Welcome to the latest edition of Hempsons’ Dental Newsbrief, a round-up of some of thehot legal topics in the dental sector.

In our first article, Faisal Dhalla discusses the legal implications of being a self-employed dental associate of a practice following recent case law and HMRC’s planned change to their guidance in April 2023.

Following the recent spate of case law in vicarious liability and non-delegable duty, our regulatory partner Sharon Cooney explains what this means for dentists and dental practice owners.

Daniel Howlett, a solicitor in our real estate team, considers the effects of title defects and problems which can arise from them.

Finally, our last article, written by James Morter from chartered accountancy firm Hazlewoods, delves into the ins and outs of transitioning from NHS practice to private practice.

We hope you will find something of interest in this Newsbrief. If you want more information or to follow something up, please get in touch.

e: enquiries@hempsons.co.uk

Associates beware!

Most of you will be working as self-employed associates, rather than being employees of the dental practices that you work for. This means that your income as a dentist can be assessed as trading rather than employment income for tax purposes. This is a position that many clinicians still favour. Following cases in other sectors where the status of individuals has been considered (eg the well known Uber decision), there has been much speculation as to what this might mean for the tax status of dentists going forward. Further, we know that HMRC have been scrutinising associate dentist contracts for some time.

Withdrawal of HMRC guidance

You may all have noticed an increased level of hype around this topic following the announcement by HMRC that an element of their previous guidance on the status of associate dentists will be withdrawn from 6th April 2023. It has, up until now, been the case that dentists engaged under the terms of the BDA’s standard form associate agreement and agreements that have been approved by the Dental Practitioners Association (DPA), were automatically deemed to be self-employed. HMRC’s guidance was clear that “Where these 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. In these circumstances the dentist is liable for Class 2/4 NICs and not Class 1 NICs”.

However, as from 6 April 2023, an individual associate’s tax status will be determined on a case by case basis instead. There will no longer be the blanket approach applied to associates engaged on particular forms of agreement. The question many of you dentists may therefore be asking yourselves is, will my self-employed status change, and will I become an employee of my dental practice as a result of this change? The short answer to that is, not necessarily. However, the devil is very much in the detail and will depend on your own individual circumstances, as well as the particular contract that you have in place for your engagement.

What should you do?

Our strong suggestion is that you take the time now, ahead of the changes in April 2023, to really scrutinise your own arrangements with your practice to test whether or not they will stand up to external scrutiny. You’ll need to consider what it really means to be self-employed vs employed. The element of control that you vs your practice owner has, will be a key factor in determining that. The terms of your associate agreement will help make this determination, as will what actually happens on the ground.

A good starting point will be to take the HMRC CEST test. This is an online status checker that asks certain questions about the terms of your contract to seek to determine whether or not you are genuinely self-employed for tax purposes. Some of the questions asked within that test are key indicators to your status. We explore some of the key ones to look out for below.

What does it mean to be self-employed?

As alluded to above, control is a key element with self-employed status. An associate should have the autonomy to decide their own working arrangements – for example, when they work, how they work, how they dress etc. We would also expect a self-employed dentist to be able to appoint their own locums or “substitutes”. This means an associate can decide to engage a locum to perform the duties instead of them – whenever they wish. This is because, unlike an employment relationship, the engagement of a self-employed individual is not personal.

In particular, this will be required when you wish to take time off or when you will be away from your practice for other reasons (eg maternity, paternity leave). It is also important that the right to appoint a locum is not subject to further restrictions by the practice owner. Given the nature of this, it might be prudent for you, as a self-employed individual, to obtain locum insurance cover for the costs connected with this (to avoid you taking a personal hit out of your own income). Further, the right of substitution must be very clear in your contract.

As a self-employed associate, rather than an employee, you will also take on financial risk connected to your role. This is because you will need to pay for your own equipment and materials, as well as your own laboratory fees. You will need to rectify, at your own cost, any poor dental treatment you carry out. You will also only be paid based on the work that you carry out, and you will be required to bear the burden of your bad debts as well. Your contract must spell all of this out very clearly.

Unlike employment contracts, associate agreements should not have mutuality of obligations ie the practice owner does not agree to provide work in return for the individual carrying out such work.

A self-employed associate should have complete clinical freedom and should not be under the supervision of the practice owner. Furthermore, the use of the facilities by a self-employed associate needs to be subject to a licence fee.

Subject to your own scrutiny of your associate contract, it may mean that you will need to seek variations to your contract, to provide you with greater protection of your self-employed status. Many practice owners are already working with their associates on this and are either amending existing contracts or replacing them with more robust ones.

