practice manager, because there are large fines for filing incorrect VAT returns.

Outsourcing will cost approximately £150 per practice for a quarterly return.

Paul Samrah, a partner at accountancy firm Kingston Smith, said: 'The issue is that the VAT man can and will inspect and there is always a danger that you are cocking it up.'

Mr Samrah said most affected practices would probably have a practice manager or in-house accountant who would be able to handle the process.

Dispensing practices have had to be registered since April 2006 and Dr Craig Wakeham, a GP in a dispensing practice in Dorchester, Dorset, said becoming VAT registered had been 'a lot of work but manageable'.

He said: 'As businesses with a big turnover we need to be able to manage our finances better in general and we took this as an opportunity to do that.

'We identified a financial administrator – we GPs need these people to manage our businesses these days.'

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