Guide to incorporating your GP practice

GP practices looking to incorporate should take time to consider whether it is the right move for their practice. There are pros and cons to consider when forming a limited liability company.

So, what do we mean by ‘incorporation’?

Whether used to mitigate the personal liabilities that may fall on individuals (whether sole contractors or partners), to establish a more tax efficient operating model or as a vehicle through which your practice can develop and evolve, the incorporation of your GP practice may well be under consideration.

As a principle, incorporating your practice will see you establish a limited liability corporate vehicle and transfer your business and contracts (including the GMS, PMS and/or APMS) to that limited company.

In this article, we look at some of the core considerations when it comes to a practice incorporation.  

What does limited liability mean?

At its most basic level, and assuming there is a full incorporation with no subsisting guarantees or contracts sitting with individuals, it means that any business liabilities will sit with the corporate vehicle as opposed to its individual owners.

What corporate vehicle should we use?

Whilst on the face of it there are options when it comes to the type of corporate vehicle used, those being a company limited by shares, a company limited by guarantee or a limited liability partnership, the overwhelming choice is to establish a company limited by shares. Whilst there are a variety of reasons for this, the primary legal reason is that a company limited by shares is currently the only type of corporate body that is capable of holding a GMS or PMS contract.

The remainder of this article will therefore consider the position where incorporation is done using a company limited by shares.

What governing documents will apply to our company?

The company will have a bespoke set of governance documents detailing how the company is to be run and how the shareholders will interact with one another and the directors. These documents will consist of a set of Articles (that will be publicly available at Companies House) and a Shareholders Agreement (that is a private document between the shareholders and the company itself).

You can expect the governance documents to cover the following although this is not an exhaustive list:

  • The rights attaching to shares (ie, the dividend, voting and capital rights)
  • The board structure and the appointment of directors
  • The restrictions applicable to shareholders
  • How shares can and/or will be dealt with (ie, can they be voluntarily transferred, when will a shareholder have to transfer their shares etc)

Who can hold shares in the company we can create?

This is an important question and ultimately depends on the type of GP contract that you hold as the contracts themselves dictate the types of bodies / individuals that can hold them. Care is therefore needed.

As an example, if we take a GMS contract, they currently can only be held by companies limited by shares where:

  1. at least one share is legally and beneficially owned by a general medical practitioner
  2. any other share owned by a medical practitioner, is legally and beneficially owned by a general medical practitioner or medical practitioner employed by within the NHS (by an NHS Trust or FT for instance), and
  3. any other shares not owned by (a) a general medical practitioner, or (b) other medical practitioner, must be owned by individuals falling within a specified list

Is there a need for directors?

Yes, every company must have at least one director and those directors will, alongside any contractual obligations they may have under service agreements, automatically owe various statutory duties. Whilst not an exhaustive list, these include the need to promote the success of the company, exercise independent judgement, exercise reasonable care, skill and diligence and avoid conflicts of interest.

Will all our practice contracts novate into the company?

The short answer is that this will depend on the contractual terms of those contracts. Looking at the key contractual arrangements that are usually under consideration:

  • Lease documents: Whether you can assign the lease to the company will be dependent on the lease terms around assignment.
  • Staff contracts: In a situation where the practice fully incorporates and there is a novation of your core GP contract into the company then the general rule is that your employees will, unless they object, transfer by operation of TUPE.
  • GP contract: Whether you can assign your GP contract will depend on the contract you hold. If we take GMS contracts as an example, there is no right to novate. The approval of your Integrated Care Board (ICB) will be needed.

If we need ICB consent, is there a set process or application form?

Yes, NHS England has established an assessment framework for use by ICBs when it comes to considering applications for incorporation and a novation of GP contracts from individuals/ partnerships into a corporate vehicle. You can read it here.

The ultimate decision as to whether to approve an incorporation and a novation of your GP contract will rest with your ICB who should, if your application is approved, insist that a Novation Agreement is entered into to document the shift. These should be considered carefully as they can contain guarantees and restrictions that may prove unacceptable and/or unworkable.   

Are there any other core considerations?


Other key factors include:

  • Care Quality Commission: To the extent the company is providing regulated activities, it will require registration for those activities with CQC; otherwise, the company directors could be in breach of a statutory offence
  • Pensions: Where staff members will transfer to the company then it will need to secure its own access to the pension scheme for its staff as an employer.
  • Statutory reporting: There are obligations on the company to file annual filings which detail:
    • ownership
    • accounts
    • restrictions on shares and applicable directors’ duties
  • Tax: The company and its shareholders will be subject to different tax rates and treatment and it’s imperative that specific tax advice should be obtained as to how incorporation will directly affect your tax liability.

Supporting you with your practice incorporation

If you are considering incorporation, then please do get in touch. We can support you on a range of legal issues that spin out of the process.

We can help you with all aspects of the incorporation process including:

  • drafting the shareholders agreement and articles
  • reviewing and/or supporting with the application process with the ICB and the negotiation of any Novation Agreement
  • advising on whether the non-clinical contracts are capable of novation
  • supporting you with the staff consultation process required under TUPE transfer into the corporate vehicle, and
  • considering CQC registration requirements

Our content explained

Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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