VAT registration for self employed dentist???

VAT registration for self employed dentist???

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Hi, can someone please advise how VAT rules apply to a self employed dentist who works in dental practices on self employed basis providing treatments to both private and NHS patients.  Gross turnover £82,000, after superannuation etc £74,000

thanks

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By MKRAJA
17th Sep 2014 15:13

thanks, does it mean that dentist do not need to register for VAT even if their turnover is more than VAT threshold?

 

 

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By johncmartin
17th Sep 2014 15:20

Supply of dental Labour is VATable

Dental treatment is VAT exempt if provided by a pratitioner.  The supply of labour from a self-employed dentist to a practice is regarded as VATable.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageImport_ShowContent&id=HMCE_CL_000121&propertyType=document#P206_34076 

 

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By mrme89
17th Sep 2014 15:33

I disagree – even though the

I disagree – even though the dentist is making supplies to the practice rather than directly to the patients, it would still be exempt.

 

The link you provide seems to be about employment agencies providing medical staff?

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By johncmartin
17th Sep 2014 15:50

Principal or Not

If the Dentist acts as a Principal, and invoices the clients him/herself then VAT is not chargeable provided it is not for anything other than basic medical care.  If the dentist is providing labour through a contract for services and the Practice/s are raising the invoices (private or NHS) then the dentist is supplying labour, in the same way as an employment agency is.

(I would be be delighted if the case were otherwise). 

See thread from last week - Contract Dentist, IR35 and VAT for other links.

 

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Replying to ColA:
By mrme89
17th Sep 2014 16:27

Rapid Sequence

johncmartin wrote:

If the Dentist acts as a Principal, and invoices the clients him/herself then VAT is not chargeable provided it is not for anything other than basic medical care.  If the dentist is providing labour through a contract for services and the Practice/s are raising the invoices (private or NHS) then the dentist is supplying labour, in the same way as an employment agency is.

(I would be be delighted if the case were otherwise). 

See thread from last week - Contract Dentist, IR35 and VAT for other links.

 

 

I don't think the Rapid Sequence case has any relevance to this.

 

Rapid sequence employed overseas anaesthetists and provided them to NHS hospitals. The were acting as an employment agency supplying staff to the NHS. It was deemed that in order for the exemption, Rapid would have to provide medical care in its own right. Rapid had no control over the treatment or care that its staff provided to the patients, unlike the dentist described above.

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By Kirkers
17th Sep 2014 15:55

http://www.hmrc.gov.uk/manuals/vathealth/vathlt2520.htm

 

I would see the above information.

To me it would seem they would fall under associateship agreements?

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By Duhamel
17th Sep 2014 17:09

Exempt
I have acted for a number of self employed associates in the past and, as in the link provided by Kirkers, a self employed dentist working for a practice principal is exempt from VAT.

It has been rightly pointed out that the supply of staff under an agency basis, such as a recruitment agency, would be vatable.

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By Malcolm McFarlin
17th Sep 2014 17:59

The toothbrush scheme

Many years ago one of the big four accountancy firms marketed the 'toothbrush scheme' and encouraged dentists to sell toothbrushes which were standard rated which allowed them to re-claim the VAT on their purchases and expenses.

HMRC raised the deminimis levels for partially exempt traders and the scheme fell by the wayside.

A bit useless information for you but nevertheless interesting, if you are that way inclined.

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By johncmartin
17th Sep 2014 18:09

Kirkers link regarding Associate Dentists confirms that the "Associate" only qualifies as being exempt for VAT provided he/she acts as a Principal and maintains their own client base. Unless I have misunderstood the Self-Employed Dentist in this instance is working within a number of practices, implying that they are providing services rather than maintaining their own client base. This is an assumption on my part, so perhaps MKRAJA can advise the correct interpretation of the information provided?

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By MKRAJA
18th Sep 2014 13:57

Thank you all for your valuable comments and support. This particular dentist is registered as self employed with HMRC, provides services to upto 2 different practices who pay him 50% of takings (after deducting any lab fee etc), they then deduct superannuation contributions and percentage levy from that 50% and the net is then paid to the dentist.

 

this year, these earnings (before superannuation deductions) have reached at £82000

(£74600 after superannuation deductions)

 

I was wondering whether  VAT has a role anywhere in this situation.

Furthermore, what is the best treatment of superannuation contributions when filing SA returns and accounts please?

 

thanks again

 

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Replying to lionofludesch:
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By johncmartin
19th Sep 2014 08:34

Non-Associate

Thanks for the clarification.  The dentist is supplying services to the Practices, and has no responsibility as a Principal with regard to the relationship with the clients.  In my opinion, there is no argument that allows VAT not to be chargeable at standard rate for the provision of services, if the self-employed dentist has a turnover in excess of the VAT threshold.  Bear in mind the future uplift of the VAT threshold to £100k when giving the advice.  I would still personally welcome any arguments to the contrary on this, as there are many many dentists who are potentially non-compliant.

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By Duhamel
19th Sep 2014 09:25

Non-associate?
I acknowledge the OP has said the client is supplying services, perhaps this is poor wording.

