The directors present the strategic report for the year ended 31 March 2024.
North Cumbria Primary Care (NCPC) was initially set up in 2019 as a collaborative response to the local challenges of GP recruitment and sustainability of Primary Care services in North Cumbria. As a not for profit enterprise our aim is to create a network of great family practices by building a multidisciplinary and multispecialty model of primary care and creating a platform to support general practice at scale with the benefit of an umbrella structure to provide support. All income we receive in funding and from other business activities goes into supporting the organisation, our staff, and our services. Any surpluses that we make are committed to improving quality of care, supporting staff or reducing inequalities (we look after 60% of the most deprived patients in North Cumbria). No dividends are paid to shareholders. All clinical and non-clinical staff, including Directors and GPs, are employed by NCPC and receive a salary.
The first GP practice joined NCPC in August 2019 steadily increasing to eleven practices by July 2020. In early 2021 the five practices in Workington merged to form one town wide practice and in April 2023 two practices in Whitehaven merged.
Our six practices span rural and urban communities from Carlisle to Bootle, operating over sixteen sites and serving over 100,000 patients; one third of the population of North Cumbria. We employ more than 350 staff. Practices are grouped into three geography localities; Carlisle, Copeland and Workington. Clinical and operational Locality Leads work with practice managers to run our sites. The management support team provide advice and support in areas such as managing service contracts, HR, finance and business development. As NCPC develops, further back office at scale working is planned.
NCPC provides Lead GPs with dedicated development, leadership, and training time. We have GP training practices in each locality to “grow our own” GPs and encourage our students to stay with us, commit to North Cumbria, and join us on our journey to improve patient care. We are thinking creatively and working hard to attract GPs, including continuing our discretionary self-funded golden hello and GP trainer recognition schemes, attending local and national recruitment, skills and careers fairs, and linking with the new Pears Medical School in Carlisle (with whom one of our salaried GPs holds the Head of Primary Care role) and working in collaboration with partner organisations including Health Education England. We have also recruited in a wide range of other clinical areas including paramedics, mental health practitioners, advanced clinical practitioners, physician associates and pharmacists to supplement our GP resource. Integral to our model is the support, training and development of our multidisciplinary teams, this includes recruiting for trainee ACPs on the new Newcastle ACP training which is focussing on Primary Care ACPs. We have a number of apprentices, offering training and development in both clinical and non-clinical areas of the practices and tier 2 sponsorship is available for GPs wishing to join from overseas who require a visa to work. One practice has been accepted to provide placements for those GPs who are Returning to general practice. We are also developing joint GP roles with Cumbria Health On Call and a joint post with NCIC combining work in the Community Hospital and Primary Care. The role of GP Registrars and F2 doctors is now well embedded in the practices.
Primary Care is under huge pressure with rising demand and a steady decline in GPs per 1000 patients nationally since 2016 – this workforce crisis is felt most acutely in coastal areas of North Cumbria. We are the front door to our healthcare system and cover a huge range of services and increasing complexity of patient care. On a daily basis we can provide health advice, home visits, face to face consultations, prescriptions, minor illness and injuries services, ongoing care for chronic conditions, health screening, vaccinations, antenatal care, fit notes, referrals to secondary care, and much more.
Despite the ongoing recruitment challenges, we continue to provide increasing numbers of appointments each year by utilising our growing multidisciplinary teams and adapting our clinical delivery to include telephone and online options for patients, in additional to traditional face to face appointments. .
Over the last 12 months, the practices have handled the impact of industrial action in local hospitals, the ambulance service and doctors in training who are working within primary care, and the impact of secondary care backlogs on primary care demand.
NCPC work closely with local practice participation groups who are integral to supporting feedback and improvements for our patients
NCPC are members of three Primary Care Networks – Carlisle Network, Copeland and Workington. Primary Care Networks work with our practices to provide complimentary primary care services.
We regularly meet with local councillors, Members of Parliament, and other community leaders to work together to solve our community health challenges.
There have been some significant changes to the way primary care is commissioned with the abolition of Primary Care Clinical Commissioning Groups (CCGs) and the creation of a wider Integrated Care Board (ICB), covering North Cumbria and the North East. Whilst this is still being established and changes continue we have ongoing dialogue with our colleagues in the newly formed ICB in order to access any available support and funding for primary care services.
