CPD Training for Dentists at UCL’s Eastman Dental Institute on 22 June 2016

The Eastman Institute are holding a series of CPD lectures making up a course entitled ‘Financial management for the General Dental Practice’

Our Hugo Barton will be giving a seminar on Thinking of Buying and Selling a Practice?

which shall include discussion on and interactive learning:

  • Assets making up a General Dental Practice
  • TUPE and staff
  • associates and hygienists are they employees
  • GDS contracts and Issues
  • Matters to look for as a Buyer
  • Warranties you should look for as a Buyer
  • Top Tips! where you can save money
  • Commercial Property Tips! Are Renewable Leases really renewable?
  • Tips for Negotiation of Heads of Terms and during the transaction itself

The course is now available to book through Health England’s Ewisdom website.

A share sale is usually the sale of all the share in a company limited by share.

No TUPE applies- i.e. no statutory consultation with staff pre completion is required

As a buyer caution is needed as you are buying the company as an entity and it is a legal person. Accordingly, any arrears of tax or penalties will attach to the Company and so:

-Due Diligence is required regarding the Company- i.e. full enquiry should be made by the buyer’s accountant and lawyer

-The Share Sale Agreement tends to be lengthy and contain protection clauses for the buyer. The Sellers warrant that matters are in order and as a buyer you can rely on these statements.

A share Sale can be very quick as a transaction as any commercial leases owned by the company do not require a licence to assign from the Landlord, however, the in depth due diligence and lengthy share sale agreement tend to take time to process.

An Asset sale is where the buyer acquires the assets that make up the business of the seller (which may be a company).

Assets may include:





-the benefit of contracts like an NHS Contract

-Intellectual Property; Like the web site and any brand

This may be a preferable way for a buyer to proceed as he/she can avoid liability that attaches personally to the seller like tax!

  1. Unless your company is limited by shares you will not be able to have dividends!
  2. Many Businesses ignore obtaining properly drafted website Terms and Conditions which can leave your Business exposed to unnecessary claims!
  3. Many consultants or associates are not in fact self-employed and great care needs to be taken as to the ‘control’ you have over their work! Too much control of the relationship can result in you being an employer and the implications that follow…such as incurring pension rights!

Who can own a Dental Body Corporate?

It has now been over a decade that dentists can run a dental company or a Dental Body Corporate (DBC). We are commonly asked what proportion of dental shareholders (i.e. registered dentist or a dental care provider) have to be involved?

Well the answer is none!

This allows dental companies to be a potentially attractive vehicle for non-dental investors.

This has to be tempered by the fact that the legislation requires that a majority of the Directors have to be dental(i.e. registered dentist or a dental care provider).

It is advisable for a Shareholder’s Agreement to be entered into at the DBC formation to set out the shareholder and director obligations. This is confidential and should hopefully avoid dispute later.

A Cross Option is also an invaluable tool to consider at the same time to cover the critical illness or death of a party and use life policies to ‘cover’ these circumstances.



Corporate Social Responsibility

HealthCare Law through it’s Corporate Social Responsibility Policy continually seeks ways in which to give something back to those communities which have supported the firm.

Whether by raising funds for a charity or through pro-bono work.

Members of staff annually vote for a charity of the year which will then be the focus of the year.


Pro-bono work

Our staff generously give their time and experience to charities along with pro-bono legal advice:

Canterbury Festival: Board Director a year round million pound turnover International Arts Festival

Law Society: active National Company Law committee membership

SME Working Group

Department of Business Innovation and Skills Late Payment Working Group



We are members of The Legal Sustainability Alliance which is an inclusive movement of legal firms and organisations

committed to working collaboratively to take action to improve the environmental sustainability of their operations

and activities. There are more than 390 members globally and rising….



Are Renewable Commercial Leases really renewable!?

Many healthcare business owners are under the impression that their commercial lease is repeatable or renewable under the Landlord and Tenant Act 1954 as amended (LTA 1954).

For lawyers who are conversant with Commercial Property the situation is more complex! The legislation basically allows for a commercial lease to be either ‘inside’ or ‘outside’ the LTA 1954. Where outside the LTA 1954 the lease comes to an end at the end of the term of the lease and any further lease or licence is totally at the discretion of the Landlord.

To do this the Tenant normally enters into a statutory declaration ( or simply notice where the parties are not in a hurry) effectively removing their rights of renewal under the LTA 1954. Landlords and their advisers choose this route where for instance there may be development potential for the site and potentially in the short to medium term.  This makes life simple and avoids the need to pay any compensation (which is a multiple of the Business Rates ) to the Tenant if they have a commercial lease inside the LTA 1954.