Vicarious liability

A recent Court of Appeal case, Hughes v Rattan, determined that, in the specific circumstances of that case, the practice itself was not liable for the treatment provided by the self-employed dentists who worked there. This is because the dentists had a huge amount of freedom in the practice. However, the same case also determined that the practice had a non-delegable duty to its patients – a positive duty to protect patients from injury.

This case has recently led to a flurry of activity with practice owners amending their associate contracts to add specific “indemnity” provisions. These require the associate to reimburse the practice owner for any losses that the practice owner suffers as a result of the associate’s actions or negligence in connection with treatment provided to patients at the practice. Practice owners see this as an important part of protecting their businesses against the possible risks of vicarious liability or resulting from them having a non-delegable duty to their patients. Further, the BDA has recently updated its template agreement in light of this – in response to the changing shape of corporate liability.

Everyone’s arrangements are different and seeking advice from specialist dental legal advisers is strongly recommended to ensure that you have the best chance of retaining that self-employed status that you are looking for. Having a robust associate agreement is of paramount importance.

Faisal Dhalla


Vicarious liability and
non-delegable duty

Following on from Faisal Dhalla’s article I am going to take a look at the recent flood of case law in vicarious liability and nondelegable duty which also affects dentists and, in the main, dental practice owners.

There is some synergy between the two, in that the level of control exerted between the practice owner and associate dentist is used by HMRC to determine (amongst other things) whether the associate is self-employed. The Courts also study this relationship to decide whether vicarious liability and/or a non-delegable duty arises. Therefore, an understanding of one lends itself to a greater insight into the other.

What has changed?

In recent months the courts have shone a spotlight on the rather precarious position practice owners (current and former) now find themselves in concerning patients who are harmed because of clinically negligent treatment provided by self-employed dentists who work, or may have worked, at their practice. Historically the accepted view had been that self-employed associate dentists were, by and large, responsible for making good any damage caused to patients because of negligent treatment they provided. However, recent jurisprudence has turned this thinking on its head.

In January 2020 Leeds County Court considered the (unreported) case of Ramdhean v Agedo and the Forum Dental Practice Limited 2020 WL 00620352 (“Ramdhean”). Following hot on its heels is the other widely publicised County Court decision of Breakingbury v Croad (19 April 2021, Cardiff County Court) (“Breakingbury”). Both cases grappled with the concepts of vicarious liability and non-delegable duty in circumstances where the treating dentist, a self-employed associate, caused damage to the patient because of substandard treatment.

Ramdhean – turning of the tide

In the case of Ramdhean the treating dentist had indemnity but did not notify his indemnifiers of a possible claim, and cover was declined. To avoid having no hope of an effective remedy, the claimant argued the practice (a body corporate) was liable for the failings of the self-employed dentist by reason of vicarious liability and a non-delegable duty towards the patient.

Test for non-delegable duty

The parties agreed that the Supreme Court decision in Woodland v Swimming Teachers Association & Others [2013] UKSC 66 (“Woodland”) is the authority for establishing whether a non-delegable duty applied to the patient. Some of the issues considered by the court were as follows:

  • is the claimant a patient or child or for any other reason considered to be vulnerable? The claimant was clearly a patient. Furthermore, she was considered a patient of the practice, not of the self-employed associate by reason of the fact the practice held her records and contact details, it was responsible for arranging appointments and processing payments
  • is there an antecedent relationship which places the claimant in the control of the defendant? The court looked to the contract to provide dental services
  • does the claimant lack control over how the dental services were performed? The court established the claimant didn’t have any control over the way in which the practice performed its duties under the contract, other than to express a preference for a particular dentist. They could not insist upon a specific dentist

The court concluded it was reasonable to find that a non-delegable duty of care existed towards the patient

Test for vicarious liability

Turning to vicarious liability, the principles set out in the Supreme Court decision of Various Claimants v Barclays Bank plc [2020] UKSC 13 are authoritative. The court considered whether the relationship between the practice and the self-employed associate dentist was “akin to employment”. It was found it was.

Notably, a small amount of control was found to be sufficient to justify vicarious liability, even where the associate could make clinical judgements and provide treatment as they saw fit. The court was also concerned about whether the associate was integral to the running of the practice’s business or independent. It relied upon several factors to find it was. The practice was also found to be vicariously liable to the patient for the clinical failings of the treating dentist.

Although the Breakingbury case was not bound by the findings in Ramdhean, the court came to the same conclusion in finding against the practice.

Hughes v Rattan – mixed fortunes

These legal principles were considered in this context by the High Court for the first time in July 2021 in the case of Hughes v Rattan [2021] EWHC 2032 (QB). The court was asked to examine whether the former practice principal should be liable for the damage caused to a patient because of negligent treatment provided by three separate self-employed dentists at the practice.

