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April 12, 2023

Tooth Ache for Dentist Associates – Changes to Self-Employment Tax Status

Historically, self-employment has been the default status for most dental associates in dental practices for many years, with both practice owners and associates preferring this model. This was based on the fact that there was a standard form of agreement for these dentists, approved by both the British Dental Association and the Dental Practitioners Association.

HMRC previously accepted this model and even mentioned this agreement in their employment status manual ESM4030.

From 6th April 2023, this has now changed.

Associate dentists will no longer be automatically treated as self-employed by HMRC and the concession in HMRC Manual ESM4030 has now been removed.

Instead, HMRC’s opinion is that the associate dentist’s employment status should be determined by looking at the ordinary employment tests to decide whether they are employed or self-employed. This is important for dental practices to get right as there are different tax treatments depending on whether they are treated as being an employee or as being self-employed.

When looking at whether an associate dentist is an employee or self-employed, the following tests would need to be considered:

  • Control: When looking at the control test, you need to examine whether an associate is able to make their own working arrangements, i.e. the days/hours they work, how they dress, if they are in control of their workload and if there are deadlines for completing work. If the individual has control over the above, this could mean that the individual is self-employed. It would also be worth considering whether the dentists are able to work for other practices.
  • Personal Service/Substitution: Whether the associate dentist has to perform the services personally or if they have an option to appoint a substitute dentist or their own locums to work in their place (for example, when the associate is on holiday or maternity leave). If the associate is able to do this, it could suggest they are not providing a personal service, and therefore not be considered to be an employee.
  • Risk: If self-employed, the associate will take on a financial risk in their role. For example, paying for their own equipment, laboratory fees, rectifying any poor dental work they carried out. They will also only be paid on the actual work they carried out themselves. It would be worth considering whether the dentist was required to take out personal professional indemnity insurance.
  • Mutuality of obligation: Is it necessary for the practice to provide work to the associate and for the associate to accept? If so, this could suggest that the associate is an employee.
  • Other factors – It would be worth considering if they were integrated within the dentist practice (e.g. able to join the practice’s pensions scheme, access to normal employee benefits, designated computer at the practice etc.).

HMRC will also look at how patients view the agreement for their treatments. If a patient believes they are being treated by the practice and they are paying the practice rather than the associate, it is likely HMRC will view this as the associate is working for the practice.

The change in HMRC’s guidance should have little or no impact on most associate dentists. HMRC themselves have advised the change is only to the guidance and not the self-employment status of dentists but the above tests do need to be considered.

HMRC will approach the dental practice as the deemed employer. If HMRC are successful, the dental practice may receive severe penalties for mis-categorisation, including outstanding National Insurance Contributions.

If you need advice/assistance on your self-employment status, please contact a member of our team today.

Disclaimer: This article is for general information only and is not intended to constitute individual advice. It is recommended that you seek independent tax/legal advice to review your employment status before taking any action.


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