There has been much discussion recently about the difficulties of incorporating an NHS contract caused by the NHS England Incorporation Policy. In some situations NHS practice owners are turning to the use of a 'sub contract'.

This is usually an arrangement where a limited company is engaged by the NHS contract holder to perform 'clinical matters'. This arrangement is allowed by GDS contracts, and permission isn't required from NHS England, only notification is necessary. In simple terms, if structured properly, this can achieve many, but not all, of the objectives of a 'full blown' incorporation.

In particular it can enable profits to be distributed to non-dentists/GDC registrants who are shareholders in the subcontract limited company – unlike dental partnerships which must comprise of registered dental professionals. It also can enable profits to be retained, after suffering a lower corporate rate of tax, for future practice acquisitions.

What is meant by 'structured properly'? There are many potential pitfalls, and an increased amount of red tape and administration. Great care and good advice is essential as, believe it or not, if the operational procedures are set up incorrectly, dentists can be excluded from the NHS Pension Scheme, and VAT can become chargeable on some payments.

For further information about sub-contracting contact Alan at NASDAL by email at alansuggett@unw.co.uk. Alternatively, to find out more about the services offered by NASDAL, visit www.nasdal.org.uk.