An NHS dental contract (whether GDS or PDS) cannot be sold or assigned to a buyer directly. The National Health Service (General Dental Services Contracts) Regulations 2005 prohibit assignment outright, which means every genuine sale of an NHS dental practice has to happen indirectly, through what the profession calls the “partnership route”: the buyer is added as a partner to the existing contract, and the seller then retires from it. Getting this sequencing wrong, or misunderstanding what it does and does not achieve, is one of the most common ways a dental practice sale goes wrong.
This post explains how the partnership route actually works, why it exists, what NHS England (via the commissioning Integrated Care Board) requires at each stage, and where buyers and sellers most often come unstuck. If you are part-way through a dental practice acquisition already, our guide to how to buy a dental practice covers the wider transaction, and our companion piece on Units of Dental Activity explains the contract value you are actually acquiring.
Why an NHS Dental Contract Cannot Simply Be Sold
GDS and PDS contracts are personal to the contractor. Schedule 3 to the 2005 Regulations sets out, in detail, who is permitted to hold an NHS dental contract: an individual dental practitioner registered with the General Dental Council, two or more individuals practising in partnership, or a body corporate (a dental corporation) that meets the ownership requirements in the Dentists Act 1984. What the regulations do not permit is the straightforward assignment of the contract from one contractor to an unconnected buyer, in the way you might assign a commercial lease or a supply agreement.
This is a deliberate feature of NHS primary care commissioning, not an oversight. The commissioner needs to know, and approve, who it is contracting with at every stage. A contract cannot simply change hands on the strength of a private sale agreement between buyer and seller; the commissioner has to be a party to the change throughout.
The practical effect is that the goodwill, equipment, premises and staff of a dental practice can be bought and sold in a fairly conventional business sale structure, but the NHS contract itself has to move by a different, statutory route that runs in parallel with, and is conditional on, that wider transaction.
How the Partnership Route Works
Where the contract is currently held by an individual principal or by a partnership, the standard mechanism is as follows:
- Step 1, the buyer is introduced as a partner. The existing contract holder (or holders) notifies the commissioner in writing that they intend to enter into partnership with the buyer to hold the contract jointly. The buyer must be GDC-registered and meet the commissioner’s eligibility requirements. NHS England’s Policy Book for Primary Dental Services requires a minimum of 28 days’ notice before the partnership change takes effect, though in practice the commissioner will often want considerably more lead time to process the paperwork properly.
- Step 2, CQC registration is confirmed before anything happens on the ground. The incoming partner must be registered with the Care Quality Commission, whether as an individual on an existing registration or as part of a new provider registration, before they can lawfully treat NHS patients under the contract. Commissioners will typically make the partnership variation conditional on CQC registration being confirmed. See our separate guide on the CQC application process for dental practices for the detail, since this step alone can take weeks and needs to start well before the intended completion date.
- Step 3, the buyer and seller operate the contract jointly, for a period. Once the partnership variation is approved, both buyer and seller are jointly and severally liable under the NHS contract as partners. This is not a formality: during this period, the seller carries real contractual exposure for anything the buyer does under the contract, and vice versa. Most transactions keep this period as short as commercially sensible, but it rarely disappears entirely, since the commissioner’s own processing timescales sit outside the parties’ control.
- Step 4, the seller retires from the partnership. Once the buyer is established as a partner, the seller gives notice of retirement. The commissioner’s policy guidance requires the retiring partner to be formally nominated and confirmed by all parties to the contract, along with fresh notice to CQC that the seller has ceased to be a registered manager or provider in respect of the practice. Once retirement takes effect, the buyer is the sole remaining party to the NHS contract (or remains in partnership with any other continuing partners), and the seller has no further standing under it.
Because the sale and purchase agreement has to work around this regulatory sequence rather than against it, it is usually drafted alongside the deal by a team who handle business sale and acquisition transactions day to day, rather than treated as a standard asset purchase with an NHS contract bolted on as an afterthought.
Two commercial points follow directly from this structure. First, a genuine dental practice sale is never a single completion event on the NHS contract side; it is a sequence with at least two regulatory milestones (partner admission, then partner retirement), and the private sale agreement between buyer and seller needs to be drafted around that sequence, not against it. Second, because the seller remains a partner and jointly liable for a period after the buyer has taken over day-to-day control, the sale and purchase agreement needs to deal explicitly with indemnities covering that overlap period, not just with the completion date itself.
