Churchill Knight & Boox clients being investigated as Managed Service Companies

[GregRickshaw]

Paul Mason made a valid point in a recent IPSE seminar that the wording of 61B(3) is not an exemption, rather a presumption that the mere provision of legal or accountancy services in a professional capacity is not automatically caught. This is a less favourable interpretation, of course, but no doubt correct when the words are parsed literally.



As an side, I expect the motivation for CK and Boox to defend this is not primarily a concern about transfer of debt (since it transfers to the MSC and other involved individuals first), more likely the existential threat to their business model. Or, at least, the combination of those two things.

Indeed and CK fall further into a trap on fees as they were one of those companies who 'became accountants' at least Boox have chartered accountants in their business name/model.


I agree their primary concern will be holding onto their very lives, but there are going to be a lot of companies in the 1000s captured who will have vanished off the face of the earth, untraceable to even apply the debt too (even with the huge caveats HMRC have) there will be some considerable sums which will end up in CK's lap (and I will be glad if it does - their behaviour in not alerting us is unforgivable).

[jamesbrown]

The point is that it doesn’t matter whether these companies have disappeared or even that involved individuals have moved overseas, the MSCP will be fairly low down the chain after all individuals associated with the MSC have been exhausted. There is some risk of transfer of debt to the individuals at the MSCP, but the bigger risk is to their business model in the short/medium term.

[GregRickshaw]

The point is that it doesn’t matter whether these companies have disappeared or even that involved individuals have moved overseas, the MSCP will be fairly low down the chain after all individuals associated with the MSC have been exhausted. There is some risk of transfer of debt to the individuals at the MSCP, but the bigger risk is to their business model in the short/medium term.

Won't they ultimately face some kind of fine if they have been deemed as MCSCP?

[jamesbrown]

Won't they ultimately face some kind of fine if they have been deemed as MCSCP?

There are no fines, only the transfer of debt provisions in relation to the deemed payment that should've been made (plus any applicable interest and penalties). There is an ordering to whom they pursue and any director or office holder of the MSC or an associate of the MSC is on the hook first (this will work in almost all cases because the individuals are known and they will generally have assets), followed by the same for the MSCP, followed by people that were more generally involved (there are two categories of these people).

[GregRickshaw]

There are no fines, only the transfer of debt provisions in relation to the deemed payment that should've been made (plus any applicable interest and penalties). There is an ordering to whom they pursue and any director or office holder of the MSC or an associate of the MSC is on the hook first (this will work in almost all cases because the individuals are known and they will generally have assets), followed by the same for the MSCP, followed by people that were more generally involved (there are two categories of these people).

Yes sorry I got that. However, while we are on that topic I wonder what sort of assets they mean, laptops I presume, anything owned by the PSC.

Also what I meant was for breaking the law?

[eek]

Won't they ultimately face some kind of fine if they have been deemed as MCSCP?

It’s worth noting that Churchill knight now have completely separate FCSA listings for their umbrella and accountancy services

[jamesbrown]

Yes sorry I got that. However, while we are on that topic I wonder what sort of assets they mean, laptops I presume, anything owned by the PSC.

Also what I meant was for breaking the law?

Yes, I think I understood you. For the avoidance of doubt we are not talking about criminal tax evasion or tax fraud here, rather alleged avoidance and, in any case, HMRC uses civil proceedings by default, even for evasion/fraud.

Regarding assets, they will ask the MSC to pay first (they don't care about the details of what assets the PSC owns and I doubt there are any non-cash assets a PSC could liquidate to meet a payment - all they care about is whether the outstanding amount can be paid within a reasonable timeframe), then they will ask the office holders to pay from their personal assets and so on down the very long chain of possibilities until they find someone who can settle the full debt within a reasonable timeframe.

As I said, they cannot levy arbitrary "fines" to whomever they please, but they can expect payment of the deemed payment, plus any interest and penalties. I'm afraid it's the usual way of things that "scheme" promoters are not first (or at all) in the firing line but, again, there is some risk to the MSCP explicitly written into the transfer of debt provisions, so there is more risk than zero/normal for "scheme" promoters.

[DealorNoDeal]

I'm afraid it's the usual way of things that "scheme" promoters are not first (or at all) in the firing line but, again, there is some risk to the MSCP explicitly written into the transfer of debt provisions, so there is more risk than zero/normal for "scheme" promoters.

Especially as neither of these firms seem to be following the usual modus operandi of scheme promoters ie. flog the scheme then at the first sign of trouble from HMRC disappear into the night. Even if being investigated has hurt their businesses, I presume they are still viable and intend to continue trading, so it's in their interests to fight this.

[GregRickshaw]

I have a feeling Boox and CK are as genuinely puzzled/shocked as we are.

However, I can't forgive them for not telling us three years ago, yes hundreds of us would have withdrawn from their services (something they are keen to avoid) but the human misery they have caused makes them IMHO as bad as those scheme providers from the EBT days.

[GregRickshaw]

I think they are too. The tone I got from Hector 2 years ago was that it was just a standard investigation to ensure Boox wasn't an MSCP and that Boox was fully on board and assisting with the case. Boox were confident the investigation would just run its course and the objections to strike off would be removed once Hector was satisfied they're not an MSCP. The only slither of gratitude I have is that the case barely progressed between 2019 and March this year else they would have issued determinations for those tax years too.

Yes there is that and the massive rushed nature of the years they did get out suggest HMRC kind of went... 'sod it let's go for it'. However I am still massively worried about the fees clause the one we are all caught on, the rest we can all argue. The fee we can't.

My hope is (again the hope...) the department dealing with this is so overwhelmed (they HMRC have suggested this) they miss next March's batch of letters for 18/19 etc., As we said though the hope (and waiting) is the killer here.