Churchill Knight & Boox clients being investigated as Managed Service Companies

[GregRickshaw]

The optimist in me says they are declining because they don't have the manpower and that they intend to allow it but obviously can't say that...

I'm with you regarding the optimism.

[isaaaaaaaaccc]

I'm sorry but comments around the corporation tax being reduced from HMRC calculations confuses me.

I was of the understanding that the determination letters do not take in to consideration corp and dividend tax paid in 17/18 and that was the whole purpose of the conditional reclaim.

Are you saying that this is not the case and the determination notice amounts estimated account for corporation tax amd dividend reductions?

[mogga71]

Spoke to a person who has been a permie contractor for over 10 years about this MSCP 'scandal' yesterday and they didn't have a clue what I was talking about. It makes you wonder just how many contractors are aware of this and reading some posts on this very forum (not this thread) it seems there are many who are not. IMHO this MSCP 'scandal' has the potential to be the biggest issue in contracting in the past 20 years and many people seem to be totally unaware of its implications.

I explained the situation ..... and he chatted me later after having a think and said .... 'surely that's got to be bollux'. Luckily the guy ... like many of us at the banks .... has been paying PAYE for the last 2 years and closed company down etc. so risk is probably limited to ... at most 2 years. I told him to tell other people.

Makes you wonder how many 'outside' contractors are being lined up for the slaughter after the CK and Boox cases are done. IMHO these guys should be acting now with the utmost urgency.

[GregRickshaw]

I'm sorry but comments around the corporation tax being reduced from HMRC calculations confuses me.

I was of the understanding that the determination letters do not take in to consideration corp and dividend tax paid in 17/18 and that was the whole purpose of the conditional reclaim.

Are you saying that this is not the case and the determination notice amounts estimated account for corporation tax amd dividend reductions?

The determination letters (the original ones) didn't take into account the amount of Corporation Tax you may have paid (dividend tax too).

I think what is being said a few posts up is; The poster asked for a more accurate amount (the amount owed after the amount of CT has been removed - not sure if they got dividend relief too).

So you are not confused the letters DID NOT take into consideration your CT and div.

However in an ever fluid situation people are fighting lots of battles and sourcing lots of new information.

There has been another development though HMRC have said they are not 'accepting' conditional claims until after the case is closed, by which time the deadline (their deadline) will have been missed to claim CT and Div relief, thereby taxing you twice so effectively the amount on the original determination.

It's confusing but it's ever changing

[GregRickshaw]

Spoke to a person who has been a permie contractor for over 10 years about this MSCP 'scandal' yesterday and they didn't have a clue what I was talking about. It makes you wonder just how many contractors are aware of this and reading some posts on this very forum (not this thread) it seems there are many who are not. IMHO this MSCP 'scandal' has the potential to be the biggest issue in contracting in the past 20 years and many people seem to be totally unaware of its implications.

I explained the situation ..... and he chatted me later after having a think and said .... 'surely that's got to be bollux'. Luckily the guy ... like many of us at the banks .... has been paying PAYE for the last 2 years and closed company down etc. so risk is probably limited to ... at most 2 years. I told him to tell other people.

Makes you wonder how many 'outside' contractors are being lined up for the slaughter after the CK and Boox cases are done. IMHO these guys should be acting now with the utmost urgency.

Not sure what a permie contractor is but I imagine it's a feast for IR35 eyes but anyway.

A couple of things;

Yes it does have the potential to wreck contracting but also take down a huge slice of accountancy business too.

The effect the investigation is having is exactly what HMRC want, it will drive more contractors into the arms of Umbrellas and a PAYE system.

Yes most of us were unaware, especially those of us who used accountants for filing and VAT and not much else, but it matters not.

If your colleague is unaware then they have not been using accountants who are under investigation and HMRC can only go back to 17/18 (at the moment - ha ha ha) so for now they don't have to worry about 17/18.

Your colleagues possibly won't have to worry about any years yet.

Will HMRC add more accountants to the list before the first tribunal?
Are HMRC preparing a different attack for other accountancy firms? Who knows.

