Employment status of Associate Dentists under review

16th October 2019

With new off-payroll working rules starting in April 2020, HM Revenue & Customs (HMRC) is taking a closer look at the employment status of associate dentists.

HMRC is trying to persuade dental practices to use its Check Employment Status for Tax (CEST) tool as a matter of course when engaging an associate. The tax department also wants practices to be continually reviewing existing engagements with associates to ensure they remain one of self-employment.

The employment status of associate dentists has been a contentious issue since the introduction of the 2006 NHS contract.

It is unlikely that many dental practices are currently using the CEST tool, though now would be a good time to at least understand how it works. As employment status specialists will already know, the CEST tool is a clumsy and rather biased attempt at codifying many years of established case law on status.

HMRC is undertaking enhancements to the CEST tool, following criticisms of its performance. Whether these changes will be enough to satisfy the critics remains to be seen.

Dentists will be particularly interested in such status issues as the use of substitutes, and expenses paid by an associate which are not reimbursed by a practice.

Where a practice is following the terms of a British Dental Association (BDA) contract, it should follow that the CEST tool would consider the associate to be self-employed. Where, however, the BDA contract is not followed, practices need to review engagements with associates to make sure they continue to be self-employment.

Employment Status Manual

HMRC continues to target associates to assess their working patterns in practice and to ensure that dental practices and associates are following HMRC’s guidance as set out in its Employment Status Manual at ESM4030.

The guidance says contracts should be used and the terms followed. Of interest to HMRC has been the clause for locum dentists, if the clause has been used and who engages the locum.

There are many associates engaged in a practice that do not have a contract, or do not have a BDA or Dental Practices Association (DPA) approved contract. This should be reviewed

Since the changes in 2006, dental practices now own the NHS contract, and associates are engaged to complete Units of Dental Activity (UDAs) on the contract. Previously, associates bought their own NHS contract into the practice.

There were concerns at the time that this change would signal the end of self-employment status for associates. But following sector representations, HMRC updated its guidance in ESM4030 to reassure the dental industry that associates remain self-employed.

The future

With HMRC making strenuous efforts in many sectors to force people onto the payroll, rather than being self-employed, it may be a question of time before status issues for the dental sector become a real problem.

The new off-payroll working rules can also create additional time and cost pressures for practices.

If you would like to discuss these issues, please contact a member of our healthcare sector, or your usual Bishop Fleming advisor.


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