This topic has been widely talked about since I entered the world of dentistry over 15 years ago. I’ve never really given it much weight until recently.
To be clear: The tax rules around employment are different to the legal/HR rules. I can obviously only comment on the matter from the tax point of view.
For as long as I have known there has been a small piece of guidance on the HMRC manuals (ESM4030) that states “It should be noted that there are standard forms of agreement for ‘associate’ dentists which have been approved by the British Dental Association (BDA) and the Dental Practitioners Association (DPA). These agreements relate to dentists practising as associates in premises run by another dentist. Where these agreements are used and the terms are followed, the income of the associate dentist is assessable under trading income rules and not as employment income. In these circumstances the dentist is liable for Class 2/4 NICs and not Class 1 NICs”.
For this reason, associates have generally had a safety net and their tax employment status has rarely been in question. From April 2023, however, this HMRC guidance is being removed and practices will need to self-assess their associates’ employment status using the Check Employment Status for Tax (CEST) tool, as all other industries do.
I don’t consider this to be a major disaster like some press coverage would have you believe - if your associates are/were self-employed then as long as you can justify this status you should be able to continue on this basis. If you haven’t assessed their status/looked at their contracts in a long time though, now is a very good time to do it.
Employment status from HMRCs point of view is all about control - who carries the risk, who tells you when to work? Who tells you what to do? Can you send a substitution to work? Generally, if an associate has lots of clinical freedom, loses income if a patient doesn’t turn up and can send a locum on his behalf then he is likely to be self-employed. It is key that it is not just the terms of their contracts that matter but what is actually happening day to day.
The best advice is to ensure your contracts are up to date (or that you have them in the first place!) and that they actually reflect what you are doing in practice, then use the HMRC CEST tool to check their status. If HMRCs opinion from the tool indicates a self-employed status, print out the result and keep it on file to produce if there is ever an enquiry from HMRC in the future. That way you can be sure you are dealing with your associates in the correct way.
The HMRC CEST tool can be found here.
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