Churchill Knight & Boox clients being investigated as Managed Service Companies

[eek]

The tax and accounting institutes, the tax experts and the various contractor and other interest groups really need to organise and lobby their (Tory) MPs as this is exactly the kind of Labour tax law that our PM is likely to get rid of at this precarious point in his career. It's anti business and scandalous that people who chose to use a regulated accountant can be targeted this way by HMRC overreach. We should all write a letter to our MPs explaining why this law is wrong in the first place. If it was big business, do you think they would be sitting there waiting for tribunals and courts? Umm..no. They would be visiting 10 & 11 Downing Street and having meetings with ministers. The way this needs to be presented to politicians is that it is anti small business. In the end everything is political.

Yet this is what both the Treasury and HMRC want - and something that the tax courts are explicitly focussing on.

If something looks like it's PAYE employment HMRC (and the Treasury) want it treated (for tax purposes if nothing else) as PAYE taxable income.

[jamesbrown]

exactly the kind of Labour tax law that our PM is likely to get rid of at this precarious point in his career

Just like IR35, right?

The dead hand of the Treasury is pretty much immutable and is certainly invariant to political parties.

[DealorNoDeal]

Yet this is what both the Treasury and HMRC want - and something that the tax courts are explicitly focussing on.

If something looks like it's PAYE employment HMRC (and the Treasury) want it treated (for tax purposes if nothing else) as PAYE taxable income.

Which is why contractors will be forever looking over their shoulder. HMRC (and HMT) won't be content until everyone who looks (to them) like an employee is taxed like an employee.

[SP8977]

Don't agree it like IR35. IR35 is a case by case analysis of employment versus self-employment. MSC rules can easily capture an outside IR35 business simply because it has the audacity to be a one person service company that chose an accountant who is deemed to be an MSCP despite every accountant in the land advising the same remuneration strategy. Essentially, it penalises them for choosing a specialist accountant for their business. It is anti business because it is prevents people from trading freely and choosing the advisors they want. It is anti business because it stops businesses from having access to the right advice and the right to mitigate tax. The chancellor mitigates his tax liabilities. Did Boris not operate a PSC for his work as a journalist?

[jamesbrown]

Don't agree it like IR35.

You seem to be having an argument with yourself here. You said "Labour tax law". IR35 is a tax law introduced by Gordon Brown. Anyway, it is related to IR35 insofar as it is much easier to catch a bunch of companies at once by locating an MSCP, somewhat like the Chapter 10 revisions to IR35 (by locating a client). HMRC are done with investigations of individual "PSCs", they are focused on securing as much revenue from employment-like working arrangements as possible and they do not view PSCs as legitimate businesses. The MSC legislation is just another avenue, considered not that useful until CBS.

[eek]

The MSC legislation is just another avenue, considered not that useful until CBS.

Mainly because it wasn't that useful until the CBS tribunals opened up entirely new avenues of approach which allows HMRC to treat almost anything as an MSC provider...

That's why my advice is now very much - use Freeagent (paid for yourself or via a Mettle / Natwest bank account) and then pay an accountant a one off fee for preparing your books etc....

[eek]

The chancellor mitigates his tax liabilities. Did Boris not operate a PSC for his work as a journalist?

That was covered by Ken Livingstone years ago - who discovered that while Ken used a PSC, Bozo was paid as an employee see Boris Johnson and Ken Livingstone in on-air tax row - BBC News.

[SP8977]

Not arguing and apologies if it appears that way. It's just a discussion. My point is that it's not like IR35 because IR35 ultimately is a one by one assessment and it's hard for any politician to argue with taxing someone like an employee if a case specific to them is made by HMRC and followed up in courts.

On the other hand, this can (and is essentially designed to) capture all PSCs regardless if they are inside or outside IR35 simply because of the type of business they are and the type of accountant they chose. None of the advice these people received around remuneration is any different in practice to any other small business owner that isn't a PSC. That has to matter politically.

So for instance a one person wedding DJ or physiotherapist could be caught by it. Surely those people should not be taxed as an employee? Who are their would-be employers even?? That could sit very badly with a lot of Tory MPs who are pro small business. It's a badly thought out law and there should be exemptions if I chose my accountant on the basis that they were a regulated professional firm. If you think there is no value in trying to make this political, fair enough. I respect your opinion. Personally think there is a lot of political mileage in this if presented the correct way, but it does require the organisations and experts I previously mentioned to make a stand. Anyway, best of luck. I will be writing a letter to my MP.

[eek]

It's a badly thought out law and there should be exemptions if I chose my accountant on the basis that they were a regulated professional firm.

The law was regarded as being necessary overkill to handle the issue it was trying to solve. Which is why it had an exemption for accountancy work.

But the issue isn't the law itself, it's the way it's reach was extended by the CBS tribunal that is the real issue here and these cases are attempt by HMRC to see how far that reach extends given that the approach CKA and Boox advertised to their clients comes very close to the definition of an MSC...

Now you may think there is value in making this political but given the way this Government works (and HMRC's need to collect every penny possible) I very much doubt you will get anywhere

[DealorNoDeal]

It's a badly thought out law...

No, if anything, it's HMRC's interpretation of it that's badly thought out. They've got a bit carried away after the CBS win.

They can deem whatever they like an MSCP but it doesn't make it so. Until a court says CK and Boox clients were MSCs, this is just HMRC indulging in wishful thinking.