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Ask the experts: Must a GP partner's aesthetics business be run as a separate company?

Jenny Stone highlights issues around liability, sale of goodwill and rent reimbursement.

QUESTION: One of the GPs at our practice has just undertaken aesthetics training to enable him to offer anti-wrinkle injections, dermal fillers and acid peels. I’ve checked with NHS England and they are happy for us to do this within the practice, as it is not work that would be offered under the NHS. However, on his training course the GP was strongly advised that we should set up a separate company for this work.

As practice manager, I think it would be more straightforward to keep it within the practice: one set of accounts; no issues with employing staff separately (including pension problems); insurance and indemnity within the same body; and, probably most arduous issue, only one CQC registration required, though it would need amending.

In short, I’m not sure what would compel us to form a new company – or are we missing an important point?

ANSWER: The advantage to having the aesthetics business within a separate company is that you would have limited liability, so if the business folded and had lots of debt, the shareholders would only be liable for the investment they made in the business. By contrast, if it’s within the partnership, the partners would be fully liable.

Also, if you wanted to sell the business in the future, if it were a separate company to the partnership, you might be able to sell it including goodwill.  A GP practice cannot sell goodwill, as it has a registered list of patients.

However, if the income is not going to be very much and the partners are happy with the risk and confident they will not be exposed to large debts for which they will be liable (the medical insurance will cover the cost of being sued), then I don’t see why this income has to be in a limited company. Having said that, without the knowledge of why the GP was strongly advised on the training course to set up this business under a separate company, I cannot comment fully.  

There is a restriction in the Premises Costs Directions that says you cannot use NHS premises for a significant amount of private work, or rent reimbursement could be reduced. The Premises Costs Directions previously stated private work must be less than 10% of the practice’s over-all work, although this section were removed from the Premises Costs Directions 2013.  

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