Q: The senior partner retired on 30 September 2010 and a new full-time partner, who had recently finished her GP training, joined for a six-month mutual trial.
This went well and on 1 April 2011 the practice confirmed the terms on which she would stay with us. The stages at which she moves to a parity profit share are a 65 per cent share during the trial period progressing to 75 per cent after a satisfactory trial period. Full parity will follow on 1 April 2012 after 18 months with the practice.
In June 2011, we received our final QOF payments for the 2010/11 year. Normally the partner share of income is 2/7 for full-time partners and 1/7 for part-time partners.
We decided that because our new partner had only worked with us for six months of the 12-month QOF period, she should be paid QOF money for six months pro rata to her 65 per cent profit share for the period.
However, one partner now feels she should be paid for QOF for the whole of 2010/11 including six months when she was not working at the practice. I feel this is unnecessarily generous. Can you advise?
A: It is normal accounting practice to assume profits accrue evenly throughout the year, so because your new partner joined on 1 October 2010 she would only receive six months of her relevant share of the QOF achievement payment for 2010/11.
Likewise, the outgoing partner who left on 30 September 2010 would be entitled to six months of their relevant share of the QOF payment because they would have contributed to the QOF work from April 2010 to September 2010.
However, in some cases practices decide to allocate QOF money based on actual points achieved at the date a partner leaves or joins. This is because it is quite often the case QOF work is not spread evenly throughout the year.
But it is up to the partners to decide how to share profits. As long as all partners agree to reward the incoming partner a larger share of QOF, this is a decision the partnership is able to take.