HMRC Close in on Private Medical Partnerships

Why are so few doctors aware of Mixed Partnership Legislation (MPL) and the impact that it could have on their Private Practice? This legislation, aimed at partnerships with a mixture of corporate and non-corporate members, is a real risk to doctors working in partnership and we want to shed some light on this issue.

Providing medical services via a limited company has plenty of upsides, this is common knowledge. However, can it really be that easy? When this company is attached to a medical partnership, the matter is not so straightforward.


  • Dr X, Dr Y, Dr Z and XYZ Limited are members of Medico Partners LLP, a medical group proving private cardiology services.
  • Dr X decides that he would like his taxable profit share to be allocated to his family owned company so resigns as a personal member of Medico Partners LLP and introduces X Limited as the replacement partner. The members of Medico Partners LLP are now Dr Y, Dr Z, X Limited and XYZ Limited.
  • Despite not being a member, Dr X continues to provide his services to the LLP in much the same way that he did whilst he was a member. However his profit share is now recognised in the X Limited accounts and taxed at the reduced rate of 20%. Dr X, along with his wife, then extract profits from X Limited using salaries/dividends etc. The overall tax payable is reduced compared to the previous set-up.

The scenario above is extremely common and prior to 05 December 2013 was a sensible way of structuring a medical partnership. However, since the introduction of MPL, the likes of Dr X/X Limited are now likely to come under HMRC scrutiny. With reference to Section 850D of MPL, it would certainly appear that HMRC are within their rights to claim that the profit share allocated to X Limited should remain taxable on Dr X as an individual. In other words, X Limited is disregarded as being an artificial entity as Dr X’s relationship with the partnership has not changed.

As a firm we have discussed MPL and its impact on medics with HMRC and further to those discussions we would encourage all partnership members to review their position.