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Do you have unclaimed capital allowances?

You will need to claim capital allowances if you are to enjoy the benefit of them. It is our experience that not all GP practices promptly claim their full value. This can be a deliberate policy or simply an oversight. Left unclaimed, most capital allowances simply carry forward into subsequent years.

Some of the largest (and most commonly unclaimed) capital allowances are associated with premises improvements. In the event a property owning partner is bought out, the unclaimed capital allowances would normally remain with the partnership for the benefit of the remaining partners. This could result in a new partner using any unclaimed capital allowance to reduce their own tax liability, even though it was an outgoing partner who participated in the original investment giving rise to the capital allowance.

As the value of capital allowances can be significant, this is a potential source of conflict amongst partners. In this blog, we share some common scenarios together with some pros and cons so you can agree the right decision for your practice.

Who should benefit from them?

Usually, the existence of unclaimed capital allowances will be reflected in the price paid by a buyer. Unclaimed capital allowances increase the inherent value in a commercial building, so would increase the price in a ‘normal’ transaction, however they are often not taken into consideration in GP surgery valuations – even if the partners are aware that unclaimed allowances exist.

What can you do?

  • Research

    We are aware of occasions when partners discover very large bought forward unclaimed capital allowances. A nice windfall for the current partners perhaps, but any former partners would wish they had researched the position before retiring.

  • Don’t delayâ

    The common business practice is to claim capital allowances as quickly possible. This reduces the risk of a problem arising as well as reducing the partners’ tax bills.

  • Document your positionâ

    If you decide to leave significant amounts of capital allowances unclaimed, or you retire before you have claimed all of the allowances due, you need to agree with your partners how to deal with this. If the surgery building is a partnership asset, you should also have on record that it is only the owning partners that benefit from any capital allowances.

  • Consider the accounts.

    One option is to record the unclaimed allowances as an asset in the partnership accounts, or at least to do this when creating retirement accounts. Your accountant may be willing to do this if he considers the allowances ‘realisable’.

  • Be consistentâ

    Should you wish to allocate capital allowances to a retiring partner before they have been claimed in full, you will also have to agree this between the partners. In this case, you would agree that the unclaimed allowances are an asset of the partnership and that they should be valued appropriately when the retirement accounts are drawn up. You should however ensure that you are consistent over time in the way that you do this.


This may appear an obscure technical matter, but large sums can be at stake. If the ownership of these is left unclear, it can be a recipe for a partnership dispute. Practices would be well advised to ensure they understand whether they have significant unclaimed capital allowances, and if so to agree how they wish to deal with them. This should then be cross checked with the Partnership Agreement to ensure it is consistent.

If you have any questions specifically about capital allowances, then you should contact your accountant in the first instance. For assistance in documenting a relevant policy or for updating your partnership deed to deal with the position, please contact Daphne Robertson on 01483 511555 d.robertson@drsolicitors.com

Our Team


Is the GP Partnership Model past its sell by date?

There is currently much discussion about whether the partnership model for General Practice is still fit for purpose. It is clear that the model is under severe strain, and the Secretary of State has commissioned a review into how it might need to evolve. In this blog we draw on our experience of working with over 1,000 practices to offer our thoughts on the future of the partnership model.

Background & context

In common with other professionals like lawyers and accountants, GPs have traditionally organised their businesses as either sole practitioners or partnerships. The partnership model for General Practice long predates the NHS, and indeed the NHS Act 1948 had surprisingly little impact on the business model as GPs retained their independent contractor status. The GP Partnership model has served the profession well over the years, but it is interesting to compare GP practices with what has happened in the law and accountancy. Most other professionals still organise themselves as partnerships, but they are typically managed very differently to GP partnerships.

Partnerships are simply one of many ways of running a business. Most businesses are actually run as limited liability companies, so why is this much less common in the profession? The answer is that Limited Companies are designed to separate out the ownership from the management, and to provide more flexible options for financing. This is very useful in capital-intensive businesses that require multiple layers of management. The professions, by contrast, sell the skills of highly trained people who are largely able to self manage. Such businesses typically require only low levels of finance, which can be easily secured through mortgages and bank loans. There is therefore no need to separate ownership and capital from management.

Benefits of Partnerships

Partnerships, by their very nature, pool the risks of the business between the partners. This shared risk-taking strongly encourages collaboration. All the professions encourage members to understand their own limitations, and to seek the advice of colleagues when they come across something new or unexpected. This requires the kind of open, trusting relationship which forms naturally in a partnership, but which can be more difficult to forge in a hierarchical employer/employee relationship. This in turn creates an environment where tacit skills are easily transferred. These are the kind of human skills which will never be mastered by Artificial Intelligence, but which form the bedrock of what GPs and other generalist professionals do. Investment in the partnership encourages a long-term commitment, which is of course well aligned to ensuring continuity of patient care. The model is also very flexible: there are very few laws about running partnerships so you are largely free to contract with your partners about how you want to run things, and to change this agreement over time as the needs of the business evolve.

Problems with Partnerships

Unlimited liability is one of the most obvious problems with traditional partnerships. It used to be felt that limiting liability was inappropriate for professionals as it might encourage them to act recklessly. However, this idea evolved as society became more litigious, and limited liability partnerships (LLPs) have been permitted since 2000. Most accountants and solicitors have since become LLPs, but this structure is not currently allowed for NHS GP partnerships. Finance has also become an issue as partnerships take on bigger risks, particularly in the form of long-term leases or larger freeholds. Small partnerships risk becoming unviable when there is concern about becoming ‘the last man standing’ with large financial obligations – particularly when these are unlimited and there are recruitment issues. Lastly, there is a generational question over whether younger professionals actually want to manage themselves anymore, or whether they would rather be ‘managed’ as an employee or locum.

The future

The benefits of the partnership model in a generalist profession are, in our opinion, significant. In many ways they underpin the key cultural values of the professional, but many commentators miss this link and assume an organisation’s values are completely independent of the business vehicle. This is not our view. However, the GP partnership model does need to change. There is no obvious reason why GPs should be prevented from forming LLPs, and larger partnerships would enable practices to better deal with the increased finance and risk in modern general practice. There is undoubtedly a role to play for a variety of business models in primary care, but we believe that an evolved partnership model still has an important role to play. We will be exploring this further in subsequent blogs as we provide our input to the Key Lines of Enquiry of the Partnership Review.

For more information about the GP Partnership Model and any other related topics, please contact Daphne Robertson on 01483 511555 or email d.robertson@drsolicitors.com