Associate dental surgeons are typically those who work within a practice owned by a third-party, normally a principal dental surgeon or corporate provider. These arrangements are usually intended as contracted roles. It is fair to say that a significant majority of the dental surgeon population in primary care work on the assumption of a self-employed model.

Dental surgeons and their advisors have historically relied on ESM4030, in varying degrees, to provide assurance on their status. With changes to this guidance, that assurance is removed.

Without reference to a template contract to provide assurance, however limited, dental surgeons and their engagers will need to assess their employment status for tax purposes in detail. HMRC have recommended use of their CES (Check Employment Status Tool) tool to do so.

Dental surgeons and engagers may also need to make this assessment in the context of the off payroll working rules; some associate dental surgeons use limited companies to engage with their principals. These were of course expanded to medium and large end-users (clients) in the private sector from April 2021, although the majority of dental providers remain small businesses and therefore outside scope.

Use of CEST is not without controversy and reliance on CEST determinations assumes accurate data entry on the part of the user.

Of course, as HMRC have rightly pointed out, it is the substantive nature of the relationship that ultimately matters, not the legal wording deployed. There are risks that, mismanaged, use of tools like CEST by associates referring only to their contract, and not the reality of their relationship, may create danger.

By removing reference to template contracts in their guidance, HMRC are drawing a clear line that (at least from April 2023) they will assess dental engagements primarily on the substantive relationship, not the underlying contracts, and they have said as much.

The effect of the change on the sector is yet to be seen. Larger dental corporates have already written to their dental surgeons providing notice of changes to older contracts to better demonstrate self-employment within the current climate. For example, there has been a recent emphasis on improving the (often existing) right of substitution in dental associate contracts through locum provisions.

Of course, getting it wrong can have significant consequences. The most egregious cases may face PAYE determinations and failures.

The emphasis for now seems to be on protecting the self-employed nature of the principal – associate relationship, rather than assuming a switch to employment. Aside from the Employer National Insurance savings, there are many commercial reasons why this may be preferred, including the allocation of clinical indemnity and risk (accepting that legal employment status, relevant to clinical liability, does not necessarily follow tax employment status).

HMRC have suggested the changes to ESM4030 are cosmetic and an exercise in keeping tidy. If this is true, and the substantive working relationships match the underlying contracts, then there will be little disruption.

But if the changes in guidance herald a more active HMRC in reviewing the self-employed status of dentists, and the evidence of recent enquiries and interest in the sector suggest this might be the case, the profession may face significant disruption.

In addition, the profession is working in a more regulated and controlled environment with each passing day, suggesting that the need for greater control between principal and associate is increasing, not decreasing. This is in potential conflict with the commercial desire to maintain the status quo of the principal – associate relationship.

There are few sectors that rely on the mass self-employment of individuals as a core feature of their structure. Those that do (e.g. ride-hailing, such as Uber) have famously faced significant challenge, albeit more from a legal perspective. In this context, it is not unreasonable to assume that, at least from April 2023, dentists may find themselves under greater scrutiny.

If this happens, accountants will play a key role in helping their dental clients navigate these changes.