Court Case Does Not Affect Associate Tax Status

Court Case Does Not Affect Associate Tax Status

Confusion over the employment status of dental associates arising from a much-publicised County Court case, has been clarified by NASDAL.

The recent Breakingbury v Croad case found that a dental practice owner could be held vicariously liable for negligent work carried out by associates.

While the judgement in the case has serious financial  implications for practice owners, the case also raised questions surrounding the employment status of dental associates when the judge, His Honour Robert Harrison said that the relationship between principal and associate was  "akin to employment.”

The inclusion in the judgement raised unfounded speculation that associates may be treated as being ‘employed’ in the future with regard to tax status.

But a spokesman for the National Association of Specialist Dental Accountants and Lawyers said there is “no tax implication” for dental associates.

NASDAL says that where British Dental Association and Dental Practitioners Association standard associate agreements are used and the terms are followed, the income of the Associate dentist is assessable under trading income rules and not as employment income.

“As long as associates use BDA contracts and actually work in line with them, they should pass the overall self-employment for tax purposes test. However, it continues to be less clear now that an associate could be considered self-employed by HMRC and yet be a “worker” from an employment law perspective.”

Damien Charlton, Chair of the NASDAL Lawyers’ Group and partner at Ward Hadaway explained, “This is an interesting case that perhaps raises as many questions as it answers. The first point to make is that first and foremost, this is a case about responsibility for defective treatment, and does not address self-employed status as such. The claimant chose to pursue the practice owner rather than the associates that provided the treatment.”

“This could have been because, as reported in some of the dental press, that two of the three associates are no longer registered on the GDC register and are no longer resident in the UK.”

“The Judge in the County Court was trying to find who was responsible for poor treatment. In this instance, the court found the practice owner had a non-delegable duty of care to patients. The court also considered the concept of "vicarious liability", which arises when a tortious act (such as negligence) occurs, and a third party is liable for that act because the act was committed by one of its agents.”

“The principle of vicarious liability can make an employer liable for the acts or omissions of his employees, but it is not confined to employment relationships and can arise where there is a relationship that is "akin to employment.”  In the Breakingbury case, the judge found that the practice owner was vicariously liable for the negligence of the associates that work at the practice.”

NASDAL warned “If you are a Principal, it would be advisable to check your indemnity insurance and find out if it provides cover for vicarious liability. You should always ensure that your associates have their own indemnity insurance, and if an associate leaves then try to ensure you have a forwarding address.”

Alan Suggett, Chair of the NASDAL Technical Committee and Head of the Dental Business Unit at UNW added, “Yet again it seems that the legal and financial landscape is becoming more and more complicated for dental professionals. Now, more than ever, the value of expert advice has never been greater.”

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