HMRC updated guidance on self-employed status of Associate Dentists

Dental practices should take note of changing HMRC guidance on the employment status of Associate Dentists from 6 April 2023. 

HMRC has previously accepted that Associate Dentists, engaged under agreements approved by the British Dental Association and the Dental Practitioners Association, are self-employed for tax and NIC purposes provided that the terms of the agreement are followed.

However, HMRC practice and guidance on this area is being withdrawn from 6 April 2023. From that date, HMRC’s view is that the employment status of Associate Dentists should be assessed in the same way as it is for all off-payroll workers.

In summary, this means considering their contractual and working arrangements in light of the status tests established in case law, with particular emphasis on: 

• the extent of control exercised or exercisable by the engager;
• whether there is a right of substitution;
• the existence of financial risk or opportunity for profit; and
• mutuality of obligation.

For dental practices, this change creates uncertainty around the employment status of Associate Dentists and will increase employment costs and administration where they have to be put on the payroll. 

Dental practices directly engaging Associate Dentists will be responsible for assessing their status. Mis-categorisation as self-employed when employment status applies could lead to unexpected liabilities for the engager in the future (such as retrospective PAYE tax and NIC liabilities, and HMRC penalties).

Dental practices should, therefore, start to prepare for this change in HMRC practice now.

If you would like to discuss this change or your approach please contact Lee Knight, Susan Ball, or your usual RSM contact.