James Goldman tells
us whether IR35 changes will impact the employment status of dental associates
and lead to large tax bills for practice owners.
Photo (c) Getty Images
IR35 is a tax law intended to stop individuals avoiding employment tax by treating themselves as self-employed, when they are in fact working as an employee. Public sector employers (including NHS dental practices) have long since had a responsibility for determining whether workers working through limited companies are, in effect, working like employees.
At present, IR35 laws say that an NHS dental practice is required to pay extra tax, if they are engaging someone though a limited company, but that person works in a way consistent with being an employee.
From April 2021, these rules will also apply to larger private practices. They will apply to your practice, if two of the following conditions are met:
- Your practice has an annual turnover of more than £10.2 million
- The balance sheet total is more than £5.1 million
- You have more than 50 employees.
Will these IR35 changes impact dentists?
These changes have yet to be finalised, but we have been advised that most associate dentists, working to a good contract, will likely be considered as self-employed. We believe the IR35 rules pose little risks as regards associate dentists. There is only a risk if the associates are working in a way that is consistent with being an employee.
For an associate to be self-employed they must:
- Have clinical freedom. They should have the ability to choose their own hours at least to some extent.
- Be involved in complaints against them.
- Be able to affect their income by, for example, providing private treatment.
- Be able to arrange a locum to do work for them.
- Decide what they charge.
How can you prove your employment status?
If you need to prove that you, or an associate in your practice, is self-employed then having a good, written associate agreement is an important first step.
In advance of these IR35 changes, we have taken advice from a leading barrister specialising in employment status for tax purposes. He was happy that most associate dentists would continue to be considered self-employed and that our model associate agreement can help demonstrate that an associate is self-employed.
- If you are an associate, I suggest you get your contract checked by our advice team to make sure everything is in order.
- If you are a practice owner, I suggest you review our model associate agreement. Members can request a copy by calling 020 7935 0875.
We can help ensure you’re prepared for any employment status questions that might arise. If you are contacted by HMRC with questions about your employment status or the employment status of one of your associates, you should also get in touch with an accountant who has some knowledge of status questions and ideally one who knows the dental industry.
Associate Director of Advisory Services, BDA
Our advisory services team offers advice to our members on a huge range of issues, such as employment law, health and safety, the NHS, business support and regulatory inspections.