National Health Service Act 2006

Certain transactions deemed sale of goodwill

2 (1) For the purposes of section 259 and paragraph 1, a disposal of premises previously used for the purposes of a medical practice is deemed to be a sale of the goodwill of a medical practice if—

(a) the person disposing of the premises did so knowing that another person (“A”) intended to use them for the purposes of A’s medical practice, and

(b) the consideration for the disposal substantially exceeded the consideration that might reasonably have been expected if the premises had not previously been used for the purposes of a medical practice.

(2) If a person disposes of any premises together with any other property, the court must, for the purposes of sub-paragraph (1), make such apportionment of the consideration as it considers just.

(3) For the purposes of sub-paragraphs (1) and (2)—

(a) “disposal” means any sale, letting or other form of disposal (whether by a single transaction or a series of transactions) and “disposes” and “disposing” must be read accordingly, and

(b) a person who procures the disposal of any premises must be treated as having disposed of them.

(4) Where in pursuance of any partnership agreement—

(a) any valuable consideration, other than the performance of services in the partnership business, is given by a partner or proposed partner as consideration for his being taken into partnership,

(b) any valuable consideration is given to a partner, on or in contemplation of his retirement or of his acceptance of a reduced share of the partnership profits, or to the personal representative of a partner on his death, not being a payment in respect of that partner’s share in past earnings of the partnership or in any partnership assets or any other payment required to be made to him as the result of the final settlement of accounts, as between him and the other partners, in respect of past transactions of the partnership, or

(c) services are performed by any partner for a consideration substantially less than those services might reasonably have been expected to be worth having regard to the circumstances at the time when the agreement was made,

there is deemed for the purposes of section 259 and paragraph 1 to have been a sale of goodwill as specified in sub-paragraph (5).

(5) The sale of goodwill is the sale of the goodwill of the practice—

(a) of any partner to whom, or to whose personal representative, the consideration (or any part of it) is given or for whose benefit the services are performed,

(b) to the partner or each of the partners by or on whose behalf the consideration (or any part of it) was given or to the partner who performed the services.

(6) The sale is deemed for the purposes of section 259 and paragraph 1 to have been effected—

(a) in a case to which sub-paragraph (4)(a) or (b) applies, at the time when the consideration was given, or, if the consideration was not all given at the same time, at the time when the first part was given, or

(b) in a case to which sub-paragraph (4)(c) applies, at the time when the agreement was made.

(7) Sub-paragraph (8) applies if a person (“the assistant”)—

(a) performs services on behalf of a person who carries on a medical practice (or as an employee of a person employing a practitioner who carries on a medical practice),

(b) receives substantially less remuneration for performing those services than might reasonably have been expected, having regard to the circumstances at the time when the remuneration was fixed, and

(c) subsequently succeeds, whether as a result of a partnership agreement or otherwise, to that practice.

(8) For the purposes of section 259 and paragraph 1, a sale of the goodwill of the practice is deemed to have taken place (at the time when the remuneration was fixed) unless it is proved that the remuneration was not fixed in contemplation of the assistant’s succeeding to the practice.

(9) For the purposes of section 259 and paragraph 1, the goodwill of a medical practice is deemed to have been sold if sub-paragraph (10) or (11) applies.

(10) This sub-paragraph applies where a person carrying on the practice (or employing a practitioner who carries on a medical practice) agrees, for valuable consideration—

(a) to do or refrain from doing any act for the purpose of facilitating the succession of another to the practice, or

(b) to allow any act to be done for that purpose.

(11) This sub-paragraph applies where a person—

(a) gives valuable consideration to a person carrying on the practice (or employing a practitioner who carries on a medical practice), and

(b) succeeds, or has previously succeeded, to the practice.

(12) Sub-paragraph (9) does not apply if it is proved that no part of the consideration was given in respect of the goodwill.

(13) Sub-paragraph (9) does not apply to anything done—

(a) in relation to the acquisition of premises for the purposes of a medical practice,

(b) in pursuance of a partnership agreement, or

(c) in the performance of medical services by one person as an assistant to another.