Written evidence submitted by the Association of Independent Specialist Medical Accountants (FGP0276)


The Association of Independent Specialist Medical Accountants (AISMA) is a network of over 75 firms providing expert advice to over 3,800 general practices, as well as salaried GPs, locums, specialists and consultants. Together, AISMA accountants represent an unparalleled depth of understanding of the financial arrangements underpinning UK general practice.


Our response to this inquiry will focus on the improvements that can be made to the general practice business model.


We recommend that the Health and Social Care Committee (HSCC) re-visits the recommendations in the final report of the GP Partnership Review, published in January 2019[i]. Action has been taken on some of the recommendations. However, those not actioned remain relevant since the challenges persist within general practice.


There are two areas in the report to highlight:


  1. Premises


    1. Practices are struggling for space. The impact of the investment in staff through primary care networks (PCNs) under the Additional Role Reimbursement Scheme, while positive, is raising issues around space. Practices are limited in their ability to house more staff by COVID safety requirements.


The NHS needs to accelerate investment in adding space to premises and encourage different models of working. It needs to communicate the latter to the public, backed up by ministerial messaging.


The NHS also needs to remove some of the barriers to premises improvement and encourage investment. For example, practices are not able to claim capital allowances on expenditure incurred for premises development which is not covered by grants. This is not HMRC guidance but NHS policy.


    1. Many premises run by NHS landlords do not have leases. Those that do are held by GPs at practice, rather than system level. This results in several issues.


      1. Lease risk can block recruitment or changes in practice structure, for example merger.


      1. Holding leases at integrated care system (ICS) level would remove barriers and allow flexible use of buildings through multiple providers where there is multiple occupancy. Currently, the administration involved in dealing with multiple occupancy is complex.



      1. There has been no resolution to the problem of significant changes in the way service charge costs at practice level are levied by NHS Property Services (NHSPS). This is well documented and previous reports by the Committee of Public Accounts[ii] make it clear that the Department of Health and Social Care needs to take a more active role in resolving the issue. The ongoing impasse has led to significant increases in administration, as well as significant financial risk remaining for some practices.


In some areas of the country, for example Morecambe Bay, local commissioners have been proactive in engaging with NHSPS local teams to ensure that subsidies that existed before the formation of NHSPS continue to be paid and protected at practice level. While this may seem inequitable with other types of property ownership, this action has at least unlocked the problem.


A national plan to resolve this issue needs to be put in place immediately so that practices burdened with uncertainty can move forward.


      1. Consideration should be given to ensuring a level playing field for all premises, irrespective of ownership. This could, for example, mean removing premises costs and reimbursements at practice level and meeting them centrally via a system-wide managed service.


  1. Legal model


Currently, the ability to operate through a Limited Liability Partnership (LLP) is not recognised within NHS contracts and pension legislation at GP level. LLPs are used extensively throughout other professional partnership models, such as accountancy or law. They bring the flexibility of partnership but with personal risk protected from commercial risk.


If commercial risk on individuals was reduced through the use of LLPs, it may encourage partnerships to take on further investment. It would also help reduce the personal risk of being a partner, making partnership more attractive.


  1. Other challenges


We set out below other challenges for general practice:


    1. Taxation


      1. Annual Allowance (AA) pension taxation charges


While the 2020-21 budget changed the tapering rules to remove most GPs from the risk of a tapered allowance, many are still affected by annual allowance taxation. GPs are disincentivised to work additional sessions because of the additional tax they will need to pay.


Controlling AA costs is difficult since NHS pension scheme rules dictate that all GP NHS income is pensionable unless they come out of the scheme altogether. GPs are unable to control the growth in their pension scheme by choosing to pension only a certain part of income.


Variations in inflation also impact on pension growth calculations. The current rise in inflation will result in sizable increases in AA charges for GPs in 2021-22, even though their income may not have changed year-on-year.


Annual allowance rules need further reform to remove this risk altogether.


