Dental businesses fear a “catastrophe” over tax
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- Published: Wednesday, 01 August 2018 07:48
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The City Editor of The Times has reported that dental businesses fear a “catastrophe” if a tax investigation into thousands of their staff determine that dentists who claim to be self-employed are actually full-time employees, ‘potentially costing the industry millions in extra costs’. Dental accountant, Alan Suggett, told the paper that “What HMRC is doing is dangerous.”
The Times reports that tax authorities have written to about 50 dentists, mainly in the north of England, as part of an examination of the employment status of dental associates who perform much of the work in practices across the country. If Revenue & Customs decides that associates are not independent contractors but employees, it would force dental practices to start making national insurance contributions that would hit hardest large corporate players that are already struggling to make money, the paper claims.
“What HMRC is doing is dangerous,” said Alan Suggett, a dental sector specialist at UNW, a leading firm of chartered accountants. “NHS dental profits have been falling since 2009 and if dental associates were deemed to be employees, the employers’ NIC contributions would be huge and the extra costs that would be landed at a stroke would not be recoverable — and that would be a disaster,”
The paper goes on to say that big corporate dental businesses have come to dominate the sector over the past decade and generally rely on using self-employed staff, often recruited from overseas, saving the companies millions of pounds in national insurance. Despite their size, their margins have been shrunk by a combination of the decreasing value of NHS work, staff shortages and the rising cost of buying dental practices. “The end result could be catastrophic,” Mr Suggett said.
Mydentist, Britain’s biggest private dental company with more than 600 practices, is already facing questions over its future and in its latest financial results reported a near-doubling in pre-tax losses to more than £140 million. Southern Dental, another large business, reported a loss in its latest results of £3.3 million in 2017, up from £2 million the year before. In addition Mydentist has failed to meet its NHS targets in recent years, meaning that it has had to return tens of millions of pounds to the health service, putting further pressure on its finances, The Times says.
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