NCPC maintains a risk register covering both operational and clinical risks. Risks and uncertainties are reviewed at quarterly leadership and Board meetings. Risks are mitigated using a range of policies and standard operating procedures. All our practices were inspected by CQC during 2022 and 2023 with all achieving a “Good” rating.
Our key strategic risks are:
Change of government, NHS Contractual Arrangements and financial sustainability
NCPC holds five NHS General Medical Services (GMS) contracts and one Alternative Medical Services (APMS) contract. The NHS Long term Plan provided some certainty of funding under these contracts for the five years from April 2019 to March 2024. For 12 months from 1 April 2024 the contracts have been rolled over; substantially the same contract as the previous five years. Whilst these contracts run in perpetuity the change of government and associated policy bring uncertainty around future funding arrangements, and routes of funding which bring challenges to financial planning.
In addition to the 2024 autumn budget announcements have brought additional budgetary pressures. Whilst we anticipate the some funding towards these additional costs, at
the date of signing these financial statements the government hasn’t published any details on contractual funding arrangements from 1 April 2025. It has therefore been necessary for financial forecasts to assume broadly similar funding continues to be received under the GMS and APMS contracts with an uplift to contribute to the additional costs derived from the budget announcements.
Provided future funding is broadly similar to historic arrangements with an uplift to reflect the additional costs derived from the autumn 2024 budget, and given the company’s significant cash reserves, the directors’ are confident of NCPC’s financial sustainability.
2. Workforce recruitment and retention
Recruitment of GPs in all practices, particularly those in West Cumbria, continues to be challenging and wider staff recruitment is hampered by competition for limited skills and inequality of pay between General Practice and other NHS providers through Agenda for Change arrangements. In addition, all practices have experienced challenges with recruitment in other clinical and administration roles too. Retention of nursing and ACPs is impacted by competitive pay from other local organisations, whilst administration teams are impacted by firms with a national presence improving their pay and terms to attract staff in response to inflationary pressures and where availability of staff is limited.
GP locum costs absorb a significant share our finances, which presents a financial risk to the business if costs escalate. In addition, the high locum earnings obtainable make it less attractive for GPs to join NCPC as a salaried GP. In 2024/25 NCPC has entered into a preferred supplier agreement with a locum agency for both temporary and permanent GP recruitment. To mitigate the cost risk to the sustainability of NCPC, limits continue to be placed on locum spend with monthly monitoring in place and approval required for breach of the limit. This represents a challenge for all our practices and our clinical models. PCN clinical roles help to support our workforce with a diverse range of multidisciplinary roles.
NCPC must also fund any recruitment attraction incentives; the discretionary golden hello and GP trainer recognition schemes offered, as we are ineligible to access the national new to partnership (Golden Hello) scheme because we offer a salaried GP model (as opposed to the traditional partnership model).
Health and wellbeing of our workforce is a priority for NCPC, increasing demands for Primary Care services and shortages of some clinical staff have an impact on our workforce. We are currently working towards the Better Health at Work Award.
3. Estates
NCPC operates over sixteen sites, with a varied estate from purpose built health centres constructed in the 1970 and 1980, to more recent builds in the early 2000s and some surgeries created from former residential house conversions. Years of under-investment in estate by predecessor contract holders presents NCPC with a significant programme of planned improvement and maintenance work to ensure the condition of the estate does not deteriorate further, and where possible is brought up to CQC and DDA compliant standards.
In 2023/24 a surplus of £787,878 (2022/23 £136,107) has been generated, maintaining a strong balance sheet position with net assets of £3,158,590 (2022/23 £2,350,712).
2023/24 concluded in line with forecast performance. Turnover was forecast to be lower due to the minimal contractual uplift of 2.6% initially awarded by the government. However this was revised following the DDRB review with the government confirming a further £2.45 per weighted patient would be awarded backdated to 1 April 2023. This brought the total Global sum uplift to 5%, and along with non-recurring income and PCN surpluses gave rise to turnover of £2.1m greater than forecast. The vast majority of the additional funding received, excluding PCN surpluses, was spent on workforce costs during the year.
As with most businesses, NCPC has continued to be impacted by inflation and rising interest rates; with energy costs rising by just over 11% and an additional £71k in loan interest. Under-investment in estate by predecessor contract holders continues to give rise to significant repair bills at some sites. NCPC also continued with a programme of planned maintenance to improve the condition of the estate and facilities for patients and team members. These additional costs have been offset by savings achieved through re-procurement of some contracts.
