Financial Solvency tests flawed says NASDAL

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Alan Suggett and NASDAL say: NHSE Financial Solvency tests for dentists “fundamentally flawed”

The Financial Capability & Capacity (FC&C) tests that are required when tendering or retendering for contracts with NHSE (NHS England) under the “Dynamic Purchasing System” are ‘fundamentally flawed’. That’s according to NASDAL (The National Association of Specialist Dental Accountants and Lawyers) and Alan Suggett, specialist dental accountant and partner in UNW LLP.

“The solvency tests are flawed in their application to unincorporated businesses and most owner-managed limited companies,” said Alan. “NHSE don’t understand this and its stance is that they are just standard accounting tests that are easily calculated so where is the problem?

“The problem is that from our initial testing, around 90% of dental practices would fail the tests! As dental practices are regarded as one of the least risky sectors for business lending this is clearly ridiculous.

“The tests are appropriate for larger entities such as the larger corporate groups. However, it would perhaps be cynical to suggest that this is by design rather than accident. As the tests are of a technical accounting nature, it seems that nobody involved (dentists and NHS employees including public sector accountants) understands the issues – they are only apparent to accountants who act for owner-managed dental practices.”

Alan concluded: “NASDAL is working with the BDA to persuade NHSE that a cashflow forecast, supported if necessary by proof of deficit funding, is sufficient evidence of financial viability.”