Associate Dentists trading as a partnership

Associate Dentists trading as a partnership

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We have been approached by a client who is an associate dentist and they have been recommended by a colleague that they should set a up a partnership to help save taxes.

The colleague is using a different accountant who says they have set up a partnership with their spouse so they can use both personal allowances and not pay higher rate tax.

I have seen other discussions regarding whether it is morally right but I am more concerned whether it is legally correct. From what I understand from the Dentist Act if a partnership is used all partners must be registered as dentists and if not this is illegal.

After a quick google search found this recent article http://www.the-dentist.co.uk/article/1610/keeping-out-of-danger, not by an account or solicitor but confirms my thoughts.

In our case the spouse does have some involvement in the admin side of things so there is a valid arguement that they are involved with the business.

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By WallyGandy
17th Jan 2013 07:33

I've had one....

 

Hi- I visited my own dentist a couple of years ago and after my treatment he said he was in this "partnership with wife" situation and what did I think- clearly he was worried.

Scheme was set up by unqualified accountants- not in itself untoward but in meeting we discovered....

The services contract was in his name only- wife not mentioned

Wife no experience in dentistry at all - not GDC registered and PI Insurance in his name alone

Wife working full time elsewhere as HR consultant so never steps foot in the surgery

The first year had no higher rates on combined "profits", but Class 2 for her has been paid (as well as Class 1 in her employment) when her "share" was below the limit of liability. Former accountants charged unrealistic fees for SA returns.

etc etc etc

So we let year one run to risk- in fact HMRC had gained from all this, then terminated the partnership and engaged wife as assistant- PAYE scheme in his name. Monthly salary to wife just below the NI limit with (now) 20% tax saving against his higher rates.

BTW- wife has a degree in human behaviour under stress (some "ology") and researches patient relaxation techniques as well as laundry, record keeping and the usual market rate for salary worth so her salary levels seem justified. 

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By vince8
17th Jan 2013 09:20

Not sure

I suppose anyone can set up a partnership but leaving aside the contract and wife issue how does a partnership of associate dentists work? I believe an associate undertakes work within a practice working to a principal, has their own patients and does NHS and private work. The associate pays a share of the practice outgoings. Are you saying there are a number of associate dentists in one practice or that a number of associates from different practices are getting together to form a partnership? I'm not sure it works but would be interested to hear other views.

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By sbt
17th Jan 2013 10:50

The partnerships would be between the dentist and spouse, he does the dentistry work and she does the admin side.

As the income goes into the partnership they are both receiving the income and I guess this isnt allowed as she isnt a dentist.

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