Is your employment status set to change as an associate dentist?

As of 6th April 2023, HMRC is removing their guidance under the ESM4030 that allowed associate dentists to be classified as self-employed if they were engaged under a standard BDA or DPA associate contract. This means that the employment status of an associate dentist will be determined by the usual case law that decides if someone is self-employed or employed. This change will have a significant impact on the dental industry and requires dental practices to re-examine their working arrangements with their associate dentists.

PREPARING FOR THE CHANGES – WHAT DENTAL PRACTICES NEED TO DO

To prepare for the upcoming changes, dental practices should use the HMRC Check Employment Status for Tax (CEST) tool to answer questions regarding the agreement and the actual working practices of their associate dentists. The CEST tool will then determine if the associate dentist is self-employed or an employee. Dental practices with an older BDA associate agreement should switch to the latest BDA agreement and have it signed by all parties before 5th April 2023. If a bespoke associate agreement has been drafted by the practice’s solicitor, it may need to be reviewed and amended.

WHAT HAPPENS IF HMRC CHALLENGES THE CLASSIFICATION OF AN ASSOCIATE DENTIST?

If HMRC decides to challenge the classification of an associate dentist and believes that they are employed instead of self-employed, they will approach the dental practice. If the associates are considered employees, the practice could become responsible for paying the income tax and National Insurance Contribution (NIC) payments for all associate dentists at their practice.

COSTS INVOLVED IF FOUND LIABLE

If a dental practice is found liable for the tax of associate dentists, they will have to pay employer NIC on the associates’ pay. While there is a possibility of an offset for the taxes that have already been paid by the associate dentists, the dental practice could still be liable for the employer’s NICs at a minimum, which are 13.8%. This could result in a substantial increase in costs for the dental practice, and practice owners are advised to seek professional advice.

ENSURING YOUR CONTRACT PROTECTS YOUR SELF-EMPLOYMENT STATUS

To protect your self-employment status, your associate contract should offer complete clinical freedom and state that the use of facilities by a self-employed associate is subject to a license fee. Additionally, the contract should clearly outline your financial responsibilities. If your current contract does not provide sufficient protection, you may need to seek variations to your contract. Many practice owners are already working with their associates to amend existing contracts or replace them with more robust ones.

WHAT BIRDI & CO RECOMMEND

We recommend that all dental practices review their Associate Dentists’ status and comply with the new guidance. Our expert team can assist with this review and provide advice on all aspects of operating in the dental sector.

Get in touch to learn more about how we can help you navigate the changing landscape of Associate Dentist employment status in the UK.