HMRC’s attack on the employment status of dentists could be a kick in the teeth for the sector

HM Revenue and Customs (“HMRC”) has reportedly issued letters to roughly 50 dentists as part of an examination of the employment status of “dental associates”. This comes as a blow to those in the profession who have historically relied upon HMRC guidance to define them as being self-employed.

If you’re concerned about your engagement of self-employed individuals (dentists or otherwise!) then please get in touch with Aspire to discuss how we can help.

Over recent years there has been an increasing number of cases surrounding the validity of the self-employed status of individuals. Recent tribunal cases such as Uber and the Supreme Court ruling in the case of Pimlico Plumbers appear to have prompted HMRC to once again review the status situation in the dentistry sector.

This stance appears to contradict the guidance in HMRC’s Employment Status Manual regarding the employment status of dentists.  The guidance states that where dentists are practicing as associates in premises owned and run by another dentist (a principle) and are subject to an associate agreement which has been approved by the British Dental Association (BDA) and the Dental Practitioners Association (DPA) and the terms are followed, then the associate’s income will be assessed under ‘trader income rules’ and not treated as employment income. Following this guidance, where the criteria is met, an associate dentist is self-employed and is liable to class 2 and 4 national insurance contributions (NICs), not class 1 NICs.

Where HMRC launch an enquiry, the devil will be in the detail of how the services are actually provided and to whom to identify the correct employment status.  As such, it will be important to ensure that advice is taken from an expert to avoid an incorrect decision.    

Should HMRC deem that dental associates are actually employees, it could cost the sector millions in employer’s NICs.

Aspire Comment

If HMRC is preparing to challenge the dentistry sector on their use of self-employed associates, it will have major implications for practice owners who could be faced with large bills.

Whilst many are confident that HMRC won’t raise any retrospective liabilities, we have recently seen them attempt to reinterpret guidance in the care industry and also, introduce new legislation with retrospective powers relevant to contractor loan arrangements. In situations such as this, it seems that money talks and the chance to increase treasury receipts will be prioritised above everything else.  Although the topic is slightly different, it proves that HMRC is not scared of making challenges even if it makes a striking contradiction to their own guidance.

Self-employment and the collection of taxes remain very much in the spotlight, with the recent case law and Government consultations/reviews, and so, there could be further change afoot in relation to both employment tax and employment law.