Employed or self-employed? Dental practice, HMRC and vicarious liability

HMRCJonathan Jacobs explores the changing landscape of HMRC’s views on employed/self employed associates and what the future might bring.

It may at first sight not appear the most compelling of subject matters to throw together in an article. But they are becoming inextricably linked as time moves on.

COVID-19 has neither worsened or improved the situation. The linkage was there before the pandemic. And it will remain in situ as we slowly come out from the other side.

For some time now, it has been one of HMRC’s many objectives to establish the status of dental associates.

Standard agreements approved by the BDA and Dental Practitioners Association result in the associate’s income being assessed as self-employed income and not income derived from employment.

The GDS contract allows for associates to remain self employed. As long as they continue to pay their share of lab fees and abide by other terms of their contract.

That is not the case after April 2023. At this point, every associate’s tax status is considered on an individual basis. At first sight that may signal a shift from self employment to employment for dental associates. But the view from within is that it will not.

Vicarious liability

However, there is a fly in the ointment, which is gathering pace as case law develops.

It is apparent that there is a non-delegable duty of care. This is owed by the principal of a dental practice to its patients. And that responsibility, therefore, cannot pass down to the associates at the practice.  In essence that means that a patient has the right of action against the practice owner. As well as against the associate who treats them.

This duty has been substantiated in two recent cases; Breakingbury versus Croad and Ramdhean versus Agedo and The Forum Dental Practice Limited.

In Breakingbury, the judge found Mr Croad, the owner of the practice to be vicariously liable for compensating a patient for the negligent treatment administered by his associate. They clearly suggested that the relationship between principal and associate is akin to there being a contract of employment in place, rather than the associate being engaged by the principal to provide dental services.

The decision was based around the fact that the patient was a patient of the practice and not the associate.

Other issues related to the number of dentists. Miss Breakingbury was treated by a different dentist on almost every occasion she attended the practice. This was due to the fact that the practice had ultimate control of whom the patient is seen by.

In Ramdhean, the dental practice was found to owe a non-delegable duty of care to an NHS patient. And be vicariously liable for the associate dentist’s treatment.

The judge determined that the relationship between the claimant, Dr Agedo as the treating dentist, and The Forum Dental Practice Limited (FDPL) were such that she could find not only that FDPL owed the claimant a non-delegable duty of care, but that it was also vicariously liable for any negligent treatment Dr Agedo provided.

Associate agreements

I must stress that this is a first instance decision of a preliminary issue. Namely, whether or not the practice owed the claimant a non-delegable duty of care, and/or could be vicariously liable for the claimant’s treatment.

Also of note is that whilst Dr Agedo had taken no part in proceedings, he did have professional indemnity insurance. But, not notifying his professional indemnifier, they declined cover.

These cases and others that will clearly follow, present an issue for principal dentists. An issue that is already being addressed by the professional indemnity companies and insurance providers.

The burning question is how do they protect themselves from claims as a result of negligent acts carried out by the associate?

Most indemnity/insurance companies are now offering vicarious liability cover as part of a package. Some are charging a premium, but that does not detract from the fact that the industry is alert to the fact. And it is acting on the change of direction adopted by the courts.

The CQC has also taken steps to ask practices during their application and interview processes to specify the type of insurance in place at the practice over and above the individual policies held by the practitioners working at the practice.

It is of ever more increasing importance that associate agreements are drafted in such a way as to deal with the mechanics of what happens when a claim arises.

The importance of a bespoke agreement cannot be overstated. An agreement should include clauses to allow practice owners to reclaim the costs incurred when dealing with a complaint due to an associate’s negligence or recklessness. This should draw on the independence of an associate as self employed.

Changing views

In conclusion, HMRC’s isn’t finished yet.

Whilst it holds the view that associates are self employed from a tax position, the legal position is changing.

By April 2023 when practitioners are assessed on a case by case basis, there will have been more cases on this subject and consequent developments of the law and of the contractual arrangements that are in place between principals and their associates.

The message that should go out to practitioners at this time is to ensure that:

  1. Practice owners are adequately protected. Both in terms of the watertight associate agreements that they have with their dentists and in terms of the all encompassing insurance or indemnity cover
  2. Associates should still see themselves as self employed contractors. It will take a significant volume of case law to persuade the authorities to implement a seismic change in the profession.

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