Even the renewable leases are prevented from renewing by the Landlord putting forward one of the grounds for opposition under the 1954 Act.

Those grounds could include the No fault grounds of opposition by the Landlord

A tenant with security of tenure under the LTA 1954 is entitled to compensation if it does not obtain a new lease solely because the landlord establishes one of the no fault grounds. These grounds are set out in paragraphs (e), (f) and (g) of section 30(1) of the LTA 1954:

  • (e): the tenant was granted a sublease of part, and the landlord is the superior landlord of the whole and intends to re-let the whole for substantially more rent than the aggregate of the rent obtainable on re-lettings of the parts
  • (f): the landlord intends to demolish or reconstruct the property
  • (g): the landlord intends to occupy the property for business purposes or as a residence

Calculation of compensation

Compensation is calculated by applying a multiplier to the rateable value of the property. The compensation will be doubled if the tenant and any predecessor have been in occupation of the property for the purpose of the same business for 14 years or more (see Rateable value and Appropriate multiplier).

Therefore, calculations for the compensation are as follows:

  • For less than 14 years occupation: the rateable value of the property x the appropriate multiplier x 1.
  • For 14 years or more: the rateable value of the property x the appropriate multiplier x 2.

(Section 37(2), LTA 1954.)

Rateable value

The rateable value of the property is established by reference to the valuation list that is in force on the date of service of the notice under section 25 of the LTA 1954, or the request under section 26 of the LTA 1954 (section 37(5), LTA 1954).

Surveyors will assist the landlord and tenant in establishing the rateable value.

Where the holding includes domestic property, as defined in section 66 of the Local Government Finance Act 1988, that part of the holding is disregarded for the purpose of determining the rateable value (section 37(5A)(a), LTA 1954  ). If the tenant occupied the whole or part of the domestic property on the date the landlord served its section 25 notice or counter-notice to the tenant’s section 26 request, the tenant is entitled to additional compensation of a sum equal to the reasonable expenses in vacating the domestic premises (section 37(5A)(b), LTA 1954 ). If the sum cannot be agreed, it can be determined by the court (section 37(5B), LTA 1954  ).

Appropriate multiplier

The appropriate multiplier is set out from time to time by a statutory instrument (section 37(8), LTA 1954). The current order is Landlord and Tenant Act 1954 (Appropriate Multiplier) Order 1990 (SI 1990/363) and this sets the multiplier as one.

Higher rate compensation

If the tenant has been in occupation of the property for the purpose of its business for 14 years or more, the tenant will be entitled to double the rate of compensation (section 37(2) and (3), LTA 1954). The 14 year period is calculated backwards from the date of termination that was specified in the notice under section 25 of the LTA 1954, or request under section 26 of the LTA 1954.

If there has been a change in occupier during the 14 year period, the current occupier must not simply carry on the same type of business, but must be a successor to the actual business. It is not clear what successor to the business means, but it is thought that there must be some transfer of the goodwill of the business (Cramas Properties Limited v Connaught Fur Trimmings Limited [1965] 1 WLR 892).

Compensation for misrepresentation

The court can order the landlord to pay the tenant compensation if it subsequently appears that misrepresentation or concealment of material facts led to any of the following:

  • The landlord obtaining an order for the termination of a tenancy without the court ordering the grant of a new one.
  • The court being induced to refuse an order for the grant of a new tenancy.
  • The tenant quitting the property after not making, or withdrawing, its application for the grant of a new tenancy.

The court can order the landlord to pay such sum as appears sufficient to compensate for the loss or damage sustained by the tenant as the result of the order, refusal or the fact that the tenant has quit (sections 37A(1) and (2)  LTA 1954).

Section 37A  of the LTA 1954 requires fair dealing. In the case of Inclusive Technology v Williamson [2009] EWCA Civ 718, the Court of Appeal awarded the tenant compensation under section 37A of the LTA 1954 in respect of the landlord’s misrepresentation. The landlord had served a section 25 notice with a covering letter opposing renewal of the lease on the ground contained in section 30(1)(f) of the LTA 1954. The landlord then decided not to proceed with the works due to a change in market conditions and an increase in the cost estimate of the works. The landlord failed to inform the tenant of its change of plans

Contracting out of the right to compensation

Any agreement to exclude or reduce the payment of compensation is void, unless one of the following exceptions is satisfied:

  • The property has been occupied by the tenant (or a predecessor to the tenant’s business) for the purpose of its business for less than five years before the tenancy is terminated.
  • The agreement is made after the right to compensation has accrued.

