Most GP practices don't need to register with TRS - but some should do

There were initially concerns that GP practices could be caught by the need to register in three main ways:

• First, where a nominee partner holds shares in a GPCo or federation company, on behalf of his or her partnership.
• Secondly, where a lead practice in a PCN holds PCN moneys for the other members. Thirdly, where two or three partners are named as owners of the freehold of the surgery premises, on behalf of the others. They are often described as holding the building on trust for the other partners - so does this trust need to be registered?

There is good news in all three scenarios, and strangely it comes from the Freedom of Information Act (FOIA). The new money laundering regulations exclude public authorities - and they define "public authority" the same way as FOIA does. The FOIA covers anyone who holds a PMS or GMS contract. Therefore PMS/GMS practices are excluded from having to register with TRS. Many GPs have long resented having been brought within the ambit of FOIA - at least this is a silver lining!

Whilst that good news applies to the large majority of practices, there are still some who may be caught, and might need to register:

• As far as FOIA is concerned, having an APMS contract doesn't make you a public authority. So any partnerships which are APMS-only may have to register. They should seek further advice.
• Most PMS/GMS practices which occupy freehold premises, hold them as a partnership asset. However if the premises are 'off the books', ie held by a separate property-owning partnership, with or without a declaration of trust in place, then it's quite likely that a registration will be needed. This is because the property-owning partnership (ie the thing that 'owns' the building) doesn't have its own GMS or PMS contract, and so isn't excluded from the money laundering regulations. In that situation, if the actual ownership doesn't match up exactly with the names listed on the title at the Land Registry then a registration is needed. Those in this situation should look further at registering - or should reconsider the pros and cons of bringing the building onto the books.
• For similar reasons, if a retired partner still has an interest in the freehold of the surgery premises (because he or she hasn't been bought out, or refuses to sell), then registration may well be necessary. If the retired property owner cannot be bought out and removed from the title at HM Land Registry, then specific advice on registration should be taken.

Some PCNs have established companies which sit alongside their networks, to employ the ARRS staff and carry out other functions of the network. They may or may not hold assets on trust for their member practices, but in our view the same public authority exemption would apply to them.

What about federations who hold assets (for example PCN moneys) for their members? It will depend on all the facts but in most cases, in our view, the TRS rules will not bite, for either or both of two reasons.

• First, there is the question of whether a trust relationship is genuinely established in the first place. Is the federation really holding money 'on trust' or is it merely a commercial contractual arrangement? If it's the latter, it doesn't necessarily give rise to the need to register. The fact that A holds B's money doesn't of itself mean there is a trust relationship between A and B.
• Secondly, the activities of the federation may in any case come within the public authority exemption, even if the federation doesn't hold its own PMS or GMS contract, because the federation is enabling the PMS/GMS contractors to carry out their functions.

The terms of the specific documents agreed between the parties is important. If the contract between the federation and its members specifically states that the federation holds money 'on trust' then it makes it much more likely that the requirement to register is triggered. So in that scenario, the choice is either to a) go ahead and register or b) hope that the federation comes within the public authority exemption. But in any case it may be as well to remove the references to trusts in the relevant documents next time they are being updated, because often the same commercial outcome can be achieved without setting up a trust relationship.

To what extent does this matter? Well, as with most money laundering obligations, criminal liability is involved if you get it wrong. However HMRC recognises that the rules are new and so it is taking a relaxed approach initially.

The rules say that trusts must be registered within 90 days of being established (or within 90 days of the 1 September start date, if the existed before then) - and they must be kept up to date thereafter as the parties change. Failure to do that can lead to a penalty of up to £5,000. However guidance has been issued indicating that there will be no penalty for a first offence, unless there is evidence that the failure to register is due to deliberate behaviour. That is only guidance though, and one would expect the rules to be applied more stringently as time goes on.

If registration is necessary, then as long as 'wheels are in motion' to sort things out, we would not expect a penalty to be enforced where a trust is not registered. For example, if a retired partner remains named on the title of the surgery premises for a short period while a refinance is arranged to buy him out, our guess is that no penalty would be applied, and the risk is low. Nonetheless the issue should not be ignored. This is just one more reason why practice should prepare for title transfers prior to the departure of a partner named on the legal title, and get it completed as soon as possible after retirement!

Whilst the new rules will not catch most GPs or their practices, some will need to register if specific circumstances apply. In particular, if you are an APMS partnership, or if you have retired partners involved in owning the building, Oliver Pool at VWV would be happy to advise further.

_{*The views expressed are the author's and not ICAEW's.}