Dentists Self Employed Tax Status Challenged by HMRC – Who’s Next?

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Dentists Self Employed Tax Status
Dentists Self Employed Tax Status

Dentists Self Employed Tax Status

HMRC are currently challenging dentists self employed tax status of self employed.

Most dentists work for the big dental companies on a freelance basis currently.

Those big dental companies do a lot of work for the NHS.

In April last year, the Government and HMRC changed the rules for freelancers in the public sector.

New Public Sector IR35 Rules

According to the new rules, and the new IR35 test that they prepared, freelancers working in the public sector would no longer determine heir own IR35 status.

It would be the person and department hiring the freelancer that would decide this.

They would use the new IR35 test to determine the status of the freelancer.

There would also be financial penalties for those departments who got it wrong.

So far, 54% of contractors who sat the test passed it and 46% either failed the test or the results were indeterminate – which would come to the same thing in practical terms.

Dentists Not Employed by National Health Service

However, most dentists are outside the National Health Service although they do work for it via the big Dental companies.

Now HMRC have set their sights on the dentists self employed tax status.

HMRC and the Government are already planning to roll out the public sector IR35 changes to the private sector too.

They are in consultation stage at the moment.

It is predicted that they will roll it out in either April 2019 or April 2020.

Cherry Picking Professions for IR35 Tax

It looks, however, in the meantime that they are cherry picking professions to investigate.

They have written to around 50 dentists, mostly in the North of England.

They want information from them on their working practices and dentists self employed tax status.

HMRC will then determine if they are really self employed or they are employees of big dental companies like MyDentist and Southern Dental.

The dentists say that they provide their services on a freelance basis to the big dental companies.

HMRC obviously believe that they are employees of the big dental companies.

It looks like HMRC are picking off the professions one by one, targeting what they see as the easier ones first.

More Costs for Dental Companies

If HMRC rule that the dentists are really employees that would add greatly to the costs of the dental companies as they would have to pay Employers National Insurance and provide benefits to their ’employees’.

It would have an even greater impact financially on the dentists themselves.

Some doctors say that their take home pay was cut by 40%.

MYDentist use around 600 different dental practices.

Freelancers and Disguised Employees

Although the Government pay lip service to freelancers in the UK, they appear to believe, from their actions that a major percentage of UK contractors are really disguised employees.

It’s difficult to see how dental practices fall under the Supervision, Direction and Control part of IR35 as they work autonomously.

Dentists self employed tax status has been the same for years – till now.

Government Wants More Tax from Freelancers

However, with growing numbers of self employed the Government, and HMRC, seem determined to grab more and more tax from them.

There’s also the problem of back tax and penalties.

If HMRC determine that the dentists are really employees of the companies then they may decide that they were operating falsely as self employed for years.

They may want the back tax and penalties.

Changed Form Limited Companies to Umbrella Companies

When the Government and HMRC rolled this out in the public sector, most of those who were now inside IR35 changed to using umbrella companies dumping their limited companies.

One would expect that dentists would do the same rather than just pay the IR35 tax.

However, it is yet another attack by the Government and HMRC on the freelance community in the UK.

It is dentists self employed tax status that is being challenged now.

Who’ll be next?

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