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Should our Primary Care Network set up a Limited Company?

At THC Primary Care, we create resources for primary care network leaders and have written over 200 blogs to support you

In this blog, we tackle the topic of incorporation.

"Should our Primary Care Network set up a limited company?" or; "Should our PCN incorporate?" is a question we are often asked and have considered for the networks we support.

Whilst we will always signpost you to a legal professional, you may find our research into the topic helpful.

In this blog, we invite you to consider:

  1. How well-aligned you are as a network

  2. How much control do you want when it comes to employment liabilities

  3. Taxation implications

  4. Whether or not the PCN want to access the NHS pension scheme

  5. CQC and compliance

  6. What NHS access you will need

  7. General business planning advice

  8. The services a solicitor can support you with

We also signpost you to some solicitors who have a proven track record in this area.

Let's jump in!

How aligned are we in our Primary Care Network?

If you're considering setting up a limited company, I am making the assumption that your network is well-aligned:

✅ You have strong working relationships

✅ You can easily point to some achievements which both meet the needs of your practices and patients

✅ You have experienced conflict and have successfully come through the other side

✅ You have a strong leadership and management team

✅ You want more control over your network

✅ You have a vision which extends beyond meeting the requirements of the DES

🎯 To ensure you are on the same page, you may want to sense-check these areas, because if you aren’t all of the same opinion, trying to create a limited company will be routinely met with opposition.

Employment liabilities

Your PCN is responsible for a large workforce budget, and this year (23/24) the Additional Role Reimbursement Scheme budget has increased, which means increased liabilities for managing the team.

Your PCN will need to determine the extent to which it wishes to hold this liability and the extent to which third parties may hold it on its behalf.

Do you want full control over recruitment, induction, training, career development, HR Policies, disputes etc.………?

If you are attached to a federation, you may also have to consider the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

🎯 As a network, collectively consider what is and what isn’t working right now (within your current arrangements) to help shape your plans for the future.

Understanding Taxation

PCNs are not legal entities, and consequently, taxation is complicated. The two main areas of concern are VAT and individual partner income tax.

VAT arises when one entity provides a service to another entity, unless a valid exception is utilised, or if a special entity called a Cost Sharing Group is formed.

The following three scenarios summarise this position using the example of the ARRS teams:

  • One practice employs staff and shares them with other practices. This would be subject to VAT.

  • The PCN purchases a clinical service which uses ARRS staffing. This would not attract VAT as they would be exempt under the Clinical Services Exemption.

  • The PCN forms a Cost Sharing Group which employs the staff on behalf of the practices. As long as it meets certain criteria, this would attract no VAT.

The second area of consideration is how and when the liability for income tax arises. Under the Network Agreement, all PCN revenue is received and should be accounted for towards individual partners in the year it is received.

Spending the money and having cost-efficient structures can reduce the risk of unanticipated tax bills for individual partners.

🎯 This is definitely an area for further investigation, and we suggest your first port of call is your accountant or solicitor.

The NHS Pension

Another area for consideration is the NHS Pension.

Will you want your team to have access to this?

🎯 If you do want your PCN staff to access the NHS pension, more guidance can be found at the NHS Business Service Authority.

and here in the Hempsons article, Is your PCN Company eligible for the NHS Pension?

CQC and compliance

The obligations on PCNs primarily relate to those arising from the DES. However, this funding relates to the provision of healthcare services, which may require CQC regulation.

The PCN will need to consider the extent to which they wish to take on this responsibility or remain with their current arrangements.

🎯 To learn more about CQC registration, please visit the CQC website here.


You will also need to consider your infrastructure costs for setting up your network and your ongoing costs.

🎯How will you fund the initial set-up costs?

🎯 Also, how will you access NHS laptops, NHS emails, smart cards and NHS Spine access etc...? I would speak to your practices to see how they currently access these if you aren't sure.

If you engage with a solicitor, what will you be paying for?

This list is not definitive. This is just an example of the scope of services we have been presented with.

You will be paying for expert support and guidance, which will provide you with:

  1. A bespoke Company Articles document to support the required PCN governance and the NHS contractual requirements.

  2. A Services Framework Agreement (which enables VAT costs sharing) between the PCN members and the new PCN company to reflect the anticipated operating and services model.

  3. A TUPE Consultation letter to enable the transfer of any staff (e.g. ARRS resources) into the company, including a telephone/video call to talk you through the TUPE steps.

  4. A Trust deed for each practice to sign, linking the PCN Company to the internal governance of the individual partnership.

  5. Liaison with the PCN accountant to ensure the company dovetails with VAT & pensions requirements.

Business Planning

Some final thoughts.


Please see below for a list of solicitors who can assist your further.

Rob McCartney, who is an Associate at Hempsons.

Hillingdon Dickinson

Dr Solicitors have also created some resources here

For HR support, my go to is always is Orchard Employment

We hope this helps!


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About the Author

I'm Tara; I am the founder of THC Primary Care, an award-winning healthcare consultancy specialising in Primary Care Network Management and the host of the Business of Healthcare Podcast, where we have now published over 240 episodes.

I have over 20 years of project management and business development experience across the private and public sectors, and I have supported over 120 PCNs by providing interim management, training and consultancy.

I have managed teams across multiple sites and countries; I have an MBA in Leadership and Management in Healthcare, I'm published in the London Journal of Primary Care, and I am the author of over 250 blogs.

I have 3 children. My eldest has Asthma, my middle child has a kidney condition called Nephrotic Syndrome, and my youngest daughter has Type 1 Diabetes, so outside of work, healthcare plays a huge role in my life.


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