Some time ago, I returned to a hotel after a day of meetings and workshops. Feeling like washing off the dirt of the day, I was relaxing in a tub of warm water when the fire alarms went off. What does one do in these circumstances? I considered the dilemma for a while and decided that I couldn’t really run out into the car park with just a towel around me. Not wanting to make an undignified rush, I got dry and dressed, then put together any really important things in a bag and packed up the laptop so that I could catch up with emails in the bar if I couldn’t return to my room. I was sure we would be corralled in the gardens until the faulty fire alarm was switched off and then allowed to troop back in grumbling to each other about the cold – as was my previous experience with hotel fire alarms.
I opened the door and was confronted with a wall of smoke and a fireman in full orange protective gear and breathing mask. He put a mask over my face and escorted me past a corridor with an ominous orange glow. I learnt a huge lesson there folks. Complacency is our enemy!
Listen to the radar
Now I am getting a little nervous tick about the self-employed status of dental associates. Several little warning signs are flashing away on my professional dashboard. There are rumours that HMRC is looking in detail at Associateship Agreements again, as they do now and again. In addition, potential changes to the remuneration of NHS practices under a new contract are going to make UDA’s a less than convenient way of calculating an associate’s income.
We should not be complacent in assuming that the current status will last for ever. In particular, we should not make the assumption that associates will automatically be regarded as self-employed. Any possible change could be catastrophic for both practices and associates, as HMRC can claim back taxes from a practice for six years if they adjudicate a change of status. Many associate contracts have a clause allowing the practice to claim this back from the associate. However, this would probably unleash a claim for holiday pay, sick pay and pension contributions.
Be aware
Whilst current contracts state ‘self-employment’, and PAYE and NI are not deducted, other conditions could make that irrelevant. For instance:
- Is an associate restricted to practice hours and maximum holiday time?
- Does the practice provide all the equipment?
- If an associate is unable to work, would the practice provide a substitute?
Answer yes to all these and a practice is taking a huge risk under current interpretation. It is also interesting that a recent test case found a dental associate was able to take an action to an Employment Tribunal, meaning that they were considered to be ‘employed’!
However, the very helpful HMRC has produced an on-line tool – HMRC IR35 test (Employment Status Indicator) – which both practices and associates can use to test their own arrangements. It enables you to check the employment status of an individual or group of workers – that is, whether they are employed or self-employed for tax, National Insurance contributions (NICs) or VAT purposes. The ESI tool provides a series of questions and once you’ve answered all the questions, the ESI tool will provide an indication of the worker’s employment status. It is possible that the ESI outcome will be accepted as evidence of a worker’s status for tax purposes. Do not be complacent, log on to:
http://www.hmrc.gov.uk/calcs/esi.htm
