Since their inception in 2019, primary care networks (PCNs) have grown into substantial businesses with growing budgets and increased workforce needs.
Incorporation of a PCN means the creation of a limited liability company which can be used by the PCN to assist with the delivery of the directed enhanced service (DES). Under the default or ‘unincorporated’ form, a PCN is simply a contractual relationship between the member practices, and it relies on a robust network agreement to detail how liabilities would be shared between the practices. As PCNs grow, particularly in the evolving landscape of the new integrated care systems, so do the potential liabilities.
Benefits
Limited liability
Unlike the unlimited liability partnership model which underpins the member practices, a limited company is a separate legal entity distinct from the member practices. The incorporated model can offer practices additional protection with the ability to limit liability, which is currently unavailable through the partnership model.
Workforce solution
The limited company can employ staff, removing the need for a lead practice to employ on behalf of the wider practices or for the PCN to engage with external hosts.
Pensions access
Ability to access the NHS pension was previously a hurdle to the limited company model. NHS Business Services Authority released guidance in October 2019 which confirmed that a limited company employing staff to perform DES activities may be eligible to apply for temporary NHS Direction/Determination status which would allow employees (directly assisting in the performance of GMS/PMS/APMS/PCN/ARRS) temporary access to the NHS pension scheme.
VAT Cost Sharing Group
Pushing the administrative requirements of the DES into a limited company can give rise to VAT liabilities. With the correct accountancy advice, however, your limited company model can form a ‘cost-sharing group’ enabling services to be provided at cost to practices which would be exempt from VAT.
There is no ‘one size fits all’ model for PCNs and incorporation is by no means a requirement. However, there are a number of benefits associated with the incorporated model which has resulted in an increase in interest over the past three years.
PCC have worked in partnership with Hill Dickinson to help PCNs work through their strategy and options. We will shortly be offering some online events led by Hill Dickinson on the incorporated model. If you would like to know more please register your interest events@pcc-cic.org.uk.
Authors
Helen Matthews – Associate, Hill Dickinson
Justine Lee – Consultant, Hill Dickinson