What the Commissioner Actually Checks
NHS England’s policy guidance is clear that the commissioner cannot arbitrarily refuse to admit a properly qualified incoming partner. If the proposed partner is GDC-registered and meets the ordinary eligibility criteria, the commissioner does not have a general discretion to block the transfer. What the commissioner does check, and can properly withhold approval pending, includes:
- Confirmation of the incoming partner’s GDC registration and, where relevant, performer number status.
- A signed partnership agreement (or evidence of the partnership arrangement) covering the parties to the NHS contract, which is usually prepared alongside, but is legally distinct from, the sale and purchase agreement itself.
- CQC registration status for the incoming partner, since commissioners will typically make the partnership variation conditional on this being confirmed before the new partner starts treating patients.
- Written notice, properly signed by all existing and incoming parties, setting out the effective date the change is intended to take place.
Since primary dental care contracts are currently commissioned by Integrated Care Boards, delegated from NHS England, it is the ICB’s dental contracting team that processes the variation in practice, even though the underlying framework sits in NHS England’s national policy guidance. That commissioning landscape is itself changing over the next couple of years as NHS England’s functions transfer to the Department of Health and Social Care under ongoing NHS reform legislation, so it is worth confirming with the relevant ICB early in the transaction which team is currently handling contract variations for your area, rather than assuming the position has stayed static.
Incorporated Practices: A Different, and Riskier, Position
Where the practice being sold operates through a limited company, the position is different and, if handled carelessly, materially riskier. GDS and PDS contracts held by a body corporate transfer by way of a share sale rather than the partnership route, since the contracting party (the company) does not change, only its ownership does. Many commissioners will have inserted a change of control clause into the contract, requiring notice, or in some cases consent, before a controlling interest in the corporate contractor changes hands. Consent should not be unreasonably withheld, but the clause still needs to be identified, checked and complied with before exchange, not treated as a formality.
The genuinely dangerous scenario is a mismatch between where the goodwill sits and where the NHS contract sits. Some principals, often for tax or historic structuring reasons, have transferred the trading business and goodwill of the practice into a company while the NHS contract itself remains personally held. Because assignment of the benefit of a GDS or PDS contract is prohibited, moving goodwill into a company in this way, without the contract following it through a properly structured route, risks putting the contractor in breach. For a buyer, this is precisely the kind of structural issue due diligence needs to catch before exchange, since a practice built around an NHS contract that turns out to be improperly held can lose most of its value overnight if the commissioner terminates it. Our dental practice due diligence checklist covers this and the other checks a buyer’s solicitor should be running in parallel with the contract transfer itself.
Where the Partnership Route Commonly Goes Wrong
In our experience acting on both sides of dental practice transactions, the same handful of issues recur:
- Timescales are underestimated. Buyers and sellers agree a completion date based on the wider commercial deal, without building in the commissioner’s 28-day minimum notice period, the CQC registration timeline, and realistic processing time on the commissioner’s side. It is common for the NHS contract elements of a transaction to take considerably longer than the property or share purchase elements, and the legal documents need a completion mechanism flexible enough to accommodate that gap without collapsing the deal.
- The joint liability period is not addressed contractually. During the overlap between the buyer joining and the seller retiring, both are exposed under the NHS contract. Without clear indemnities in the sale agreement covering acts and omissions during that window, whoever ends up dealing with an NHS England or ICB dispute, or a clawback assessment relating to that period, is left to argue it out after the event rather than by reference to an agreed contractual position.
- UDA performance during the transition is not checked. The buyer is, in effect, taking on responsibility for a share of the practice’s UDA delivery for the remainder of the contract year from the moment they become a partner. If the practice is already tracking below the tolerance threshold, that exposure needs to be priced into the deal, not discovered after completion. See our companion posts on how UDAs work and on UDA clawback for how underperformance translates into money owed back to the commissioner.
- CQC and NHS contract timelines are run sequentially instead of in parallel. Because CQC registration is usually a precondition to the NHS partnership variation taking effect, starting the CQC application only once the sale agreement is signed routinely adds months to the timetable. It should start as early in the process as the transaction realistically allows.
What This Means for You
Whether you are buying or selling, the partnership route is not a box-ticking formality that runs alongside the “real” transaction, it is the mechanism that actually delivers ownership of the NHS contract, and it needs to be planned into the transaction timetable and the legal documents from the outset. For sellers, that means understanding you will typically remain jointly liable under the contract for a period after completion of the wider sale. For buyers, it means starting the CQC and commissioner processes early, and making sure due diligence has properly tested how the contract, and any related goodwill, is actually held before you commit.
If you are buying or selling a dental practice and want to talk through how the NHS contract transfer fits around the wider deal, get in touch with our healthcare team or call us on +44 207 566 1188. You can also reach us at info@gurvelegal.com.
