The Great PCN Surplus Debate

Rewind back to Spring 2019, when all practices were encouraged to group together with neighboring practices to form a Primary Care Network (PCN). At the time, we didn’t really know too much about them and it was very difficult for the lead practice or the administrators of the PCN to decide what to do with the £1.50 core funding that came in for each patient.

Initially, it was unknown how the PCN’s would declare this income but it was subsequently agreed that as this £1.50 forms part of a Directed Enhanced Service (DES), it should be declared as income in the year it is received.

Many of you will have already received a set of PCN accounts from your accountant or the accountant of the PCN, if one has been appointed. This set of accounts should be fairly basic, as we know that during year one, there were (in most cases) very few transactions going through; mainly income for Extended Hours, Clinical Directors and perhaps a Pharmacist or Social Prescriber.

Other than administration work and perhaps some VAT or other professional advice, there was little else being charged through the PCN, meaning in some cases, most of the £1.50 was left sitting in the PCN account at the end of March 2020.

The initial thought was to keep this money in the PCN and just roll it forward against future expenditure and in practice, that is what will happen but in reality, you are expected to bring in any surpluses relating to 2019/20 into your practice accounts regardless of whether the PCN has paid you anything or not.

This isn’t a great position for practices to be in because if you are declaring a surplus – you are having to pay tax on this income. You certainly aren’t going to want to pay tax on monies you haven’t actually received! Our advice here is that there should be enough cash flow in the PCN to pay you out at least 50% of your declarable surplus which would cover any tax liabilities arising.

As PCN’s grow and evolve, we know it is looking likely that, to eradicate many of the VAT / sharing of staff issues, PCN’s may want to incorporate into Limited Companies and as a separate legal entity the declaration of the surplus in your own practice accounts wouldn’t be required.

If you do have any questions regarding the PCN surplus or you are concerned you haven’t had any accounts prepared yet, please don’t hesitate to contact your dedicated RBP partner or our main email on info@rbp.co.uk.