Safeguarding your dental business for your family
By Victoria Michell, Practice Management Consultant, and Tom King, Senior Policy Adviser, British Dental Association
We’ve heard stories about NHS contracts in England and Wales being terminated on the death of a contractor, leaving families facing financial difficulties on top of everything else. Here’s what you can do to ensure that doesn’t happen.
Planning what happens after we are gone, isn’t something a lot of us want to think about. With busy lives and a thousand and one other things to do, making wills - two thirds of people don’t have a will according to Lloyd & Whyte - or succession planning for your business often gets left at the bottom of the pile.
But we urge you to consider how you can best safeguard your business for your family now.
No automatic retention of NHS contract
While the Dentists Act 1984 allows your widow(er), your children, or trustees acting on behalf of your widow(er) or children, to carry on your dental business for up to three years, this does not mean that they can automatically retain your NHS contract.
As an individual holding a GDS contract or PDS agreement only in your name, on your death the contract would be terminated after 28 days and your family would not be able to sell the contract along with your dental practice.
Commissioners can agree to temporary extensions of up to 12 months, but after this period, your family will have no right to your NHS contract and the value it brings to your business. Commissioners do have the option to agree to enter into what is effectively the same NHS contract with the dentist that buys your practice. However, this is entirely at the commissioners’ discretion and, in our experience, this rarely happens, in large part because it can open commissioners up to a legal challenge. Relying on this option does not provide your family with any guarantees that their financial position will be protected.
Consider setting up a nominal partnership
We suggest considering setting up a nominal partnership that can legally continue to hold the contract after your death, rather than holding a GDS contract individually, as we know a large number of practice owners currently do. It is very important to make sure that you choose the right partner that you trust and is well known to you.
It is important to check that this partnership is eligible to hold an NHS contract and can still even after your death. The partner must also be eligible to hold a dental contract in their own right, otherwise the contract will still be terminated on your death.
You will also need to ensure that the partnership contains specific terms that mean it does not automatically dissolve on the death of a partner.
Our advice sheet provides you with information on establishing a partnership and has a template agreement, but we also recommend taking independent legal advice, to ensure it covers your particular circumstances. Extra and Expert members can also discuss their options in more depth with our team of advisers.
What else do you need to do?
You will need to notify the NHS commissioners formally that the contract will be held as a partnership rather than individually, and they will need to satisfy themselves that the proposed partnership complies with the relevant regulations and policies.
Once this is done, the commissioner will confirm that this has been accepted in writing and issue a contract variation notice.
You will also need to make sure you change your CQC registration to reflect the new partnership.
In instances where a director of a body corporate that holds an NHS contract dies, provided the make-up of directors continues to meet the requirements for the body corporate to hold a NHS contract, then the contract will not terminate. But at least 50% of the directors must be dentists or DCPs following the death of a director.
When we are all busy with the stresses of the day to day, it can be hard to think about planning for the future. But we urge you to take some time to consider the succession planning for your business today.
If you are an Extra or Expert member, you can speak to an advisor on your next steps by calling 020 7935 0875 or email advice.enquiries@ bda.org