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I act for an expense-sharing partnership of four dentists with average annual net profits in the region of £500 000 to £600 000. Gross fees mainly NHS are allocated to the individual partner as earned along with any direct expenses. The expenses of the practice premises reception staff etc. are shared equally.
Assuming that the proprietors' salaries are minimal the new company would be liable to corporation tax at the marginal rate. There is also the problem of different financial objectives of the four shareholders. One way round the problem might be for each partner to incorporate and the four companies to enter into a similar expense sharing partnership. Each partner would thus 'sell' his 25% interest in the practice to his company.
This solution seems too simple and I would be grateful if Taxation readers would explain the pitfalls!
Query T16 965 — Molar.
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