Employment Status of Dental Aassociates

Historically, self-employment has served as the predominant status for dental associates in dental practices for an extended period, with both practice owners and associates favoring this model. This preference stemmed from a standardized agreement for these dental professionals, endorsed by both the British Dental Association and the Dental Practitioners Association. The HMRC previously acknowledged this model and even referenced this agreement in their Employment Status Manual ESM4030.

However, as of 6th April 2023, these regulations have been modified.

The HMRC will no longer automatically classify associate dentists as self-employed, and the concession previously found in HMRC Manual ESM4030 has been rescinded. Instead, the HMRC now asserts that the employment status of associate dentists should be determined by applying ordinary employment tests, which will establish whether they are employed or self-employed. It is crucial for dental practices to accurately determine these classifications, as differing tax treatments apply depending on the employment status of the associate.

In determining whether an associate dentist qualifies as an employee or a self-employed individual, several tests must be considered:

1. Control: The control test examines the associate’s autonomy in establishing working arrangements, such as work hours and days, attire, workload management, and work completion deadlines. If the associate maintains control over these aspects and can work for other practices, they may be deemed self-employed.
2. Personal Service/Substitution: This test evaluates if the associate dentist must personally perform the services or if they can appoint a substitute dentist or locum in their stead (e.g., during holidays or maternity leave). If the associate can do this, they may not be providing a personal service and, thus, not be considered an employee.
3. Risk: As a self-employed individual, the associate would assume financial risk, such as purchasing their equipment, covering laboratory fees, and rectifying substandard dental work. They would also receive payment exclusively for work they personally performed. It is important to assess if the dentist must obtain personal and professional indemnity insurance.
4. Mutuality of obligation: This test determines whether the practice is obligated to provide work to the associate and if the associate must accept it. If this is the case, the associate may be classified as an employee.
5. Other factors: Additional elements to consider include the associate’s integration within the dental practice, such as eligibility for the practice’s pension scheme, access to standard employee benefits, and providing a designated computer at the practice.

HMRC will also evaluate patients’ perceptions of treatment agreements. For example, suppose a patient perceives that they receive treatment from and pay for the practice rather than the associate. In that case, HMRC will likely consider the associate employed by the practice. The change in HMRC’s guidance should minimally impact on the majority of associate dentists. While HMRC has advised that the change applies only to the guidance and not the self-employment status of dentists, the tests mentioned above must still be considered.

The dental practice will be considered the deemed employer by HMRC. If HMRC succeeds in reclassifying an associate, the dental practice may face significant penalties for mis categorization, including outstanding National Insurance Contributions. For advice or assistance regarding your self-employment status, please consult a member of our team today.

Disclaimer: This article is provided for general informational purposes only and is not intended to serve as individualized advice. We recommend seeking independent tax/legal counsel to review your employment status before acting. If you need help to plan your taxes, please contact Tax Accountant at 0800 135 7323 or email info@taxaccountant.co.uk for expert advice.