HMRC and associate self-employment

HM Revenue and Customs (HMRC) is due to change an important long-standing piece of advice from April 2023. HMRC has for many years accepted that associate dentists are almost always self-employed. Its guidance has included mention of the BDA associate agreement in its employment status manual, but as of April, this paragraph will be withdrawn.


The withdrawal of this guidance will have no impact on the self-employed status of individual associate dentists. HMRC has said that this is a change to their guidance, not a change to the self-employed status of associates. They have simply stopped referring to third party advice in their own guidance. Legal experts in the dental sector also believe that the change in guidance will have minimal impact. Furthermore, HMRC will not be using the withdrawal of the guidance as a reason to open retrospective enquiries into periods prior to 6 April 2023.


When HMRC announced its decision to amend its guidance, Jolyon Maugham was asked to advise on the implications and you can find his advice in this short video.

It is nevertheless vital that practice owners and associates are prepared for the different HMRC approach, which means being aware of the issue and understanding what factors make an associate employed, and those that lean towards self-employment. HMRC will no longer simply accept that an associate is self-employed if engaged on a BDA contract and the terms are being followed. The practice owner will need to demonstrate self-employment for both new and existing associates using the normal status tests, usually via HMRC's Check Employment Status for Tax (CEST) tool (other tools are available and may be used).


This change in HMRC's approach shouldn't be a cause for concern but should be used as an opportunity to review whether practices are taking the right approach. Practice owners and associates should all familiarise themselves with the factors that determine self-employment in the CEST test,


Practice Owners should make sure they are using up-to-date model associate agreement that accurately reflect the working relationships.


Clearly, it is vitally important that the contract between you and your associate is legally correct. Whether you are a Principal or an associate, If you wish your current contract to be reviewed, we at Jacobs Legal are here to help. Please contact us at info@jacobs-legal.co.uk or on 07776 132339 for an informal discussion


Content from https://www.bda.org

Principal vs. Associate-Led Dental Practices: A Financial Analysis

20 September 2024
Understanding the Leadership Structure The leadership structure of a dental practice can significantly impact its financial performance. There are two primary models: Principal-led and Associate-led. Principal-led: In this model, the principal dentist owns and operates the practice, assuming full financial and management responsibility. Associate-led: Here, the dentist is a self-employed contractor to the practice, the principal dentist having the responsibility to provide patients and where necessary, to offer assistance and advice. Financial Implications Income Distribution: Principal-led: The principal dentist retains all profits after expenses, potentially leading to higher income but also greater financial risk. Associate-led : Associates receive a percentage of the fees that they generate as income, providing more financial stability but limiting earning potential. Overhead Costs: Principal-led: The principal dentist is responsible for all overhead costs, which can be substantial. Associate-led: The Associate is responsible for a share of the lab expenses that they generate Debt and Risk: Principal-led: The principal dentist is personally liable for any debts or financial obligations incurred by the practice. Associate-led: The associate is not responsible for the practice’s debts and liabilities. Succession Planning: Principal-led: Succession planning can be more complex, as the principal dentist must find a suitable successor or sell the practice. Associate-led: Succession planning can be easier, as associates may have an option to purchase the practice or continue working under new ownership. Financial Considerations When evaluating the financial implications of a Principal vs. Associate-led practice, consider the following factors: Personal financial goals: Are you seeking higher income potential or a more stable income stream? Risk tolerance: How comfortable are you with assuming personal financial risk? Long-term goals: What are your plans for the future of your dental career? Local market trends: Are there any trends that favour one model over the other in your opinion and experience? Conclusion The choice between a Principal-led or Associate-led dental practice sale and purchase depends on your individual circumstances and financial goals. By carefully considering the financial implications of each model, you can make an informed decision that aligns with your professional aspirations and long-term success. Feel free to contact us for more help and advice.

Purchase Completed in York

19 August 2024
Congratulations to Joanne Nurse on the acquisition of a share in Adventurers Day Nursery in York. Joanne now becomes co-owner of the nursery with Helen Nurse. Many thanks to everyone involved in the transaction, especially Amardeep Nangla for his work done on the property side and all those at Barclays Bank who helped facilitate this transaction. All at Jacobs Legal wish Helen and Joanne all the best for the future and much success in the years to come.
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