Rebecca Wilding discusses the complexities of incorporation for dentists
Since 2006, dentists have been able to incorporate and trade as a limited company. In many ways, incorporating is similar to selling your practice as you are, essentially, selling the assets and goodwill currently held by you as a sole practitioner to your limited company. However, there are number of elements to consider:
NHS
If you have an NHS Contract, the first step is to apply to NHS England for authority to incorporate. As part of your application, you will be asked to provide information regarding your current patient demographics, re-attendance rates, and complaints procedure – amongst other things.
You will also be asked how incorporating will maintain/improve access for new and existing patients, which is something you should consider before making your application.
NHS England have issued various policy guidelines setting out how any application to incorporate should be dealt with by the LAT. You will not be automatically allowed to incorporate – indeed, it opens the door for the local area team to review your existing contract.
This means that if you have had historical under-performance issues, or have a higher than average UDA rate, the LAT may seek to negotiate the terms of the NHS Contract.
Once submitted, it is common practice for applications to be reviewed and assessed by the Direct Commissioning and Oversight Group/Executive Committee. It can take a couple of months for a substantive response to be received.
Dentists with an NHS Contract can proceed with the rest of the incorporation process once they have an agreement with the LAT. For those dentists who are purely private (and capitation scheme based), the process starts here.
Funding
If you currently have bank funding, you will need to notify your bank that you intend to begin trading as a limited company – failure to do so could leave you in breach of your funding obligations. Doing this early on is important, as most banks will look to change your banking in order to issue a new facility letter in the name of the limited company, which may affect the interest rates offered.
The bank may also need to re-issue any mortgages and could look to you to provide a personal guarantee. Additionally, the bank may wish to recover from you any costs incurred in making any changes.
CQC
As you may already know, your trading position must be reflected in your registration with the CQC. Consequently, you will need to make an application to register your limited company (and to cancel your registration if you are incorporating the whole of your practice).
Company Formation
Around the time you are submitting your CQC application, you will need to form your limited company, if you have not already done so. Depending on the name you wish to use – and certainly if you wish to use “dental” or similar – you will need to provide written authority to do so from the GDC, alongside your company formation application.
The company name does not have to be the same as its trading name, so you are permitted to form a company with your own personal name; but avoid using the same or similar names of other dental practices or businesses.
Property
There are a number of considerations to take into account surrounding the property, and, in reality, this is usually where issues arise, as it can involve third parties. If you have any queries or concerns, please contact Goodman Grant for advice and guidance.
Staff and TUPE
Under the TUPE Regulations (Transfer of Undertakings [Protection of Employment] Regulations 2006), you must inform and consult with employees regarding the transfer of their employment to your limited company.
While they will – to some extent – still be employed by you, a failure to inform and consult, can result in a penalty of 13 weeks’ gross pay to all affected employees. Remember – your limited company is its own separate entity.
You should also note that under TUPE, the employee’s terms and conditions of employment continue on exactly the same terms, so you cannot use your incorporation as a way of changing pay, working hours, etc.
Suppliers and Contracts
The vast majority of supplier or maintenance contracts require 30 days’ notice of any changes, so you will need to contact all suppliers before the date on which you begin trading as a limited company.
Capitation Scheme
Many capitation scheme providers require at least 28 days’ notice of any changes you intend to make to your contract – whether this be adding a partner or incorporating. As such, it is essential to keep up-to-date in regard to timescales.
Valuation
It is important to document the correct value of the assets and goodwill at the date of the transfer, so you should obtain an up-to-date valuation from an experienced dental business valuer.
Heather Meakin heads up the Business Services arm of Goodman Grant and would be more than happy to assist you.
Author
Rebecca Wilding works in the Leeds office of Goodman Grant Solicitors and has been with the firm since March 2015. She successfully graduated from her Legal Practice Course in July 2015 and qualified as a solicitor in June 2017. Rebecca is experienced in dental practice sales and purchases (NHS, private and mixed), advising clients on business enquiries, CQC registrations, commercial agreements and negotiating sale agreements and can be contacted on
