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COVID-19 UPDATE #42 – 15th NOVEMBER 2020

At the end of another working week we are sharing our 42nd Covid-19 digest in relation to the Scottish Dental Sector. We hope you find this digest of value. As always – if you have any specific concerns or questions we will be delighted to hear from you. Hope you have a restful weekend.


After the flurry of changes and activity last week the focus this week in the political sense has been on the news of a potentially effective vaccine developed by Pfizer.
Whilst it is early days and a degree of caution is required, the government clearly feel that there is a scientifically significant progression being made. We are aware that the NHS workforce are being readied to deliver the vaccination program from late 2020. It is possible that Scottish Dentists may be asked to participate in the same manner as the flu vaccination program took place recently. Time will tell if this vaccine provides the country and the dental profession with a much needed pathway to recovery.


In the second week of the NHS transitional period we are aware that the pent up demand for NHS services has created issues within many practices. In others we see that the conflicting pressure/fears of the public are also causing many patients in need of treatment to avoid attending. The anxiety of the public at this time cannot be underestimated and we see this likely to continue in the weeks ahead.
This week we saw the CDOs of all the home nations issue a supporting letter to the dental teams in the UK recognising the challenges that everyone has faced due to the pandemic. If you missed this collaborative attempt to communicate with the profession I have shared a copy below. 
CDOs Letter of Support November 2020

As the pandemic continues to cause issues over the longer term the challenges for the next generation of Scottish Dentists and their training continues to be impacted. This was empthasised this week in the article written by Colin Levy (University of Dundee) and can be read here
Let’s hope that the vaccine can ease restrictions on clinical and training operations in early 2021.
As the SOP’s and AGP assessment process continues in the whole of the UK we have seen Public Health England confirm that mopping up in the surgery can be done at the end of each session unless obvious visible contamination exists. This along with the recognition that cabinetry does not need wiped after non AGPs is welcomed as a reduction in the extensive processes required for the dental teams.
We are also aware this week that the BAPD have attempted to lobby for a Dental Professional to be appointed as the next chair of the GDC when William Moyes leaves office in September 2021. You can read their correspondence below.
BAPD GDC Letter 7 November


My last two digests have covered the rapidly changing support packages, and I am pleased to have had five days without any major changes this week! That said there has been additional guidance issued in regard to the extended CJRS (furlough) which I will summarise along with some news of some potentially relevant tax plans afoot.

Coronavirus Job Retention Scheme (CJRS)
CJRS (furlough) , now confirmed as extended until 31st March 2021, has had a further guidance update this week. You can read the full guidance document at this link

NB; The new furlough support is available from the 1st November, and can be backdated to the 1st of November if desired but the agreement to use it must pre-date 13th November if backdating is required. In practice what that means is that your furlough letters still in issue can continue to be valid but for any new arrangements it should have been agreed between the practice and the employee (at least verbally) no later than the 13th. The documents implemented to reflect the verbal acceptance must be dated pre the 13th to be valid. This only applies to backdating so if you have not used the scheme in November yet and intend to use it going forward then the date can be post 13th. Something to take care around to ensure any claims made are compliant. 
The new extended furlough support now contains the following salient points;

  • Practices who have not previously furloughed anyone can use the extended furlough support scheme
  • Employees who have not previously been furloughed are now eligible on the assumption that they were on the payroll before 31st October
  • The maximum number of employees that can be included in furlough claims has been amended and is now unlimited from 1 November 2020.
  • Anyone made redundant after the 23rd September can be re-employed and furloughed
  • HMRC have stated that they may publicly publish the names of those employers claiming extended CJRS and they also intend to inform employees that they have been included in claims in an effort to reduce fraudulent usage of the scheme
  • Flexible furloughing (FFS) still applies and therefore part time usage of the scheme is an option where helpful
  • Maximum grant support is 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month. The £2,500 cap is pro-rated for part time usage of the scheme but is unlikely to apply to dental team workers in Scotland if paid at average rates 
  • All practices are still required to obtain written agreement from the employee to put them on furlough
  • Furlough is still a matter of joint agreement, therefore an employee cannot force the practice to furlough them
  • As stated above furlough can be backdated to 1 November 2020 but the deadline by which this agreement needs to be in place is Friday 13 November 2020 and all documents must reflect acceptance that the agreement was in place on or before the 13th
  • There is updated guidance on the reference period for working out “usual wages.”
  • The calculation method required to be used for “usual hours” is different for those employees who were not previously eligible under the CJRS so care must be taken for any new claimants
  • The claims portal is now open for November (weekly paid) claims under the new scheme
  • There are new rules in relation to TUPE transfers 

The scheme will be reviewed in January 2021 to assess if the 80% contribution can be maintained. We anticipate it is more than likely that this will be ‘tapered off’ if the public health situation is improved by then and we may see reduced support in February and March. The current scheme is scheduled to end 31st March 2021. 
NB; With the forthcoming traditional holiday season approaching I draw your attention to the rules around furlough and holidays. The new guidance is clear and states that employees should not be put on to furlough purely for holidays, but where they are already flexibly furloughed and take holidays you can consider the holiday as ‘not worked’ and claim 80% grant funding. As previously you need to top up their wage to 100% for those days, but where this applies to the practice workforce you should ensure you claim this valuable support. 
Finally, we have this week discussed our adopted policy around the large increase in workload for the submission of furlough claims on behalf of our payroll clients and taken the decision to continue to undertake this work on behalf of our clients free of charge until the scheme ends in March 2021. We feel it is important to stand together in an effort to get through this crisis together and along with our free advisory services we will maintain this extra workload and advice at our cost. We are aware that many other firms have profiteered significantly from this support service, but we shall not levy any fees for this support. Our core message remains proud of the difference we can make togetherand as such we feel this ongoing contribution is an important contribution to the Scottish Dental Profession.This effort does currently create workflow challenges as our team continue to work 7 days at present. We appreciate your patience and assistance during this period.

