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HMRC internal manual

VAT Health

Dentists: Model British Dental Agreements

This section sets out the four main types of arrangement under which dentists may co-operate in a practice, according to the model agreements issued by the BDA. It illustrates how the general principles set out above apply to the most common situations, subject to the limitations set out above. If you encounter an arrangement which does not correspond to the models set out below, you should refer back to those general principles.


A dentist may employ another dentist who is usually referred to as his “assistant” or “performer”. (The term “performer” can also refer to “associates”). The provision of goods or services to the assistant or performer by the employer which enable him to carry out his contract of employment do not constitute supplies for VAT purposes. (The BDA advisory service’s sheet A8 covers assistants and suggests a model contract, and there is a model performer agreement covering the new GDS/PDS in England and Wales).

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For VAT purposes, a partnership is a single business and the supplies of each of the partners are seen as supplies of the business. Any supplies of goods or services between the partners can be disregarded for VAT purposes. (BDA advice sheet A10 applies).

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Associateship agreements

It is common for one dentist to be the practice owner (sometimes referred to as the “principal”) and then make facilities available for other dentists (the “associates” or “performers”) to practice. 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 arrangement usually gives rise to supplies of goods and services by the practice owner to the associate dentists. Typically, these supplies will include the use of a fully equipped surgery, the supply of materials and consumables necessary in the provision of treatment, the services of a chair-side assistant, the introduction of patients, laboratory services and the use of reception, accounting and other common services. The practice owner may also agree to provide professional help and guidance to the associate.

In return, the associate dentist undertakes to pay to the practice owner a percentage of his fee income. In most cases, fees are collected and received (from the patient or the NHS) directly by the practice owner, who will usually deduct the agreed percentage and pass the balance to the associate. The practice owner’s income from the associates is therefore, usually referred to as “retained fees”.

These retained fees are consideration for the practice owner’s supplies of the use of facilities, equipment, staff and dental prostheses to his associate, thus enabling that associate to carry out dentistry. They are exempt from VAT.

This guidance reflects the following BDA advice sheets:

Employer/employee: A8 (Scotland and Northern Ireland; A19 (England and Wales)

Associates: A17 (England and Wales); A21 (private practice); A22 (Northern Ireland); A23 (Scotland)

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Expense sharing agreements

These can take many forms but typically, they involve a number of independent dentists who agree to share the common expenses of the practice - such as insurance premiums, lighting and heating, staff and other office expenses. However, each remains an independent practitioner and there is no partnership; each dentist is usually equal in status and there is no “practice owner” or “principal and associate” relationship.

Under expense sharing arrangements, supplies can be made between the dentists, each of whom is a separate business. The VAT implications will depend on the facts of each case and you must consider the wording of the individual agreement very carefully but in broad terms where one party pays initially for the supplies and charges the other party an amount proportional to their agreed share, there is a supply from one dentist to the other. If the amounts paid are the consideration for supplies of dental facilities as set out above, exemption will apply.

Where the agreement provides for common ownership of goods, any payment from one of the parties in respect of their share in the items commonly owned is not the consideration for the supply of goods and is therefore outside the scope. Where one dentist initially buys equipment and the second party takes exclusive ownership of that equipment on payment of an agreed sum, then that sum is consideration for a supply of goods and is taxable in the normal way.

A further possibility is that an expense-sharing arrangement might start by a dentist “buying in” to an established practice. If an existing dentist owns or leases the premises, goodwill, and assets of the business, and sells a stake in the business to another dentist and they operate on an expense-sharing basis as separate businesses, the sale of part of the business can be seen as the transfer of part of a going concern. It is therefore disregarded for VAT purposes.