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Associate dentist tax status changes

Author: Tom Slevin, DJH Mitten Clarke

Published: 03 Jul 2023

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What the changes mean for dentists and a guide to using the CEST Tool.

For many years, there has been guidance from HMRC under the ESM4030 that associate dentists can be treated as self-employed. This was based on the practice and associate signing a British Dental Association (BDA) or Dental Practitioners Association (DPA) standard associate contract and both parties adhering to the terms in the contract.

Whilst these agreements were in place and terms were followed, the associate dentist would be subject to tax under the rules for trading income, and not as employment income. This means that it falls to the associate dentist to pay their tax as self-employed.

From 6 April 2023, HMRC withdrew the guidance in ESM4030 that associate dentists will be treated as being self-employed if they are engaged under a BDA or DPA associate agreement. This means that the employment status of each associate dentist will be based on the usual case law which decides if someone is self-employed or employed.

Dental practices and associate dentists should now be utilising the CEST tool available on gov.uk and answering the questions on the CEST tool in reference to the agreement and the actual working practices of the associate dentists. Once the questions are answered, the CEST tool will arrive at an answer on whether or not the associate dentist is self-employed or an employee. If the questions have been answered accurately, then HMRC will stand by the determination given by the tool.

Those dental practices that have an older BDA associate agreement should also now be using the up-to-date BDA agreement and getting this signed by all parties before 5 April 2023. If dental practices have a bespoke associate agreement drafted by their solicitors, then this may need to be potentially re-drafted by their solicitors.

CEST tool

The CEST tool is split into different sections. I have gone through each section below with the questions that the tool asks and have given what I feel is the conservative answer for the average associate dentist contractual arrangement.

These are just a guide to the answers and may differ depending on the contractual terms of engagement.

About you and the work

The first section of the CEST tool asks if you are looking at whether IR35 applies (a contract with an associate dentist operating through a limited company) or whether you are looking at if the work will be classed as self-employment. The answer to this will depend on how the associate is being engaged but the questions that follow apply to both types of engagement.

I will be looking at this from the point of view of the hirer/dental practice and where the associate dentist is already working at the dental practice.

Worker’s duties

The CEST tool asks whether the associate dentist will be an office holder, which will be no.

Substitutes and helpers

This section has been the most talked about section since HMRC announced the withdrawal of ESM4030. This section asks whether the associate has ever engaged a substitute to carry out the work, whether the dental practice has the right to reject the substitute and whether the associate dentist has ever paid another person to carry out the work for them.

The answers to this will differ greatly for many dental practices but as I am looking at a conservative approach to this, I have seen many contracts where the dental practice can reject the substitute/locum, and so for many associate dentists, the answer would be that the dental practice can reject the substitute, even if this is unlikely. If the associate dentist has previously engaged a locum to carry out their work, for example if they were off work with illness or on parental leave, the test will then ask who actually paid the locum.

It is important that the questions are answered according to the actual working practices and not the contract. If the contract states the associate dentist will need to engage the locum, but the dental practice actually finds the locum, engages them and pays them, then the question should be answered in accordance with the actual working practice.

Working arrangements

This section looks at the control the dental practice has over the associate dentist. The questions in this section include:

  • Does your organisation have the right to move the worker from the task they originally agreed to do?
  • Does your organisation have the right to decide how the work is done?
  • Does your organisation have the right to decide the worker’s working hours?
  • Does your organisation have the right to decide where the worker does the work?

The associate dentist is engaged to carry out dental services on the dental practice’s patients. The dentist would not be moved from this task to carry out other tasks, such as reception duties, and the first question isn’t a particular concern for the ordinary working arrangement.

The associate dentist is a highly skilled professional and the principal dentist will not decide how the associate treats their patients and so I would answer the second question stating the worker is highly skilled.

It is likely that the dental practice will determine the working hours, as the dental practice will be open on certain days of the week with standard opening hours. The place of work will also be the dental practice building, and so there is only one place for the associate dentist to work in.

Worker's financial risk

This section is arguably the most important section to determine self-employment.

The questions are as follows:

  • Will the worker have to buy equipment before your organisation pays them?
  • Will the worker have to fund any vehicle costs before your organisation pays them?
  • Will the worker have to buy materials before your organisation pays them?
  • Will the worker have to fund any other costs before your organisation pays them?
  • How will the worker be paid for this work?
  • If your organisation was not happy with the work, would the worker have to put it right?

Associate dentists will have their own loupes that they have purchased to enable them to carry out dental treatment and may have other equipment they use that is not funded by the dental practice – some specialist dentists will have their own equipment that they take from practice to practice for example. They may also have their own camera, specialist seating and other specialist dental equipment to carry out their work. Without these, the associate dentist would not be able to carry out treatment and so would not be paid.

Vehicle costs are not relevant for most associate dentist engagements.

For the materials question, HMRC state this includes items that form a lasting part of the work and is most relevant to the construction industry. I have seen the argument that laboratory work could be relevant here but this question doesn’t seem to have a huge weighting to the decision made by CEST.

The associate dentist will need to fund other costs – these include professional indemnity insurance, GDC subscription and other costs that are required for them to practice as an associate dentist.

Most associate dentists are paid a percentage of the sales they generate and this demonstrates some financial risk for the associate dentist. If the dental practice is paying the associate a fixed hourly rate, which would be in a small minority of cases and most commonly seen with some orthodontic practices, I would suggest that this is changed as it could affect the final decision arrived at by CEST.

The final question can be looked at in the scenario of a patient being unhappy with the treatment they have received. In most contracts, the associate dentist will need to fix the problem with no additional fee being paid by the patient and so the associate dentist will effectively generate no income during that treatment time. The associate dentist may also incur additional laboratory costs that may not be shared by the dental practice depending on the terms in the contract.

Worker's involvement

This section looks at what benefits the practice provides to the associate, whether they have management responsibilities and how they introduce themselves to patients.

HMRC describe management responsibilities as giving appraisals to employees, hiring and firing employees and helping decide on how much to pay someone. It is unlikely an associate dentist will have management responsibilities at most dental practices and as a self-employed individual, the associate dentist should not have management responsibilities. Those associate dentists that are working at a practice with no principal dentist (generally practices owned by the corporate groups) would need to ensure they are not taking on these responsibilities.

The CEST tool asks how the associate dentist introduces themselves to consumers/suppliers and can be answered as working for you, an independent worker acting on your behalf, work for their own business or this would not happen. An associate dentist is working for their own business in the dental practice premises but it is unlikely a patient is aware of the working arrangement. From my testing of the CEST tool, the answer to this question isn’t too important in determining tax status.

Worker's contracts

This final section looks at the contract, whether there are any ownership rights in the contract or restrictions of trade and previous and future contracts. Most contracts I see are open-ended with some restrictions on the associate being able to work within a certain radius of the dental practice.

The answers to some of these questions will depend on the contract in place and whether the associate dentist is also working at more than one dental practice.


Once the questions are answered, the CEST tool will ask you to check your answers and then give you a result of either employment, self-employment or cannot determine the status.

From my tests, the workers financial risks section is the most important section in determining whether the engagement is self-employed. If the associate is paid a percentage of sales generated, funds some of their own costs, or funds some of their own equipment costs, the result will generally be that of self-employment. If the answers to these questions are amended, then the CEST tool may change the result to unable to make a determination.

HMRC have stated that where the questions are answered truthfully and accurately then they will accept the determination that arises.

The dental practice and associate dentist should both keep a copy of the results with the contract for the associate and if the CEST tool is updated, the working arrangement should again be tested on CEST.

*The views expressed are the author’s and not ICAEW’s.