The interest in medical limited liability partnerships (LLPs) has been increasing over the past few years, and now in particular a partnership can be a very effective model to help hospitals with post-Covid recovery plans. However, there is an understandable lack of detailed information amongst doctors.
These are some helpful answers to some of the most common questions that we are asked:
Do I have to join as an individual?
No, your membership of an LLP can either be you as an individual or a corporate member. For example it could be John Smith, or John Smith Limited.
Why is an LLP suitable for medical consultants?
An LLP is an ideal structure for forming a medical business with your colleagues. The reasons for this include:
– limited liability;
– a flexible structure that suits the work of doctors; and
– internal management and payment structure that is confidential to the members of the LLP.
Do I have limited liability?
Yes, the Members have limited liability in the same way that there is limited liability in a limited company.
Does an LLP have shares and pay dividends?
No – the LLP has no shares and doesn’t pay dividends. The LLP is run and managed by the details that are specified in the LLP Members Agreement and are unique to each LLP. This includes how much each member is paid and how to distribute any profits. It is important that this document is a comprehensive agreement, written specifically for consultants and for the type of work you will be undertaking.
How much tax does the LLP pay?
The LLP itself pays no tax which is different from a limited company which pays corporation tax. Money earned by Members through an LLP is taxed at the point of receipt. For example, if the Member is an individual member, any earnings by that Member from the LLP will be declared on their tax return as self-employed earnings. If the Member is a corporate member, the tax will be paid by the limited company.
What types of contract can the LLP commission?
Consultant LLPs can contract with NHS Trusts, private hospitals and with solicitors to provide medical-legal work. It is important point to note that the commissioner is contracting with the LLP as a corporate body, rather than with one individual consultant. This means that the LLP can substitute any member to undertake the work required (provided they have the appropriate qualifications and skills).
For further information about LLPs and if you think Trust Health can help please get in touch:
Sally Barr
[email protected] or call 01403 241484
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