If you haven't incorporated your PCN yet - now is the time

PCNs have had the option of incorporating since the word go, back in 2019 - but many haven't. Until recently, we had not been pushing the idea particularly strongly. There were pros and there were cons, and we felt that incorporation was worth it for some but not others. However we now think that, given the way that neighborhood agenda is developing, those PCNs who haven't incorporated yet really ought to get on and do it now.

It seems that the "single neighborhood" is going to amount to PCNs by another name. ICBs may commission neighborhood services via the existing PCN DES, or they may issue a new single neighbourhood contract - but they can't do both at the same time. We still await details of that single neighbourhood contract, but we expect it to be considerably riskier than a normal GMS contract. The GP profession has been crying out for limited liability for many years - they should certainly take the opportunity to get the benefit of it in respect of PCN/neighborhood work.

Those who aren't convinced by that idea should also consider the VAT risk. Inherent in PCNs, right from the start, was the concern that if a lead practice hosted ARRS staff and supplied those staff to another practice, the lead practice ought to be charging VAT on top. In the early days the numbers involved were low and many "supplying" practices may even have been under the VAT threshold anyway. These days though, the numbers of ARRS staff, and therefore the risks, are larger. As far as we are aware HMRC have not yet taken the point - but the risk is there, and if they were to decide to try and recover some money they could go back at least 6 years, so the figures involved could be substantial.

When you incorporate a PCN, you set up a company which sits alongside the practices. The network agreement remains in place, but the company is established to employ the staff, so that the partners are no longer personally liable under the contracts of employment. A VAT cost-sharing group can then be set up between the company and the PCN practices, which should deal with the VAT risk mentioned above. The company should have access to the NHS pension, which your accountant can usually help with.

This company would not necessarily be delivering PCN services itself, it would merely supplies the staff to enable the practices to do so. However, it would clearly be an advantage to have a company already set up and owned by the practices, because it could be used to hold the single neighborhood contract, or to provide other services if necessary. If that were to happen then a CQC registration would almost certainly be needed - but the partners would have limited liability for those services, which is a very important consideration.

Please contact Oliver Pool or Zeena Asghar for further information.