Importantly you might think at no point had the principal provided any treatment to the patient and, crucially, the associates’ indemnity bodies indicated to the claimant’s solicitors their willingness to support the associates if sued. Nevertheless, the claim was maintained solely against the practice principal.

In short, the Preliminary Court determined the practice principal was vicariously liable and had a non-delegable duty for the failings of others working there.

Dr Rattan appealed the decision to the Court of Appeal and the Appeal Court’s decision was published on 5 February 2022. It found with Dr Rattan regarding vicarious liability, ruling (obiter) that no such duty applied. Having assessed the level of freedom the associates experienced at the practice; it held the relationship was not “akin to employment”.

However, the decision remained that a non-delegable duty applied. The court’s reasoning centred around the principles laid down in Woodland and focussed largely on the patient’s signed treatment plan to provide NHS treatment (as required under the NHS GDS contract). The treatment plan stated that “the dentist named on this form is providing you with a course of treatment”, naming only Dr Rattan. The court was persuaded the patient was a patient of the practice, and not the associate dentist.

Doubtless this case turned on its own facts although it is authority for the departure of the presumption that a non-delegable duty only applies to hospital cases, as has been the case in the past.

What does the future hold?

It is still unknown whether this case will be appealed to the Supreme Court, by either side. Whatever, it remains a hot topic and until there is more certainty there are various steps that may be taken to try to protect and/or mitigate against the risk that healthcare providers will be held liable for actions of independent contractors.

First and foremost, providers need to ensure they have appropriate cover to protect from litigation for vicarious liability and/or non-delegable duty. Careful attention also needs to be given to the associate contract to ensure appropriate indemnity provisions are in place. In practical terms, providers should also ensure their independent contactors’ indemnity is checked and verified on an annual basis, to include run off cover if their indemnity is on a claims made basis. Careful advice and consideration now may make all the difference in the future.

Sharon Cooney


Title defects
– proceed with caution

It is important to be forward thinking when title defects are discovered on property that you own. There are often a number of options when considering how to deal with title defects. But what can seem like an easy solution at the time might in fact bring about larger problems down the line due to the strict requirements potential buyers or lenders often have.

One matter we have been working on highlighted the importance of this issue. Our client was buying a business by way of a share purchase, and the target business owned a factory where the core of their production activity took place, so it was crucial to the functioning of the business. Unfortunately, during our title review we realised a small corner of the building was located partly within the area of a registered title that was owned by a third-party, and we requested clarification from the seller.

The seller let us know they had discovered this title defect around 12 months ago. It was determined that the factory had been accidentally built on part of the third-party land over 20 years ago. Once the seller realised the existence of this title defect, they needed to resolve it and there were a few options available to them.

Firstly, they could have applied to the Land Registry to register ownership by way of adverse possession. On the basis that they had been exclusively occupying the land for over 10 years without permission of the registered owner, they could apply to HM Land Registry to be registered as the owner of the land. This would start a process whereby the registered owner could decide whether to oppose the application or not. For the sake of brevity, we won’t go into detail regarding the process here, suffice to say it can become a drawn out situation if the third-party decides to rigorously oppose the application.

Secondly, they could have approached the third-party to alert them to the situation and request that they sell the land in question to the seller. This can be a good option where it is anticipated that the third-party will be agreeable to selling the land, but it does risk excluding the third option set out below.

The third option would be to take out an indemnity policy in respect of the land they were occupying. In the event that the third-party became aware of the situation and tried to repossess the land the indemnity policy would cover the costs of defending the action or for the reduction in value of the land if the third-party was successful in repossessing the land. It’s important to note that if any party claiming under the indemnity policy has alerted the third-party to the occupation of the land the policy will become void.

In this situation the seller decided to go with the indemnity option as it was easy, quick and relatively inexpensive option when compared to the first two. When looked at in isolation this seemed to be a perfectly fine solution and they continued the operation of their business with no issues, safe in the knowledge the risk was covered by an indemnity policy.

However, when they later came to sell the business to our client the existence of this piece of land very much complicated the sale process. Lenders have very strict requirements when considering taking land as security and will almost always require any title defects to have been resolved prior to completion.

In this instance our client was buying with the help of a lender, who predictably, was not prepared to accept the land ownership as it stood. After considering the situation the lender confirmed they would only release funds if the third-party had sold the land to the target company.

As this was the only solution the lender would accept the seller was forced to approach the third-party to explain the situation and offer to purchase the land or risk the sale of the business falling through.

However, this option was not without its downsides. Approaching the third-party alerted them to the occupation of their land, and as referred to above, this instantly voided the indemnity policy that had been taken out and the seller no longer had the protection it offered. Another issue this caused is that approaching the third-party owner to purchase the land would arguably negate any adverse possession claim under option one. By requesting that the third-party sell them the land they would be acknowledging that they are currently the rightful owner of the property.

