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Where Taxpayers and Advisers Meet

Dental practice

simpsonite
Posts: 103
Joined: Wed Jun 24, 2009 11:58 am

Dental practice

Postby simpsonite » Tue Nov 27, 2018 5:08 pm

Hi all,
I have a dentist client who is about to start trading in practice.

His income is made up of NHS work in addition to private client work.
The approach was to incorporate - however, the NHS work cannot be transferred across to the company.

My approach therefore is to subcontract the supply of NHS work from my client personally to his limited company each month.
His ltd company would just raise a monthly invoice.

Although the ltd company would be vat registered and charge VAT on the private work, it would not need to charge VAT on the NHS work (being an exempt supply).
All expenses would then go through ltd company (payroll , medicine etc)

This approach would seem solid based on HMRC V City Fresh.

Comments would be much appreciated,

Thanks
Simpsonite

bd6759
Posts: 3109
Joined: Sat Feb 01, 2014 3:26 pm

Re: Dental practice

Postby bd6759 » Tue Nov 27, 2018 8:51 pm

City Fresh v HMRC (not HMRC v City Fresh) is a first tier decision. It is informative but not binding. It seems HMRC did not explain their view clearly, and lost because of that. There is nothing to prevent them raising their arguments again.

simpsonite
Posts: 103
Joined: Wed Jun 24, 2009 11:58 am

Re: Dental practice

Postby simpsonite » Wed Nov 28, 2018 1:03 pm

So, an element of risk then with this approach if HMRC revisit -
All of a sudden my client could be landed with a VAT problem down the road!

A safer approach -
Denplan private client work to ltd company & NHS to him personally as a sole trader.
All expenses are invoiced to him personally , with payroll also set up under his name personally.
I then recharge expenses across to the Ltd company on preparation of the year accounts based on the ratio of NHS to Private client denplan work.

My question is would HMRC be content with recharging expenses in this manner?
I don't see why not.

(In hindsight i think the denplan private client work is also an exempt supply of medical services i nthe same way that the NHS work is)


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