Churchill Knight & Boox clients being investigated as Managed Service Companies

[DealorNoDeal]

My suspicion is that this will eventually evolve into something like the TV presenters / IR35 cases - with each case being decided on its merits.

If you mean HMRC taking each contractor to tribunal individually then I can't see that happening. It's far too resource intensive, and the tribunals would be backed up for years. HMRC want cases which catch everyone in the same net.

[jamesbrown]

According to CK’s site HMRC have taken the view that clients cannot operate independently from the portal! - Make of that what you will, but If that’s their view then many more products could be labelled as MSCPs.

Even if that’s true, it doesn’t follow that every client is “managed”. The court of appeal judgement in the Costelloe case explores (that often used phrase) the intention of parliament.

My suspicion is that this will eventually evolve into something like the TV presenters / IR35 cases - with each case being decided on its merits.

I think the latter is highly unlikely. One of the appealing things about the MSC legislation is that a connection between an MSCP and one of its "products" or "solutions" used by an MSC implies that all MSCs using the same product or solution would be caught. In that sense, there may be an analogy, at least in the method of attack, with Chapter 10 IR35 where HMRC uses an end client as a funnel to identify and lump together a bunch of contractors operating in the same, non-compliant, way - but not when it comes to tribunal decisions. For example, look at the CBS FTT/UTT, which considered all five client MSCs together.

As an aside, I would be careful what you share from "CK's site" - although I am sure we're all very interested to learn about it - remember, this is a public forum.

[DealorNoDeal]

I wouldn't have thought HMRC could use Follower Notices in this situation, unless they're somehow able to construe that it's a tax avoidance arrangement. But you can never be sure with these buggers. They have form for using legislation "creatively".

[eek]

I wouldn't have thought HMRC could use Follower Notices in this situation, unless they're somehow able to construe that it's a tax avoidance arrangement. But you can never be sure with these buggers. They have form for using legislation "creatively".

I think it's built into the MSC provider legislation. ...

[DealorNoDeal]

I think it's built into the MSC provider legislation. ...

Oh. Of course, HMRC would still need to get a final* court decision in their favour to be able to issue follower notices.

* at the end of all appeals

[Chevalier]

One of the appealing things about the MSC legislation is that a connection between an MSCP and one of its "products" or "solutions" used by an MSC implies that all MSCs using the same product or solution would be caught.

I’m not sure that I fully agree with the view that all are caught. The legislation requires influence or control in one of the areas mentioned.

If there’s a single aspect of the portal that applies to 100% of the client base, all behaved the same way then yes. That was indeed the point of Costelloe where the bank accounts were clearly being managed!

On the other hand if it’s something like patterns of dividend distribution it’s a totally different animal.

[eek]

I’m not sure that I fully agree with the view that all are caught. The legislation requires influence or control in one of the areas mentioned.

If there’s a single aspect of the portal that applies to 100% of the client base, all behaved the same way then yes. That was indeed the point of Costelloe where the bank accounts were clearly being managed!

On the other hand if it’s something like patterns of dividend distribution it’s a totally different animal.

We are in danger of going round in circles here. The fact is that CBS isn't a great example to see why CK is being targeted. We know CK did something wrong (in HMRC's eyes) but we haven't got a clue what it is.

CBS did a whole pile of things wrong so you can't just say CK are innocent because they haven't done these 5 items CBS were found guilty of. CK only need to have screwed one item up to be caught.

[SoConfused]

Does anyone know how HMRC calculate what they believe the business owes in PAYE and NIC? I ask because surely there will need to be re-calculations based on corp tax paid and personal tax on dividends taken for the tax year. If they assume all money in is what would be paid out then you would be looking at a 0 profit business and they could end up having to rebate a lot in corp tax...

[jamesbrown]

Does anyone know how HMRC calculate what they believe the business owes in PAYE and NIC? I ask because surely there will need to be re-calculations based on corp tax paid and personal tax on dividends taken for the tax year. If they assume all money in is what would be paid out then you would be looking at a 0 profit business and they could end up having to rebate a lot in corp tax...

There isn't a straightforward answer to that because different taxes have different time limits for correction/refund. With CT, it's four years. Natural justice would suggest that taxes already paid should be used to offset whatever is due, but HMRC take a different view about this (no surprise). In a tribunal situation, where no agreement is reached, the tribunal judge can be asked to rule. In the end, it would probably be factored in, but I don't think it's guaranteed.

[SoConfused]

Lol - so whatever suites HMRC!? I have to laugh else I'd cry.