When selling or purchasing a practice, it is essential to gain relevant information from a solicitor to make sure you are choosing the right firm.

There are only a few commercial solicitor practices in the country that have the
specialist knowledge to handle a dental practice sale or purchase. Unless you know the correct questions to ask when first inquiring with a solicitor, you could find yourself in a difficult situation where your solicitor may not be able to assist you. It is therefore very important that you find out at a very early stage whether the solicitor you are talking to or emailing has the necessary experience to help you.

The following questions are here to help you choose which firm to use. You should remember that in every transaction, be it a sale or a purchase, the other side will likely face the same situation and will want or need a solicitor who can guide them through the complex process. So, why shouldn’t you have the same?

Q There are two types of NHS contract, one is saleable and the other is not. What are they called and what is the difference?
A The two types of contracts are a General Dental Services (GDS) contract and a
Personal Dental Services (PDS) contract. Only the GDS contract is saleable, and if the dentist has a PDS contract he must get it transferred to a GDS contract first. NHS England  requires three months’ notice of the intention to change from a PDS to a GDS contract. They must then issue a variation notice and the UDAs under the PDS contract may remain unaltered or NHS England may see this as an opportunity to review this.

Q In relation to the saleable NHS contract, how would you go about ensuring the
transfer of that contract by NHS England?
A The GDS guidelines do not allow for the transfer of a GDS contract. However, they do allow for dentists to take on a partner and also for dentists to retire from a partnership.
Therefore, the preferred way to go about this is by the existing dentists and the incoming dentists to enter into a partnership and then, after completion, the outgoing dentists retire from the partnership. This all needs to be done
by deed and NHS England must be formally notified of the partnership and then, in due course, the retirement of the outgoing dentists as well. The
normal period for this ‘partnership’ situation to exist for is 2-3 months, which is a sufficient length of time so as to appear to the general public as a genuine partnership.

Q There are various tiers that regulate a practice purchase. One is the GDC,
another is the Area Team of NHS England; are there any more?
A The Care Quality Commission (CQC) have the jurisdiction to ensure that healthcare standards in dentistry are maintained. They have inspectors who will check dental practices to ensure that standards are maintained. All dental practices must be registered with the CQC. To trade without CQC registration is a criminal offence and the offending dentist can be prosecuted. It currently takes 56 days for the CQC to register a new provider and, without registration, the new practice owner cannot complete the transaction.

Q What are CQC’s requirements for dealing with registration of a change in the
ownership of a dental practice?
A The CQC will require the incoming dentist to undergo a Disclosure and Barring Service check. This must be done by an agency approved by the CQC and signed off before the application for registration can be processed.

Q In what circumstances would there be a need for retention on completion?
A There are many reasons for retention, but the most common will be if the UDAs that the seller is expected to perform have not been completed. NHS England will allow a 4% underperformance and, on application, will carry forward up to 2% uncompleted UDAs to the following year.
In those circumstances, the NHS may expect at some stage to recoup from the dentist the monetary value of uncompleted UDAs, and the buyer will need to hold back monies from the seller. Further, if there is remedial work still
to be done on patients at the time of sale and which will be completed by the buyer, where the NHS  have already paid the seller in advance for this work, they will not make a second payment to the buyer. In those circumstances,
it is reasonable for the buyer to make retention in respect of the outstanding treatment costs.

Finally, if you are buying a building, as well as a practice, and repairs need doing, retention may be made against the costs of those repairs.

Q Are there any complications if I am selling my practice to a limited company
as opposed to an individual or partnership?

A Yes, NHS England  will not allow a limited company to go into partnership with an individual. Also, equally importantly, where the contract is transferred into the name of a limited company and the selling dentist remains as part of the organisation, a limited company cannot have the benefit of superannuation. Therefore, the dentist will lose his superannuable pension and it may be a case
of a deal being struck between the company and the dentist to pay him/her a sum in lieu of lost superannuation.
There may also be tax implications if the seller stays on as a member of the limited companyas he/she may find that they are taxed on their own earnings and, if a portion of those are remitted to the company, then corporation tax
may be payable – double taxation.

For more information please contact me at Albinson Napier on 0161 792 8142 or [email protected]