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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included mention of our associate agreement in its employment status manual, but as of April, this paragraph will be withdrawn.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 told us 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. The National Association of Dental Accountants and Lawyers, the experts on 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, we asked tax expert Jolyon Maugham 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, as set out in this blog by James Goldman, our Associate Director of Advisory Services.

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