      1. Lifetime Allowance (LTA) taxation charges


LTA taxation continues to damage morale within the GP profession, particularly in relation to the freeze in the allowance. That said, it is an effective cap on tax relief for those who have a good pension and there may be a good fiscal argument for this.


However, we have a system of both AA and LTA which leads to a doubling-up of taxation on pensions. If LTA was the only issue this would be more manageable and less of a disincentive to GPs carrying out additional work while maintaining fiscal control.


HM Treasury should be encouraged to re-think its policy on AA and consider raising the limits in the public sector with the knowledge that the tax relief is ultimately capped with the LTA.


      1. VAT


VAT is complex in relation to primary care services. The original legislation is now out of date and not reflective of how a modern health service runs. For example, some of new services provided in general practice by professions such as care co-ordinators are not VAT-exempt[iii].


This is particularly problematic for primary care networks where practices need to employ staff jointly which can lead to VAT issues on supplies of staff. This is counter-productive to what PCNs need to achieve, which is an agile staffing structure able to move around practices without taxation issues blocking the way.


We recommend a review of the VAT provisions is concluded quickly and updated to reflect the modern health service. There is an urgent need to rectify the VAT problems related to the the supplies of staff issue noted in the paragraph above.


    1. Contractual issues


General practice is commissioned via a multitude of contracts. Originally, when the GMS contract was reformed in the early 2000s, it was designed to simplify payment streams to practices. As years have gone on, more and more amendments have been added, meaning we are now back where we were under the old red book system of paying GPs, which was scrapped in 2004.


The GMS contract is also determined by payments linked to the weighted list. The weighting formula (the Carr Hill formula) has never really achieved what it was intended to do.


There is a strong argument now that funding needs to be more closely linked to activity and not simply to list size. That way, funding would follow the demand. Additionally, the number of payment streams needs to be simplified to reduce the claims required, give a more even cashflow to encourage investment, and make administration easier.


    1. Primary care networks


When PCNs were originally formed, they were explained to the profession as a way of allowing investment at scale while preserving the structure of general practice at practice level which suited local populations.


PCNs are not separate legal entities and therefore commissioners cannot commission services at PCN level. Despite this, references to general practice in ICS plans all refer to PCNs and not practices. Commissioners are looking increasingly to by-pass practice level.


Contractually this is difficult. In addition, there is a real risk that moving funding to PCN level will raid services funded currently at practice level, leading to further destabilisation of GP practices who currently need the funding to meet costs.


Clarity over the direction of PCNs and their legal structure needs to be given, in contrast to the current situation where services are commissioned entirely at practice level through an enhanced service but operated at a PCN level.


Instead of PCNs reducing administrative burden they have had the exact opposite effect. The time needed to run PCNs is increasing significantly and the bureaucracy of running general practice at practice and PCN level is effectively being doubled up, taking up more of our clinicians’ time, rather than less. Investment in management support is needed to free up clinicians to be clinicians.


As the COVID vaccination programme proved, PCNs are a good idea and can achieve incredible things – they just need to be clearer in their role and easier to administer.


    1. Pension administration


The current pension administration service is not meeting the needs of most GPs. From a staff perspective it is fine, but for GP partners, salaried GPs, locum GPs and non-GP partners, this system still has significant gaps.


The Primary Care Support England (PCSE) online portal, launched in June 2021, is a positive step and will improve things once problems are ironed out.


However, these problems are significant and include getting people onto performers’ lists and dealing with legacy pension issues. Clinicians and their management teams spend too much time trying to get records updated and many still do not have access to accurate pension statements.


This causes multiple problems, including time wasted chasing, information not available for assessing AAs and LTAs, and morale issues through GPs not being able to plan for retirement.


The government needs to take a more active role in tackling the backlog of these legacy problems which need clearing as a matter of urgency.







[i] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/770916/gp-partnership-review-final-report.pdf

[ii] https://publications.parliament.uk/pa/cm201919/cmselect/cmpubacc/200/200.pdf

[iii] https://www.gov.uk/guidance/health-professionals-pharmaceutical-products-and-vat-notice-70157


Dec 2021