Counting the cost

31 August, 2010 / business

The National Health Services (GDS) (Scotland) Regulations that came into force on 2 July have had many implications for NHS practitioners. Some of these have had an impact on the financial side of maintaining a practice, with particular reference to Dental Body Corporates (DBCs).

The dental lists maintained by each NHS board will be split into two – the first will detail all those dentists and DBCs who are contracted with the health board to provide general dentistry services (GDS), the second list shall be those approved to only provide assistance with GDS provision.

As DBCs have a legal personality of their own, in addition to the persons behind the operation, it is the company that is required to register to provide general dental services. In the case of a sole practitioner or partnership, each person who engages with the NHS to provide GDS must register, thus each person would appear on the first list.

Practitioners trading as a DBC would not appear in the first list along with their company – they would appear on the second list only because they are assisting the DBC, in the same way as an associate would assist within a practice. There are important financial implications arising from this change.

When a practitioner trading via a DBC moves from the first list to the second list, they will lose entitlement to various benefits such as seniority payments, vocational training allowances and remote areas allowances, among others. Most importantly, the practice will lose entitlements to grants for practice improvements, except for those grants available via the Scottish Dental Access Initiative.

Furthermore, as practitioners essentially become assistants to the DBC, the obligation to provide maternity, paternity and adoptive leave payments falls upon the company, not the NHS health board.

DBCs on the health board lists will only be able to claim for the reimbursement of non-domestic rates, practice expenses, clinical audit allowances and for grants under the Scottish Dental Access Initiative. Commitment payments are paid to the DBC in the expectation that these are distributed among the practitioners in the appropriate proportion. Practice allowances are still also claimable.

These changes considered, incorporation is still worthwhile for dentists in the private sector. These changes impact only on NHS practitioners and for those who can incorporate without losing out on grants and allowances. Especially considering the previously proposed 1 per cent increase in the small companies’ rate of corporation tax that has been reversed, the rate has been cut by a further 1 per cent, giving an overall small companies rate of 20 per cent.

If the individuals register with the health board in their own names, rather than the dental body corporate, the DBC would have no patients registered under its unique legal identity, and accordingly, would have no income. Instead, the income would be self-employment income of the individuals. That means if you incorporated a dental body corporate with a view to running your practice(s) in a more tax-efficient manner, your plans may have been undone. It’s a choice between losing out on grants and allowances, or paying a higher rate of tax.

If you are considering whether incorporation would be worthwhile for you and your practice, there are new factors to be considered. If you are trading as a dental body corporate and have concerns on what impact the new regulations are going to have, then it may be worthwhile considering disincorporation and reverting to trading as a sole practitioner or partnership. However, this could be complicated and you should seek professional advice.

The financial benefits and drawbacks are clear: with a company, you as an individual pay tax only on sums withdrawn from the company. Therefore, profits in excess of your current requirements can remain in the company taxed at lower rates than you would pay as an individual. However, you would lose out on the allowances and grants referred to earlier. As an individual or partnership, you pay a higher rate of tax on all profits generated by your practice, irrespective of your level of drawings, but there is more certainty of receiving significant grants and allowances from the health board. If you qualify for seniority payments, then this is a factor you may also wish to consider.

The new NHS regulations will have a big impact on the way dentists are registered with health boards. Because of the way in which determinations are set out in the Statement of Dental Remuneration, there will be financial consequences for DBCs.

Stephen Neville is a Partner at Martin Aitken & Co and has advised many dentist clients for more than 20 years. Contact Stephen on 0141 272 0000, orFind out more about Martin Aitken & Co at

This is our understanding of the law at this point in time, and we would advise you to seek professional advice prior to taking any actions based on the above. This article is not intended as professional advice – it is for information purposes only.

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