(Section 38, LTA 1954.)

If the parties intend to document their respective liabilities and neither of these exceptions applies, reference to any compensation payment must be drafted with care or the agreement may be void. It should be made clear that the landlord agrees to pay the full amount of any compensation, without exclusion or reduction, and the tenant agrees to pay the full amount of its liabilities.

For an analysis of when to include a clause excluding compensation in a lease.


  • As a Landlord avoid concealing any facts re development or you not developing if you are using Ground F!
  • As a Tenant who is  let say a dentist acquiring a renewable lease from a retiring dentist who is the freeholder then BEWARE that they can take back the premises for themselves!!!! There is a solution which we can negotiate i.e. an option for lease which starts a similar lease the day after the current lease ends.
  • As a healthcare business owner and tenant the goodwill can only normally be effectively sold where a lease is sold at the same time. In fact many NHS contracts for primary care attach to the premises
  • As a tenant the rules for compensation are relatively complicated
  • The compensation does not equate to your actual loss of profit and/or goodwill if the lease ends it is simply a ‘rule of thumb ‘level of compensation! Therefore on acquiring the healthcare business this may have an impact on the initial purchase price and the affordability of any lending particularly  where the lease arrangements end earlier than expected for you!


We may well have heard of these terms, but in the eys of legal speak, just what do they represent?

Agreement – ideally a written contract between parties

Due Diligence – formal process for a buyer’s accountants and lawyers to look into the likely matters and liabilities that may affect a Business that is transferring or on a share sale

Enquiries– a more often used word for lawyers asking questions about an asset or entity such as a company

Indemnity – a promise by one party to pay another party a sum to remedy a breach of a representation and this payment is without mitigation

Warranty – a representation that can result in a claim by a party but the Warrantor can under the law mitigate the claim

Retention – one party to a transaction can hold back funds if there are matters that are in doubt and not have to sue for the funds which the other party may not have!

Introduction to the issue…

With recent legislative and political changes it now seems that the conceptual gap between Tax Evasion and Tax Avoidance has narrowed and potentially closed!

The GAAR anti avoidance regime now in place reverses the burden of proof so that the tax payers (and not HMRC) have to show the reasonableness or  primary commerciality of any arrangements. The old game of tax-advisers trying to beat HMRC in an arms race of beating prescriptive HMRC legislation would appear to be drawing to a close.

The fundamental approach of the GAAR

The GAAR Study Group Report was based on the premise that the levying of tax is the principal mechanism by which the state pays for the services and facilities that it provides for its citizens, and that all taxpayers should pay their fair contribution. This same premise underlies the GAAR. It therefore rejects the approach taken by the Courts in a number of old cases to the effect that taxpayers are free to use their ingenuity to reduce their tax bills by any lawful means, however contrived those means might be and however far the tax consequences might diverge from the real economic position.

Amongst these Court decisions the following are routinely cited as providing legitimacy to even the most abusive tax avoidance schemes:

  1. “My Lords, the highest authorities have always recognised that the subject is entitled so to arrange his affairs as not to attract taxes imposed by the Crown, so far as he can do so within the law, and that he may legitimately claim the advantage of any express terms or of any omissions that he can find in his favour in taxing Acts. In so doing, he neither comes under liability nor incurs blame.”
  2. “Every man is entitled if he can to order his affairs so that the tax attracted under the appropriate Act is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.”
  3. “No man in this country is under the smallest obligation, moral or other, so as to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores. The Inland Revenue is not slow – and quite rightly – to take every advantage which is open to it under the taxing statutes for the purpose of depleting the taxpayer’s pocket. And the taxpayer is, in like manner, entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue.”

The last quote from the judgment of Lord Clyde in the Ayrshire Pullman case epitomises the approach which Parliament has rejected in enacting the GAAR legislation. Parliament is keen that taxation is not to be treated as a game where taxpayers can indulge in any ingenious scheme in order to eliminate or reduce their tax liability.

The conclusion

So from an entrepreneurs’ point of view it is essential to appreciate that, so far as the operation of the GAAR is concerned, Parliament has decisively rejected this approach, and has imposed an overriding statutory limit on the extent to which taxpayers can go in trying to reduce their tax bill.

The  limit of tax Avoidance is reached when the arrangements put in place by the taxpayer to achieve that purpose go beyond anything which could reasonably be regarded as a reasonable course of action.

However, care needs to be taken as there is a vocal moral and political debate that Tax Avoidance as well as Tax Evasion are offensive to society and both represent a breach of moral opprobrium. So tax avoidance schemes that are a reasonable course of action today may not be seen in that light in the future!


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