Care UK (NHS)

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"Care UK is one of the biggest private providers of NHS treatments. It is the largest operator of independent sector treatment centres and also operates GP practices, NHS walk-in centres, GP out-of-hours services and Clinical Assessment and Treatment Services around the country. The company has had contracts with all of the current Strategic Health Authorities, works with one in three Primary Care Trusts and is currently bidding to take over the management of the NHS George Eliot Hospital in Nuneaton.[8] It also runs 85 residential homes and provides care for over 17,000 people across the UK.

"Previously publicly listed on the London stock exchange, it was bought and taken private by the private equity company Bridgepoint Capital in 2010. The new owners immediately restructured the company, increased its levels of debt and introduced a tax avoidance scheme that sees interest payments on borrowings and dividends on shares channelling money out of the company (and see here for a previous Corporate Watch article about the Southern Cross-style split Care UK is making between ownership and management of its care homes).

"Care UK did not make an operating profit in 2010 due to the various costs of restructuring the company under its new owners. However when it does, the restructuring has ensured that, while its owners will enjoy healthy returns, the public finances may not. Its accounts show Care UK paid £41m in finance costs in 2010.[9] £25m of this was the 10% interest on the £250m bond it had to issue for Bridgepoint to buy it in the first place.

"Of the other £16m, £8m is going in interest payments on £130m of loan notes – essentially IOUs – Care UK issued on the Channel Islands stock exchange straight after its acquisition by Bridgepoint.[10] Usually, when a UK company borrows from a non-UK company it has to ‘withhold’ 25% of the interest on the loan – ie it has to pay 25% of the value of the interest to the UK tax authorities. But there are exceptions to this, one being if the loan notes are issued on a stock exchange designated by the UK Inland Revenue as eligible for what’s called the “quoted Eurobond exemption”. The Channel Islands is one such exchange.

"Care UK’s accounts do not disclose who has bought these notes but, given their terms and the history of private equity deals, a subsidiary of Bridgepoint, routed in a similar way to the Spire-Rozier-Cinven structure above, is likely. The terms of the notes make it clear that if Care UK cannot afford to pay the interest one year it can be rolled over to the next year, to all be paid off by 2018 (when all remaining interest from previous years will be paid). But this decision may not be made by Care UK, as the terms of the £250m bond it issued are clear that the bondholders can stop Care UK paying interest on other loans or dividends if they are not happy with its financial performance. The terms of the bond also state that at the end of the year the bondholders get their interest payments before anyone else. So if the company isn’t doing too well and can’t afford all the interest it has to pay, the holders of the loan notes would lose out.

"But in terms of the money Care UK is paying in British tax, it doesn’t really matter who is buying the shares as the interest payments, whoever they are going to, are taken off Care UK’s taxable earnings.

"In addition, £8m a year is going straight to the Bridgepoint fund investors‡ that bought Care UK, as dividends on £126m of “cumulative preference shares” in the company. When the Bridgepoint fund bought Care UK, it invested £130m into the company. However, it put £126m of this into these preference shares, with only £4m going into ordinary shares.

"Ordinary shares are what we usually think of as shares: if you have one, you own a part of the company, have voting rights and receive dividends when the company performs well enough. Preference shares do not allow voting rights but guarantee a dividend every year, in this case of 16%. This means the company does not have to be profitable for its owners to be making a regular return from it. Care UK's accounts show HMRC appears to have decided taking these dividends off the company's taxable earnings would be a step too far and deemed them “not deductible for tax purposes”. However, as major investors in the Bridgepoint fund are American (ironically, many are public sector pension funds), and as companies pay a reduced rate of tax on preference share income in the US, they will still enjoy a certain amount of 'tax efficiency'." [1]

It is owned by Care UK Health & Social Care Holdings .


Accessed February 2014: [2]


Accessed December 2012: [3]

Board (2009)

Accessed August 2012: [4]


Resources and articles

Related Sourcewatch


  1. corporatewatch Health, organizational web page, accessed August 3, 2012.
  2. Care UK (NHS) Management, organizational web page, accessed February 23, 2013.
  3. Care UK (NHS) Management, organizational web page, accessed December 19, 2012.
  4. Care UK (NHS) Board, organizational web page, accessed August 3, 2012.