My practice has recently completed a new surgery project for which we receive premises reimbursement. We own our building but sublet part of it to a pharmacy. Our concern is that, if we simply refer in the partnership agreement to market value, we may lose our 'cost rent' and receive notional rent, in which case we would be considerably out of pocket. Can you advise?
When considering premises value and reimbursement, market value is always the starting point. It is fully defined in the Royal Institution of Chartered Surveyors' appraisal and valuation manual. A primary care organisation's district valuer (DV), a surveyor, will be fully aware of this.
It is therefore a good base for any valuation assumptions. The relevant clause in your partnership agreement needs to clarify that the market value should be ascertained with regard to the basis that any form of reimbursement will continue to be received by the practice.
This will enable and instruct the DV to properly take into account the level of your premises reimbursement.
Under NHS regulations, the occupation of the property by the practice and any personal goodwill must be ignored.
At the same time, you do not want to lose the benefit of the lease to the pharmacist. So you need to instruct the DV that the part of the accommodation occupied by the practice should be valued on the basis of vacant possession, but the value of the actual lease to the pharmacist should be taken into account.
The wording in your partnership deed should be drafted by the practice's solicitor.
Can you tell me how money in our GP partnership's capital account should be allocated to a soon-to-depart partner?
The concept of capital is often misunderstood in general practice. The basic principle is that when you first join a partnership, you do not have capital invested in the business. You can build up capital by paying money into the partnership, though appreciation of any assets that you have purchased - such as a share of surgery premises - and via the surplus of profit share over the drawings that you have taken out of the practice.
The total capital of the practice is an aggregate of the individual partners' personal capital account balances. It is usual for property capital to be maintained in the proportions in which the property is owned by the partners. The working capital tied up in fixtures, fittings and the excess of sums owing to the practice over its liabilities is normally owned pro rata with each partner's profit share.
Preparing accounts to the date on which the partner leaves will determine how much each partner has as a stake in the practice.
Subject to agreeing the accounts, and any drawings that might have been paid taken after the accounting date, the partner leaving is entitled to the balance shown against his or her account.
Take the advice of your practice accountant.
We have always linked practice staff pay to the Whitley Council pay rates and do not think we can afford to move to Agenda for Change.
We have put up the old Whitley rates by 2.5 per cent, equal to the Agenda for Change rise for 2006/7. What are other practices in our situation are doing now that Whitley has been abolished?
For independent contractor practices, the Whitley Council arrangements were only ever a guide and not a rule book. I believe practices must do what they think best in the light of the local job market.
If you do not pay the going rate, staff will vote with their feet. The rates you pay determine the quality of your staff.
For instance, at my practice, rather than risk losing our nurse practitioner, we are just about to make her a partner. In my area, practices tend not to use Whitley at all. Some use Agenda for Change, others have their own staff pay arrangements.
Dr Tim Kimber
I have been paying into the NHS pension scheme for over 20 years. If I stop paying into the scheme (for example, if I move to non-NHS employment) what happens to my contributions and benefits?
When a GP leaves the NHS scheme with two or more years' membership, but does not take his or her benefits, the pension and tax free cash entitlements will be deferred, but they can be taken at any time between ages 50 (increasing to 55 from April 2010) and 70.
Benefits taken prior to age 60 will be subject to early retirement reduction factors unless retirement is on ill health grounds. In deferment, benefits will be increased each year by the rate of inflation to protect their value.
ASK THE EXPERTS
Dr Tim Kimber is a Littlehampton GP and a member of West Sussex LMC.
ACCOUNTING AND PARTNERSHIPS
Stuart Williamson is a partner at accountants Williamson West.
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
John Hearle is a chartered surveyor and chairman of Aitchison Raffety.
Email: email@example.com or fax: (01727) 844472
PENSIONS AND PERSONAL FINANCE
Kevin Quinn is a financial planner at Ramsay Brown & Partners.
GP CONTRACTORS AND APMS
Dr Mo Dewji is a Milton Keynes GP and clinical director for primary care contracting. Email: firstname.lastname@example.org
ACCOUNTANCY AND TAXATION
Jenny Stone is a partner at Ramsay Brown & Partners. Email: email@example.com or call (020) 8370 7739 9am-5.30pm weekdays
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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