It sounds more likely to me that the client simply has two associate agreements, which are VAT exempt.

Regarding superannuation, I would allocate it to drawings in the accounts. The actual payments made during the tax year are then deducted in box 3 on page TR4 of the return, I believe.

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By Kirkers
19th Sep 2014 09:28

I'm in agreement with Duhamel. Looks like two associate agreements to me.

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By johncmartin
19th Sep 2014 13:47

This is the extract from Kirkers reference point.

"The associate dentists are not in partnership with the practice owner; each associate is self-employed and is an independent separate “business” for VAT purposes. Associate dentists generally have their own patients and supply their services as independent practitioners. They are not acting as agent or subcontractor for the practice owner ."

This does not apply in this case.

Are you certain you're not just reading what you want to see?

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By Duhamel
19th Sep 2014 13:54

VAT is not my strong point but...
...I don't see how you can be so sure it doesn't apply in this case. Surely it depends on what actually happens in practice and what the agreement between the dentist and the practice?

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Portia profile image
By Portia Nina Levin
19th Sep 2014 14:17

John stop!

You are arguing that there is a supply of staff. A person providing their own services is not supplying staff. They are providing their own services.

Are those services VATable? Not to the extent that those services involve the provision of medical care by a registered person. The supply does not need to be made to the person who is actually receiving the medical care, it just needs to be a supply of medical care.

If our self-employed dentist engaged another dentist and supplied the services of that other dentist, only then are they supplying staff.

I agree with those that consider it exempt.

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Replying to WhichTyler:
By mrme89
19th Sep 2014 14:24

Rapid Sequence

Portia Nina Levin wrote:

You are arguing that there is a supply of staff. A person providing their own services is not supplying staff. They are providing their own services.

Are those services VATable? Not to the extent that those services involve the provision of medical care by a registered person. The supply does not need to be made to the person who is actually receiving the medical care, it just needs to be a supply of medical care.

If our self-employed dentist engaged another dentist and supplied the services of that other dentist, only then are they supplying staff.

I agree with those that consider it exempt.


 

So you'd also agree that the Rapid Sequence case has no relevance here?

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Portia profile image
By Portia Nina Levin
19th Sep 2014 14:51

Yes

Of course I would agree. Rapid Sequence hinges on exactly the same point as the Marcus Webb private tuition case.

If a sole-proprietor provides their own services, they are supplying their services. If they supply someone else's services, their supply is of the person supplied and not their own services.

In Marcus Webb that prevents the private tuition exemption applying. In Rapid Sequence it prevents the medical care by a dentist exemption applying.

John is missing that subtle distinction.

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By johncmartin
19th Sep 2014 16:32

Portia

Thanks for your input on this.  I have a lot of time for your valuable comments on here, and when you speak I must listen.

I totally understand the distinction you have made (I get subtlety which is why I'm having such a problem with this). The specific point from my last comment is that the sole practitioner is not a Principal in the supply of the medical care to the client and therefore does not comply with VAT requirements in a manner to allow exemption on his services.  His relationship (and the services provided) is entirely with the Practices, not the clients. The supply of medical care services by the Practices to the clients, however, is obviously VAT exempt, regardless of whether by sub-contracted sole-proprietors or internal staff.

I'm not trying to have the last word here. I am trying to flush out the ultimate argument that will withstand HMRC's scrutiny.  Please, please provide it.   

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By MKRAJA
19th Sep 2014 16:42

Thank you all for your help. I'm now inclined towards taking VAT exemption route here.

 

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Portia profile image
By Portia Nina Levin
19th Sep 2014 17:02

I though I already had

The point is that when a dentist provides their own services, that is what they supply their dental services (medical care).

When they supply the services of another dentist in their employing, they are supplying a service of providing someone else that can do dentistry.

In the former case they are making the supply of medical care. The person sitting in the chair with the bloody face may be the person receiving the medical care, but the person that has engaged them to give that medical care, has arranged for the dentist and the patient to be in the same room at the same time, and who will pay for the medical care given is the recipient of the supply.

They have received a supply of medical care (provided to their patient, at the recipient of the supply's request and expense). In making that supply, the sub-dentist (for want of a better term) is the principal in that relationship with the uber-dentist as their customer.

It's like this suppose you have a client that needs some tax advice. You engage me to provide the tax advice. I get you to sign an engagement letter. I then enter into correspondence with your client, I provide them with the advice (and copy you in).

I will bill you and charge you VAT. You can recover the VAT, because I have made the supply to you (you are the one that I actually have a client relationship with, you arranged for and will pay for the advice). You will bill your client (thus making an onward supply).

Both those supplies are of tax advice. It is not a supply of staff or labour. At no time was I under your control. I even gave the client the tax advice directly, but my supply of tax advice was to you.

The first question in VAT is "who supplied what to whom?".

Sub-dentist has made a supply to uber-dentist. The supply (like my tax advice) was a supply of medical care (given to patient X). There is nothing in VATA 1994 that the recipient of the supply of the medical care has to be the actual recipient of the medical care. Another subtle distinction.

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