HMRC have for many years accepted that Associate dentists are almost always self-employed. However, it has been announced that, as of April 2023, this paragraph in their guidance will be withdrawn. So, after April 2023, it will be more important than ever to make sure that the correct Associate contract is in place, and that the reality reflects the contract.
It should be noted that, should HMRC successfully challenge an Associate dentist’s self-employed status, the resulting tax and National Insurance liability would be that of the practice, not the Associate unless provision is made in the contract.
From April 2023 each Associate’s tax status will be considered on a case by case basis.
The key issue is control, if the Principal is able to exercise too much control over how and when an Associate dentist works, this will start to look more like an employment relationship, with the associated tax and National Insurance consequences.
Factors that will be considered are whether the Associate can exercise sufficient clinical freedoms, whether they have to do all the work themselves or can engage hygienists, therapists or locums as appropriate, and how much freedom they have to choose their own hours worked. The financial aspect is also important, the Associate should be able to demonstrate that they are running their own business, such as bearing financial risk if targets aren’t met, and that they have the ability to build up their own client base and earn more if they work more.
The use of HMRC’s CEST tool, the Check of Employment Status for Tax https://www.gov.uk/guidance/check-employment-status-for-tax will become even more important after April 2023.
HMRC have confirmed that they see this as a change to their guidance, not as a change to the self-employment status of associate dentists. They have also confirmed that they will not be using the withdrawal of the guidance as a reason to open retrospective enquiries into periods prior to 6 April 2023.
The BDA has a standard Associate contract which, if actually adhered to, should mean self-employed status is preserved but, as April 2023 approaches, it is very important to check that all Associates have correct and up to date contracts in place that reflect the reality of the working relationship.
For further information, contact a member of the team today!
