Hygienists and self employment seem to go hand in hand within this industry, which is an area of intense interest for me. I know this will be a thorny issue for a lot of people, but it’s one that certainly should be discussed, within private dentistry in particular. Now before you all jump up and down with unmitigated rage… these are just my views and thoughts on the issue – you should seek advice from a tax expert if in any doubt i.e. your accountant…
The HMRC website (via direct.gov) states (with my comments added of course) the following:
“You’re probably self-employed if you:
- Run your business for yourself and take responsibility for its success or failure – yes in most cases, fair enough,
- Have several customers at the same time – only work for you Mr/Mrs Dentist? Fail,
- Can decide how, where and when you do your work – Do they work to a forward booked appointment book, within only one Practice premises? Fail,
- Can hire other people at your own expense to help you or to do the work for you – Is it acceptable to the Practice for the hygienist to designate someone in their place when you fancy a day off? Doubtful. Fail,
- Provide the main items of equipment to do your work – Have they got a portable dental chair, suction pump etc? Fail,
- Are responsible for finishing any unsatisfactory work in your own time – Do they charge you for fixing any work at your usual rate, within your appointment book time? Yes? Fail,
- Charge an agreed fixed price for your work – Are they on a percentage deal? (Potential) Fail,
- Sell goods or services to make a profit (including through websites or apps) – Yes, fair enough.
Now I know this won’t be quite as simple in some cases – but is this something you as a Practice owner or manager have actually thought about? Or do you just focus on the NI/PAYE saving…?
I would say that it is only a matter of time before this area of our industry comes onto HMRC’s radar, which will not be good at all, which begs the question – how can you fix this?
It’s simple, contracts of employment. The Hygienists need to be employed. They won’t like it on a lot of occasions, but lay down a fair and legal contract of employment (having had legal advice in drafting them of course) and essentially tell them to take it or leave it – without being rude obviously. If they choose to leave it, then recruit someone else – it will be short term pain, but for long term gain. There are an awful lot of great Hygienists our there and no one is irreplaceable…
Talking of business pain… I understand that HMRC are going back some 7 years when looking at this area currently…. that’s an awful lot of national insurance money owed by your business! To give you an idea of how much, let’s look at a self employed Hygienist charging you £35 per hour, 40 hours per week. Employer NI is 13.8% (£4.83 per hour), which means you would owe £193.20 per week, or £10,046.40 per year, or £70,324.80 in NI ONLY, over the 7 years – obviously that would be a massive issue for your business – not to mention the fine that would most likely be added to this figure for your ‘non compliance’ with tax law! The Hygienist would also be expected to pay backdated tax as well incidentally – perhaps let them work out how much that would be as part of your contract implementation process.
I would say it’s pretty clear from the above, that self employed Hygienists and their employers can expect some sort of ‘correspondence’ from our friends at HMRC in the not to distant future…take action now and if your accountant hasn’t at least had this conversation with you, it might be time for a change there too…
Have a tremendous day everyone!
Edd (C&E Consult).