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Redundancy, premises and pensions


Q: I joined a two-GP partnership in April, replacing a partner who owns a 50 per cent share in the surgery. The other 50 per cent share is owned by my new partner.

The retired partner was not happy with the premises valuation and decided to retain his 50 per cent share. However the surgery is 25-years-old and the floor coverings need to be replaced throughout.

The retired partner wants me to pay half the cost of this but I cannot accept that I am obliged to do this because I do not own a share in the surgery.

Am I right and should we have a tenancy agreement drawn up?

A: Your current partner and the retired partner should be regarded as the landlord, while the practice - your current partner and you - is the tenant.

The level of reimbursement for owner-occupied surgeries is normally based on the following assumptions: a lease period of 15 years with upward only rent reviews every three years; the tenant undertaking to pay for internal repairs and decoration and the landlord bearing the cost of insuring the building and of carrying out external/ structural repairs and external decoration.

There is normally a 'user clause' that allows the premises to be used for practice purposes and for any purposes for which planning permission has been given or might be reasonably expected.

In the absence of a tenancy agreement it would be reasonable to act as though there is one in place, on the terms above. On the basis that the landlord - your partner and the retired GP - receives the full amount of the premises reimbursement, the practice as tenant - you and your partner - would pay for the new flooring.

It is advisable to have a lease drawn up along the basic lines noted above - although tenant and landlord are free to agree to vary responsibilities - to avoid similar problems arising in future.

John Hearle


Q: In September 2004 I was appointed as a three-sessions-per-week medical adviser to the local PCT and reduced my practice commitment accordingly. Six months ago, I retired from my practice because I had taken on more sessions for the PCT (doing GP appraisals and quality framework assessment visits).

But the PCT will merge with three others on 1 October and it is likely that I will be made redundant. Should any redundancy payment reflect my two years' service with the PCT or the far longer time I have been a GP? If I were offered a different post at the new PCT, which is 20 miles away, would I lose the redundancy payment if I turned down the post?

A: The amount of redundancy pay above the statutory minimum that you will be entitled to depends on what your employment contract says, and what contractual terms and conditions apply to redundancy.

Broadly, any redundancy payment will be based on age and length of service. An employee must have at least two years' continuous service (without breaks) to be entitled to a statutory redundancy payment.

If you are offered a different post 20 miles away and whether you lose any redundancy payment if you do not accept it, would depend on whether the offer is 'suitable alternative employment'. The test is subjective - it could be argued that 20 miles is too far.

If the PCT cannot find you a suitable alternative job, you would not lose any redundancy pay that you were entitled to.

Lynne Abbess


Q: My senior partner retires on 30 June 2006. For how long will he continue to earn money from the practice for items like childhood immunisation which are paid in arrears?

A: Tax law requires that self-employed individuals are taxed on their earnings in the relevant tax year. Earnings not only include cash but entitlement to payment for work completed within the period.

The practice accountant should include all elements of earnings when preparing the accounts. Entitlement to income for childhood immunisations, for example, should be included on the basis of payments received for the accounting period, in your case up to 30 June 2006, or expected.

The quality points achieved will not be known until the end of March 2007 and, as a general principle, it is accepted that quality should be earned evenly over each 12-month period to 31 March. A final settlement with a retired partner cannot take place until this figure is known.

Your accountant will not only estimate expected income but will also include expenditure incurred during the period for which payment is not made until after the end of the year. This will include provision for fees for preparation of the accounts themselves.

On the basis of the accounts being agreed, any balance showing to the credit of a retiring partner's capital account will be payable or any debit due.

Stuart Williamson


Q: Do you have any information on paying into SIPPs to save tax?

A: Self-invested pension plans (SIPPs) are personal pension plans that offer more flexibility.

You can have a broader range of investments in SIPPs than in a normal personal pension plans including individual UK and overseas stocks and shares, unit trusts, investment trusts and commercial property (such as surgery premises).

One key advantage of making investments into a personal pension including SIPPs is that payments qualify for tax relief at your highest marginal rate.

The underlying investments will also be free of any tax liabilities - other than the 10 per cent tax credit deducted at source on dividend payments.

Kevin Quinn


NHS RULES: DR TIM KIMBER is a Littlehampton GP and a member of West Sussex LMC. Email: tim.kimber@nhs.net

ACCOUNTING: STUART WILLIAMSON is a partner at accountants Williamson West. Email: ww@williamsonwest.com

LEGAL: LYNNE ABBESS is a partner at solicitors Hempsons. They can offer 10 minutes of free advice only, from 10am-4pm weekdays. Phone: (020) 7839 0278

PREMISES: JOHN HEARLE is a chartered surveyor and chairman of Aitchison Raffety. Email: john.hearle@argroup.co.uk or fax: (01727) 844472

PENSIONS AND PERSONAL FINANCE: Kevin Quinn is a financial planner at Ramsay Brown & Partners. Email: kevin@ramsaybrown.co.uk

PMS: DR MO DEWJI is a Milton Keynes GP and clinical director for primary care contracting. Email: mo.dewji@dh.gsi.gov.uk ACCOUNTANCY AND TAXATION: JENNY STONE is a partner at Ramsay Brown & Partners. Email: jenny@ramsaybrown.co.uk or call (020) 8370 7739 9am-5.30pm weekdays

PRACTICE-BASED COMMISSIONING: MAGGIE MARUM is a management consultant for the NAPC and runs its practice-based commissioning helpline. Call: 020 7636 8626. www.napc.co.uk

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