Are you prepared to take a 20% cut in income?

This article is an essential  read if you are self-employed or engage staff on a self-employed basis

If you have been looking at the dental press and social media recently, you will be aware that HMRC is looking at associates and whether their self-employed status can be justified. This follows fast on the heels of some landmark cases such as Uber and Pimlico plumbers. In the debate about employed vs self-employed status, dental commentators have been suggesting that if HMRC decides that dental associates (and hygienists and therapists) are employed rather than self-employed it will result in a 20% drop in salary and a massive drop in practice valuations.

Are you prepared to take a 20% drop in income?

If not read on.

I do appreciate that much of what I have written in this article may be unpalatable to you, especially if you are new to being self-employed.  My motivation for writing this is to keep you safe and help you to protect your salary and practice income. Read on. Failure to do so may cost you multiple tens or even hundreds of thousands of pounds. Can you afford not to know?

The HMRC has lots on information on its website helping you decide whether or not you are employed or self-employed. There are no hard and fast rules, each case is assessed on its merit and a decision is made looking at the balance of behaviours self-employed vs employed. If you want to retain your self -employed status and continue to benefit financially, you have a vested interest in ensuring that the probability is heavily weighted in your favour of you being self-employed.

What does the HMRC say?

On the HMRC website,  https://www.gov.uk/working-for-yourself,  they suggest that you are probably self- employed if you

·         run your business for yourself and take responsibility for its success or failure

·         have several customers at the same time

·         can decide how, where and when you do your work

·         can hire other people at your own expense to help you or to do the work for you

·         provide the main items of equipment to do your work

·         are responsible for finishing any unsatisfactory work in your own time

·         charge an agreed fixed price for your work

·         sell goods or services to make a profit (including through websites or apps)

How much this describes you and your working patterns?

Let’s look at each of these in turn and challenge the status quo by asking a number of questions.

run your business for yourself and take responsibility for its success or failure

• Do you run your associate position as a self-employed business?
• Do you market yourself to your potential customers (principals not patients)
• Do you have a business website?
• Do you employ team members?
• How do your raise your business invoices and issue payment receipts
• Do you take the full financial hit if there are no patients?
• Do you choose you uniform?
• Is your uniform branded, if so with whose logo?
• Do you find your own clients?
• How do you run the finances of your business?
• Do you do all the things a normal business does?

have several customers at the same time

• Do you work for more than one practice?
• Do you work for more than one principal / partner within the same practice?
• What makes you self-employed and not employed, working in several places on a part-time basis?
• How do you raise your invoices to prove that you have several customers at one time?

can decide how, where and when you do your work

• Do you decide your own working hours or are they stipulated by the practice?
• Do you take holidays, if so how many how long and who decides?
• How frequently do you review and renegotiate the hours you are available?
• Can you decide how you treat your patients?
• Can you decide where you work?
• What financial outcomes or UDA numbers are you contracted to provide?
• Your contact how many weeks of the year is it for?
• How frequently do you have a contract review or renegotiation with your customers?

can hire other people at your own expense to help you or to do the work for you

• Can you sub contract the work out to a locum, therapist or hygienist if you choose to?
• Are you responsible for paying your sub-contractors, or does the practice contribute to these fees?
• Can you choose your lab, and do you pay for them or does the practice contribute to lab fees?
• If you are away for extended periods of time for holiday or sickness, do you organise and pay for the locum cover?
• If you have an agreed target for UDA’s etc, and if you have a shortfall on what you have agreed to provide, do you bring in locums and pay them to help you reach your target?
• How much choice do you have over your choice of locum, hygienist or therapist.

provide the main items of equipment to do your work?

• How much dental equipment and materials do you provide and fund yourself, or do you expect your principal to provide everything?

are responsible for finishing any unsatisfactory work in your own time

• You may not invoice the patients for remakes and replacements and do you reimburse your principal for their surgery costs and staffing costs, so that you are totally responsible for the unsatisfactory work? If you don’t the practice is subsidising the remakes and you are not responsible.
• What provisions have you made to provide replacement treatment and to cover the cost of remakes and replacements after you leave?
• If the practice holds set aside fund for the provisions you have made to cover the cost of replacement of unsatisfactory work, how long is this held for?
• How are patient complaints managed are you responsible or is that dealt with by the practice manager?
• If complaints about your patients are managed by the principal or manager are you invoiced for those services, ensuring that you are responsible for managing them?
• If there are problems with work done by or complaints about your subcontractor, do you manage them or leave them to the practice to take care of?

charge an agreed fixed price for your work

• Are you responsible for agreeing the remuneration package you have with the practice?
• Can you set your own patient fees?
• How often do you renegotiate and change your renumeration package?

sell goods or services to make a profit (including through websites or apps

• Do you sell and goods to your patients, and do you make a profit on them?
• Do you sell services to your practices and to the patients, do you make profit on them?
• How do you track your costs of sales to measure your profit?

I believe that when the terms of engagement of an associate, hygienist or therapist are done well, the self-employed status can be substantiated, and yet when it is done without thought, consultation, consideration it has the potential to leave associates and principals in a very vulnerable and costly position.

For many being self-employed has many financial advantages and it also has its own responsibilities with have a cost in time and money.  To stay safe, it is important that you and your principal understand the responsibilities of each method of engagement.

Whether you are a principal, associate, therapist or hygienist, if this article has raised any questions for you please call 07989 757 884 or e mail Jane@IODB.co.uk

And we can talk through your personal circumstances and ensure that you are working and being paid in the correct way.

“A problem only is present in the absence of a truth-full conversation”

Let’s talk