Locum GP costs continue to drain the resources of primary care with 19% (2022/23 16%) of NCPCs total workforce costs spent on locums.
Our focus is
Workforce planning – a workforce fit for the future
refining our clinical model and skill mix to make best use of our workforce resources
retention of our teams and a focus on health and wellbeing
training and development of our teams to support retention, improve morale and develop a future workforce.
Team wellbeing – Better Health at Work Award
2. Improving workflow and working at scale to create efficiencies
3. Improving patient experience
Streamlining access to services
Care navigation
Building a safety and learning culture
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The results for the year are set out on page 11.
The group operates as a social enterprise and it's Memorandum and Articles of Association do not permit the payment of dividends.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
Following the merger of MHA Moore & Smalley with MHA, the company's independent auditor has now become MHA. A resolution to reappoint MHA as independent auditor will be proposed at the next Annual General Meeting.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of North Cumbria Primary Care Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2024 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, is detailed below:
Enquiries with the board about any known or suspected instances of non-compliance with laws and regulations, including fraud;
Auditing the risk of fraud in revenue by way of cut off testing, testing the deferral of income for invoices spanning the year end as well as sales transaction testing to obtain evidence that revenue is complete and recognised in the correct accounting period;
Challenging assumptions and judgements made by the board;
An evaluation of the risk of management override of controls and subsequent testing, including through testing journal entries and other adjustments for appropriateness; and
An evaluation of the group's internal control environment.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £787,713 (2023 - £136,107 profit).
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
North Cumbria Primary Care Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Morton Surgery, Langrigg Road, Carlisle, CA2 6DT.
The group consists of North Cumbria Primary Care Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company North Cumbria Primary Care Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
The parent company and consolidated financial statements are made up to 31 March 2024. The subsidiary financial statements are made up to 31 July 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents monies receivable from the National Health Service to provide day time and other medical services. Turnover is shown net of sales/value added tax, returns, rebates and discounts.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. The group is not permitted to pay dividends in accordance with its Memorandum and Articles of Association.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense. The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Retirement benefits
Eligible employees are covered by the provisions of the NHS Pension Scheme. This scheme is an unfunded, defined benefit scheme that covers NHS employees, General Practices and other bodies, allowed under the direction of the Secretary of State, in England and Wales. The scheme is not designed to be run in a way that would enable North Cumbria Primary Care Limited to identify its share of the underlying scheme assets and liabilities. Therefore the scheme is accounted for as if it were a defined contribution scheme: the cost of participating in the scheme is taken as equal to the contribution payable to the scheme for the accounting period. Surpluses and deficits on the pension scheme are the responsibility of the government.
The company also operates a defined contribution scheme under NEST for those employees not eligible for the NHS Pension Scheme.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to 3 (2023 - 1).
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Factors affecting future tax charges
The standard rate of tax applied to the profit on ordinary activities is 25% (2023: 19%). The Finance Act 2021, which was substantially enacted on 24 May 2021, created a 25% main rate, 19% small profits rate and a marginal rate which is effective from 1 April 2023. Deferred tax has been calculated at 25% (2023: 25%) which is the rate that the deferred tax assets and liabilities are expected to crystalise.
Freehold land and buildings with a carrying amount of £3,366,869 (2023 - £3,439,911) have been pledged to secure borrowings of the company.
Details of the company's subsidiaries at 31 March 2024 are as follows:
Bank loans totalling £2,474,586 (2023: £139,574) are secured by the group as detailed in note 18.
Bank loans totalling £303,297 (2023: £2,779,872) are secured by the group as detailed in note 18.
Two bank loans totalling £2,777,883 (2023: £2,919,446) are secured by way of National Westminster Bank Plc holding a legal charge over the land and buildings of the group and a debenture over all the assets of the group.
One of the bank loans is due to end within the next year and one in the next 9 years. Credit approval has been obtained from NatWest for the renewal of the loan due to expire within the next year therefore, the majority of this loan will revert to falling due after more than one year in the next financial statements. Interest on these loans is being charged at 2.45% over base rate per annum and 3.6% per annum respectively.
The other loan of £226,858 (2023: £212,495), is unsecured and due to end within the next year, with interest being charged at 1% over base rate per annum.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The directors do not expect a material movement in the deferred tax provision within the next 12 months.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
During the financial year, remuneration of £667 (2023: £45,422) was paid to close family members of directors of the group.