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Employed or Self Employed? The dental debate reignites (again)

With an article published in The Times on Monday ( the smouldering concerns regarding ongoing HMRC investigations into the self-employment status of a group of dental surgeons has reignited.

It is important to take stock at this point.

Currently most dental surgeons are presumed to be self-employed, unless they work within the NHS secondary care system. This is by virtue of HMRC guidance (see, which accepts that they will not challenge this arrangement in a broad range of circumstances.

The problem with HMRC guidance is that it does not have the force of law, and whilst attempting to assess for unpaid tax or National Insurance retrospectively where HMRC changes guidance is generally not accepted, they are free to change it going forward at will.

This takes us to the underlying legislation and case law. If you were to apply these rules to most dental surgeon relationships, especially in larger corporates, I think most of us in the accounting profession would accept that ‘self-employment’ is a tricky argument. Note that I say most relationships; regardless of any HMRC guidance, a significant minority of dental appointments are likely to survive as ‘self-employed’ in the eyes of the relevant law.

So where does that leave us?

If HMRC revoke or significantly alter their guidance, then each relationship will need to be reviewed on its merits. Many will fail to meet the tests for self employment. Some will if altered, but the required alterations may not be acceptable from a commercial point of view.

If an associate is found to be employed, then the new employer (the Principal or Corporate) will need to account for Employers’ National Insurance, the ‘headline rate’ of which is currently 13.8%. This is where the significant cost arises. Incidentally, there are modest relative increases in tax cost for the associate as well, which potentially increase heavily if they currently operate as a limited company.

However, let’s bust some myths:

1. You don’t take your Associate Fees and multiply by 13.8%. Employers’ National Insurance only applies after the first £702 per month of earnings per employee (2018/19 rates). So the actual amount payable across a practice or group will depend heavily on the average earnings received by each associate.

2. Employers’ National Insurance is an allowable deduction for Income Tax or Corporation Tax purposes. The effective cost is therefore lower than the headline rate. It will be significantly lower for those Sole Traders or Partners paying Income Tax at marginal rates of 45%.

3. The recent press seems to imply that practices will simply add this cost to their books, and many will therefore fail. I don’t argue with the second part, but the first implies there will be no negotiation with associates. In reality, if this is a wholesale change brought in across the industry, I think we can all expect the burden will at least be shared between associate and employer. In reality, I think this will herald a wholesale reconsideration of how associates’ remuneration is calculated.

4. Being employed for tax purposes is not the same as being employed legally. Simply because HMRC consider a relationship as employment does not mean the individual automatically acquires other employment rights, employment law may still consider them as self employed. However, it is a poor start for any principal or associate who is trying to argue self-employment. Again, I think a wholesale change will force the industry to reconsider the relationships with associates, with all the myriad challenges that brings (employment rights, time off, statutory pay, indemnity and risk etc.).

All of this is in the context of an ‘off-payroll’ consultation currently underway (see: which would be of particular concern for those who engage associates that operate as limited companies. If the consultation results mirror the changes in the public sector, the onus for reviewing such relationships may fall to the ‘would-be’ employer.

If you are concerned at all please don’t hesitate to get in touch for a complimentary consultation, or download our guide here: You can find out more about us at:

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