Have you lost out on 25% of your practice’s value?
Have you lost out on 25% of your practice’s value?
There are often ways that we can recover at least some of your money.
November 25, 2021

Simply by buying it wrong, you could be losing a quarter of your practice’s value.

Buying a practice is a rare and significant event; something you may do only once during your career. For many, it takes years of preparation and planning to get to this point.

So it’s shocking to hear that just by structuring your purchase incorrectly, you could lose a massive 25% of the practice’s value over your lifetime of ownership. The most crushing thing of all? Most buyers won’t even know that they’ve done it.

We work with clients at every stage of their career, from starting as an associate to buying their first practice, buying a second or third, and then selling. For us, it’s been proven that the earlier we’re able to get involved in a buying journey, the more we’re able to help. Not only can our sales and acquisitions team assess the practice to establish if it’s a viable investment, but they can also ensure that your purchase is structured correctly for tax efficiency.

It’s a sad fact that most dentists don’t realise there’s a right and wrong way to buy a practice. Often, it’s only when new clients come to us after a purchase that they realise they’ve missed out.

As an example, one particular individual, a young associate approached us when first considering buying his practice here in the south west. This meant that as well as offering support, we were able to structure the purchase correctly, saving them 25% in tax on the value of their practice purchase over their lifetime of owning it. In shorthand, this means that they’ll now pay less in loan repayments over the course of 10-15 years.

On the other hand, we picked up another case where a husband and wife had purchased their practice in the home counties several years ago. From looking at their accounts, we could tell that this purchase was carried out with an inefficient tax structure. This meant that they’d essentially passed up the opportunity to save 25% of the practice’s value (£250,000 in a practice worth £1 million).

This doesn’t have to be where it ends, however. Despite the fact that the husband and wife duo had lost out during those first years of ownership, we were able to correct the problem and help them to save 25% on the remainder of their initial loan (amounting to £187,500).

If you’re concerned that you might have bought your practice ‘wrongly’, it’s not too late to ask for our advice. As in many cases, it’s better to do something and save money than to do nothing and definitely lose out. Often, there are ways that we can recover at least some of your money.

If you’re thinking of buying a practice, or would like us to review a past purchase, get in touch.

The information contained in this article is based on the opinion of Hive Business and does not constitute formal tax advice. Any tax outcomes will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future. You should seek specific advice before embarking on any course of action. Hive Business does not provide regulated Financial Advice, including advice on investment, insurance or lending products or their suitability for you. This article is provided for information only and does not constitute, and should not be interpreted as, investment advice or a recommendation to buy, sell or otherwise transact, or not transact, in any investment including Bitcoin and other crypto. Any use you wish to make of any information contained within this article is, therefore, entirely at your own risk.

By Simon Vincent Tax Director
If you have any questions or comments about this article, please get in touch.
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