Dentists fear tax catastrophe

Large dental businesses fear a “catastrophe” if a tax investigation into thousands of their staff determines that dentists who claim to be self-employed are actually full-time employees.

HM Revenue & Customs (HMRC) has written to around 50 large dental businesses, mainly in the North of England, as part of an investigation into the employment status of ‘dental associates’, who perform much of the work across the UK.

If the taxman ultimately decides that these associates are in fact employees, the implications are enormous, as these businesses, many of which own multiple practices, would have to start making National Insurance Contributions (NICs), which may cripple many of them.

In fact, if the taxman’s decision went this way, the NIC contributions of affected employers would be huge and the extra costs that landed would likely not be recoverable.

Corporate dental businesses across the UK, which dominate the sector, generally rely on using self-employed staff, who are often recruited from overseas, as this saves them millions of pounds in NICs.

However, the profits from these practices have been shrinking through a combination of the decreasing value of NHS work, the rising cost of buying dental practices and staff shortages.

One such business, which owns more than 600 dental surgeries, is already facing questions about its future. Meanwhile, a similar business reported a loss of £3.3 million in its latest results, which is £1.3 million more than it lost in 2016. Both of these businesses are significant providers of dental services to the NHS.

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