Thankfully in our matter the third-party did agree to sell the land, however it caused increased costs for all parties, delays to completion and we needed to produce a workaround so that the sale of the business could complete before the title defect could be resolved. The seller was forced to carry out one of the solutions they originally discounted, an outcome that could have been predicted by looking ahead and considering the likely outcomes of due diligence exercises.

The important thing to take away from this is to be mindful of your future plans for your property when title defects rear their head. Taking the easiest option isn’t always the best idea if it doesn’t align with the requirements of a hypothetical buyer or lender. Best practice is to ensure any title defects are properly resolved when they are discovered, because you will almost certainly have to resolve it anyway down the line during any sale or remortgage process. It’s much less stressful for all involved to do this without the added pressure of a sale of the business to contend with!

Daniel Howlett


Thinking of transitioning
from NHS to private?

The lasting effects of the pandemic have meant that every business in every sector has had to adapt and are continuing to make ongoing changes in order to grow and move forward. The dental industry is no exception, with the market seeing an increase in private dentistry work. This appears to be the result of various factors including reduced NHS availability, surplus cash and the “Zoom effect”.

It remains to be seen whether this increase is sustainable in the longer term.

Current inflationary pressures also have an effect. Consumer price inflation has increased from 2.1% in July 2021 to 8.8% in July 2022 with much speculation in the press about how high inflation will peak. Of course, a peak is just that – inflation will still be high and without a fall to more normal levels, further pressure will be placed on NHS dental services. With rising costs, recruitment issues and a 4.5% NHS contract uplift, it is no surprise that many dentists are considering whether to convert to private.

Whilst there can be issues with the NHS, be they financial or administrative, often the NHS contract can form the backbone of the practice’s patient base on which additional private services can be built.

Contract reforms have recently been announced, including a minimum UDA value of £23 and higher UDA allocations for treating three or more teeth or undertaking more complex treatment. These are due to be implemented in the autumn and it remains to be seen whether these changes will prove effective at addressing concerns over some aspects of the NHS contract.

The decision to convert is not one to be taken lightly.

There are benefits of staying in the NHS, including:

  • access to the NHS pension scheme
  • sick pay
  • maternity/paternity pay
  • death in service

The cost of replacing these would need to be factored in; independent financial advice is essential.

Benefits of converting to private include:

  • more clinical freedom
  • the ability to set your own prices
  • the availability to spend more time with patients
  • less admin and bureaucracy
  • a better work/life balance

Points for consideration

If you are currently weighing up your options, here are some further points to consider:

  • is conversion viable? Consider where you are in your career, what your future plans are and whether a change such as this is right for you
  • where is your practice located? Is there an appetite for private dentistry in the area?
  • what effect will the cost of living crisis have on private dental income levels?
  • will your existing patients be open to moving to private?
  • what will your staff think? How will you ensure their support, as they will be at the front line of the change, dealing with patient queries etc?
  • how will you communicate this change?
  • how will you deal with the loss of the regular monthly NHS income? A private payment plan is a sensible option
  • how many patients will you need for the practice to be financially viable? Very often you will not need as many as you think and could generate similar or greater profit levels from fewer patients. Careful planning to ensure the numbers work is needed
  • consider timescales and put a plan in place. Ideally, you should aim for a sufficient transition period to plan for and implement the change

Whatever your current situation, whether you are NHS or private, looking to convert or not, Hazlewoods specialist team of dental accountants and business advisers, with more than 30 years’ sector experience, is here to support you.

For further tailored advice, please contact Partner, James Morter, or Associate Partner, Nigel Utting, on 01242 680000.

Selling or buying
a dental practice?

Talk to us…

At Hempsons, we have a dedicated national team which provides expert advice on the sale and purchase of dental practices.

Our expertise in the GDS and PDS Regulations, the Dentists Act and other relevant healthcare legislation, together with our corporate law expertise, will ensure that your sale or purchase is structured in a robust manner.

Regardless of whether you are selling or buying, we will work with you every step of the way, protecting your interests and completing the transaction in a cost effective and timely way.

Amongst other things, we can help you to navigate the following key issues:

  • NHS contract – how will the NHS contract be transferred from seller to buyer?
  • CQC – both buyer and seller need to complete a number of CQC forms to change the CQC registration at the practice. It can often take 10-12 weeks for this process to complete
  • employees – we can advise you on your TUPE obligations
  • premises – we can advise you on the sale / purchase of practice premises as well as putting leases into place and dealing with the assignment of existing leases
  • bank funding – as a buyer, if you are seeking funding from a bank, we can advise you on the bank’s lending and security process and documents

For further information, please contact:

Faisal Dhalla


Kirsty Odell