Nationwide tax investigation could be painful for Lancashire dentists
Dental businesses across Lancashire could be forced out of business by a nationwide tax investigation which is having its launch in the North West, according to an expert.
Tax authorities are writing to dentists as part of an examination of the employment status of “dental associates” who perform much of the work in practices across the country.
If HM Revenue & Customs decides that these associates are not independent contractors but employees, it would force dental practices to start making national insurance contributions – imposing major new financial burden and potentially threatening their financial viability.
The employment status of workers for tax purposes has become a major issue.
In June this year, Gary Smith, a former employee of Pimlico Plumbers, won a landmark court case against the company during which he argued that he was self-employed.
Andrew McKenna, tax investigations partner at accountancy, investment management and tax group Smith & Williamson, says the investigation will affect larger practices in particular.
He said: “This investigation is initially being rolled out across the North West, and nationally it could have a major impact on thousands of people who work in the dental sector.
“If HMRC deems that a dental associate who claims to be self-employed is actually a full-time employee, this will incur the payment of NICs by the employer.
“For larger businesses, these costs would be payable at a stroke – and they would substantial.
“It is an employer’s responsibility to determine the status of their workers and the consequence for getting that wrong can be financially significant.”
The investigation centres on whether income tax under PAYE and NIC should apply to dental associates .