CK/Boox - How HMRC loses

[hgllgh]

The main CK/Book thread is focussing on people that are caught up in it all and what they are doing etc.
Rather than post on that thread I thought a separate one might separate concerns better.

I'm curious as to how employment law could be applied to beat HMRC in court on this?

Is there not a clause in UK employment law which states that the legal status (and therefore tax liability) of a ltdco contract worker is solely based on the working arrangements and the contract that exists between the ltdco contract worker and the end client?

[jamesbrown]

Employment law and tax law are separate things. For example, IR35 is based on a hypothetical contract between the worker and the end client, not an actual contract and whatever it asserts about employment status, although that influences the hypothetical contract.

The MSC legislation is tax law (Chapter 9, ITEPA). Employment status has no bearing on it except as it relates to taxes paid or not paid. When an intermediary is used to pay a worker and that payment leads to less tax than would be the case were they an employee for tax purposes, and there is another person or company facilitating that "avoidance", then the facilitator can be an MSCP and the intermediary an MSC, with consequences for the underpaid tax.

[Lance]

the contract that exists between the ltdco contract worker and the end client?

in what circumstance is there ever a contract between the worker and the end client for an outside role?

[northernladuk]

in what circumstance is there ever a contract between the worker and the end client for an outside role?

I think someone made an ooopsie and doesn't quite understand what they do.

[hgllgh]

in what circumstance is there ever a contract between the worker and the end client for an outside role?

fair point... allow me to rephrase...
"the hypothetical contract between the worker and the end client"

[eek]

fair point... allow me to rephrase...
"the hypothetical contract between the worker and the end client"

Has nothing to do with the MSC legislation.

The point of the MSC legislation is that were it not for MSC provider (Boox / CK) doing a lot of handholding you would be an employee because you aren't really running the company yourself.

[hgllgh]

Employment law and tax law are separate things. For example, IR35 is based on a hypothetical contract between the worker and the end client, not an actual contract and whatever it asserts about employment status, although that influences the hypothetical contract.

The MSC legislation is tax law (Chapter 9, ITEPA). Employment status has no bearing on it except as it relates to taxes paid or not paid. When an intermediary is used to pay a worker and that payment leads to less tax than would be the case were they an employee for tax purposes, and there is another person or company facilitating that "avoidance", then the facilitator can be an MSCP and the intermediary an MSC, with consequences for the underpaid tax.

If they are separate things then MSC (tax) law supersedes Employment (IR35) law? If these contractors have been determined legally outside IR35, MSC legislation can still be applied to supersede that legal status and change their tax position. It's effectively a form of 'double jeopardy'.

[hgllgh]

MSC provider (Boox / CK) doing a lot of handholding you would be an employee because you aren't really running the company yourself.

... but this is my point... whatever they choose define as 'handholding' is superseding IR35 law. If the handholding can be shown to be a service provided by a third party to the ltdco that streamlines the accountancy work needed for that ltdco I can't see how that holds more weight in determining/changing the tax position of the worker.

[eek]

... but this is my point... whatever they choose define as 'handholding' is superseding IR35 law. If the handholding can be shown to be a service provided by a third party to the ltdco that streamlines the accountancy work needed or that ltdco I can't see how that holds more weight in determining/changing the tax position of the worker.

It’s not got anything to do with ir35. Ir35 is chapter 8 and 10 of the ITEPA, MSC legislation sits alongside it in Chapter 9.

[Fred Bloggs]

... but this is my point... whatever they choose define as 'handholding' is superseding IR35 law. If the handholding can be shown to be a service provided by a third party to the ltdco that streamlines the accountancy work needed or that ltdco I can't see how that holds more weight in determining/changing the tax position of the worker.

You're grasping at straws. IR35 has nothing to do with the MSC legislation. There's no silver bullet available.