Capital Gains Tax (CGT) Reforms
I think we all are of the general acceptance that the expense of implementing the support packages for the nation during Covid-19 shall undoubtedly lead to costs to the taxpayer for years/generations to come. The chancellor was on record last week that the recovery plans are secondary to dealing with the current challenges but once through the pandemic his plan will be to achieve repayment via a combination of quantitive easing (injecting/printing more money) along with growth in the public and private sectors. He refused to be pushed on the likely increase in taxes which most of us anticipate will accompany these ‘less painful’ measures that he is happy to discuss at this stage.
The first indication of where this might be heading was released this week from the (most misleading named organisation I am aware of!) ‘Office of Tax Simplification’ (OTS). Given that the UK tax legislation currently runs to 6,102 pages I am not sure that simplification has been achieved. With the impending requirement of legislative re-writes due to Brexit I don’t anticipate simplification arriving anytime soon either!
The OTS were commissioned by the Chancellor in July 2020 to review Capital Gains Tax (CGT) rules and provide their recommendations about reform. Without being too cynical, when you see reform mentioned in any tax review, it is usually a thinly veiled description for tax increases. 
CGT is generally considered a ‘soft target’ for the government as it is normally paid by the middle classes and in some instances by high net worth individuals. Whilst I don’t encourage you to read the full OTS report running to 135 pages there are some key recommendations within the report worthy of consideration for anyone planning buying or selling a Scottish Dental Practice. If you do wish to read the full report it can be found at this link.
It should be noted that the Chancellor is not bound by the report and he is unlikely to implement everything in the report, but it is reasonably safe to assume it my be used to form ongoing fiscal policy. The three recommendations within the report worthy of note were; 
Recommendation 1
If the government considers the simplification priority is to reduce distortions to behaviour, it should either:

  • consider more closely aligning Capital Gains Tax rates with Income Tax rates, or
  • consider addressing boundary issues as between Capital Gains Tax and Income Tax

Recommendation 5
If the government’s policy is that the Annual Exempt Amount is intended mainly to operate as an administrative de minimis, it should consider reducing its level.

Recommendation 10
The government should consider replacing Business Asset Disposal Relief with a relief more focused on retirement.

CGT is applied within the Scottish Dental context when a practice is sold. Under the current rules anyone selling their practice at a profit (after deducting original cost and legal fees) sees the profit element up to £1M generally taxed at 10% if they meet qualification criteria. They also benefit from the first £12,300 for each owner being exempt from this tax.
If the above recommendations were fully implemented this may impact the retained funds after tax by a practice disposal. Recommendation 1 suggesting better alignment with income tax rates may see the 10% CGT rate rise as far as 45% if adopted. Obviously at this early stage we cannot guarantee how it may be implemented, but it would seem more probable that this would apply to ‘non business assets’ such as property rather than goodwill and entrepreneurial gains.
Recommendation 5 is much more likely to apply in a practice disposal position. The proposal is to reduce the tax free exemption of £12,300 to circa £2,000. Assuming that the 10% rate endures this means that each owner would pay an additional £1,030 CGT. This is not catastrophic if implemented but a tax rise all the same. 
Recommendation 10, which a fairly short statement but is the recommendation with the most latent risk to Scottish Dental Practice owners. Business Asset Disposal Relief is a newly named relief (2020) and was previously known as Entrepeneurs Relief. It is the measure used to encourage business risk in the economy and is the mechanism used to limit the first £1M of gains to a CGT rate of 10%. Without it most practice disposals would be taxed at 28% (a significant 180% increase in the tax payable). The OTS report recommends the re-working or removal of this relief to be replaced with a more targeted relief. The probable outcome of this change is that the new relief will be targeted to insulate Principals at the end of their career rather than the current system which favours all. The actual measures suggested include; 

  • Requiring the owner to have held the practice for a minimum of 10 years (versus 2 at present)
  • Requiring the owner to have owned at least 25% of the practice (versus 5% at presen
  • Requiring the owner to have reached a minimum age as yet to be defined but likely to align with pension rules (versus no age clauses at present)

We would hope that whatever may emerge in this area is designed not to raid the retirement nest eggs that many in the profession have worked hard to create. However given the massive deficit that the treasury needs to repair we will have to wait for the budget announcements to gain clarity. 
CGT planning and indeed the adoption of trading structures for dental activities remain a complex matter. We recommend seeking professional advice to ensure your future tax burden is mitigated as much as possible. We will continue to advise our clients on an annual basis on their own structures and update you on any significant changes in the legislation.
I hope you find this content of value and interest. Enjoy the rest of your weekend!

And Finally

Once again love and best wishes to you at this time from myself and the full Dental Accountants Scotland team. I hope you manage to stay safe and well. Have a restful and enjoyable weekend whatever you have planned.
As a recurring reminder – our full team are now working remotely but ready and willing to continue to do all we can to support you in any way possible. Please feel free to continue to call my mobile 07375 700468 (day or night) or book a zoom online consultation here and I will be glad to support you in anyway. Our no fee advice is available to you at this time and we will do all we can as part of your team.
I invite you to keep up to date with information on our blog and to like our Facebook page to stay in touch. 

Stay safe and look after yourself and all around you at this difficult time and have lovely weekend.

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