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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Dentists: successions

A principal dentist usually has a practice, consisting of a list of patients, premises, equipment and staff. That practice, in which they exercise their professional skill, is the source of the profits to be taxed as trading income.

As the person receiving or entitled to the income from that source, the dentist is the person chargeable (S8 Income Tax (Trading and Other Income) Act 2005). It follows that, if there is a change in the person carrying on that practice, there will be a succession and the rules on cessation of a trade will apply.

The position of a dentist with a practice in a particular area is to be distinguished from that of a professional person who can exercise their professional skills anywhere in the country; see Seldon v Croom-Johnston [1932] 16TC740, Rex v City of London Commissioners, ex parte Gibbs [1942] 24TC221 at page 239, and Sargent v Barnes [1978] 52TC335. Accordingly, if a principal dentist leaves a practice in one location and moves to a practice in another location, the income from both practices must be computed on cessation and commencement lines. The argument that a principal dentist carries on one continuous profession wherever they go should not be accepted where they have operated in established practices (see BIM80625).

The position of an associate dentist may be different. Associates may have no patients of their own, no premises or staff and even no equipment. They can make their services available to one or more principal dentists on terms which usually preclude them from retaining any of the patients as their own at the end of the engagement. In those circumstances, as long as they are an associate dentist they are likely to carry on one continuous profession wherever they go. Accordingly, the cessation and commencement provisions should not be applied when they move from one associate position to another.

But associates may work on terms that make their situation for these purposes similar to that of a principal. So the correct tax treatment is not dictated by the label `associate’. Whether or not there has been a cessation, or a succession, when an associate moves between practices will depend on the facts of each particular case.

The cessation and recommencement provisions are likely to be applicable where someone permanently ceases to be an associate and becomes a principal dentist, either in an entirely new practice of their own or as a partner in another practice. This will be the case even if they had previously worked for that practice as an associate.