As 6 April 2023 marks the start of a new tax year, it is also an important date for Associate Dentists (and some other medical and aesthetic practitioners who are in a similar situation). This is the date they may see their self-employment status coming under increased scrutiny from HMRC.

Background

Historically, HMRC has mostly accepted that where a dentist practices as an Associate run by another dentist, and provided that the Associate is both working under, and following the terms of the standard contract as approved by the British Dental Association and Dental Practitioners Association, then they are treated as self-employed, rather than employed by the practice.

What this has meant in practice is that the practice owner pays the Associate gross (i.e. without having to account for employers’ NIC to HMRC), and the Associate is responsible for paying his / her own tax and NIC.

From 6 April 2023

Following increased HMRC activity reviewing the employment status of Associates, HMRC has amended its guidance from 6 April 2023, with the onus being on the practice owner to proactively review the status of both new and ongoing Associates to ensure that the self-employment status is / continues to be appropriate.

Any discrepancies in this process will be picked up by HMRC during a PAYE review which could result in the Associate’s status being changed to employee. The result of which will be that the practice will be liable for retrospective PAYE tax and NIC liabilities on the Associate’s salary for earlier tax years, together with interest and penalties.

What to do?

As a first port of call, the practice owner should use HMRC’s Check Employment Status for Tax (CEST) tool to assess the status of each Associate and keep a copy of the results. The CEST tool isn’t without fault however and has come under criticism both for its apparent bias in favour of employment status, and for providing undetermined results which then requires contact with HMRC. CEST should therefore only be used as a guide.

Where there is ambiguity, the practice owner should review their contractual and working arrangements in line with HMRC’s guidance.

What next?

If you need assistance reviewing your working arrangements with your Associates, or have been contacted by HMRC who are opening up a PAYE review, then please contact the CBW tax team, who will be able to help you.