Closing down your business doesn't mean you are safe either as HMRC can have them re-opened.

The risk if you missed the 17/18 determination is currently to two years yes 18/19 and 19/20, but pretty sure 20/21 and 21/22 and 22/23 will be dragged in when HMRC win at the tribunals.

[rdw1970]

Was this an Excel sheet or just a printed copy?

Have you been able to successfully re-engineer the figures they came up with?

How did they approach the apportionment of company years to the tax year 2017/18?

It was sent as a pdf file with the calculations. Why they couldn't have just done this with the determination letter in the first place is beyond me.

I've not had a chance to go through the exact figures yet and would need to verify the methods they've used to get to the deemed payment.

They took the 2 accounting periods for my company for 2016\17 (AP1) and 2017\18 (AP2) and deducted CT from each year

The apportionment was carried out based on the number days that the accounting period covered within the 2017\18 tax year
so for me 15% was AP1 and 85% AP2. They added these 2 figures together to get the turnover minus CT for 2017\18

They then calculated Employers NI from this figure.

They then subtracted NI from the total and calculated the PAYE due.

Finally, any PAYE already paid was deducted to get the determination amount.

I have queried Self Assessment (Dividend Tax) and Pension Contributions paid in those accounting periods as these have not been included.

Hope this helps

[isaaaaaaaaccc]

Working out what total liability could be is something keeping everybody awake at night.

I attended an ipse meeting yesterday where advice was given regarding debt transfer. They claim that debt would be transferred after 24 months.

This opposes some views where MP may negotiate longer times to pay.

[GregRickshaw]

This is all very confusing and all because the calculations weren't provided in the first place. Did Hector really think people will pay up based on some arbitrary figure?
I think someone managed to reverse engineer their determination amount in an earlier post but can't remember if CT was taken off.
Now I can see CT has been taken into account why are they saying they won't accept conditional claims? So have some individuals had CT taken off but not others?
Really confusing and not helped by the wall of silence from Boox. I asked them for an update last week and heard nothing back.

It's become confusing because HMRC have refused to accept conditional claims.

Before last week July 9th 2022 we were led to believe by 'experts' that we could claim CT and Div relief at any time and if I remember the CT deadline was early May so many of us got our claims in before the first deadline (which was insane anyway I think HMRC said we could claim on the Friday but the deadline was Monday).

Since then though HMRC have said they are not accepting claims until the case is closed win or lose. By which time their deadline (5 years after 31st Of January following the tax year in which the distribution/determination is made) so for example the 17/18 tax year the deadline is 31st Jan 2024 for submitting CT claims.

All well and good and plenty of time. However as there is virtually zero chance of the cases being closed by 2024, earliest tribunal is late 2023 (so we hear but not confirmed).

Which all means it will then be up to HMRC to decide if they accept late claims when we lose the MSC. If they choose not to allow a late claim you will be double taxed, so you will pay CT and PAYE on the year (so no refund on your CT).

Therefore the amount in your original letter is probably the amount you will be having to pay for that particular year.

[Guy Incognito]

It was sent as a pdf file with the calculations. Why they couldn't have just done this with the determination letter in the first place is beyond me.

I've not had a chance to go through the exact figures yet and would need to verify the methods they've used to get to the deemed payment.

They took the 2 accounting periods for my company for 2016\17 (AP1) and 2017\18 (AP2) and deducted CT from each year

The apportionment was carried out based on the number days that the accounting period covered within the 2017\18 tax year
so for me 15% was AP1 and 85% AP2. They added these 2 figures together to get the turnover minus CT for 2017\18

They then calculated Employers NI from this figure.

They then subtracted NI from the total and calculated the PAYE due.

Finally, any PAYE already paid was deducted to get the determination amount.

I have queried Self Assessment (Dividend Tax) and Pension Contributions paid in those accounting periods as these have not been included.

Hope this helps

This is a great help - thanks.

It would have thought it would be more accurate to use the real payments made rather than the apportionment methodology.

I live in hope that I receive a similar PDF one day.

[Guy Incognito]

I'm sorry but comments around the corporation tax being reduced from HMRC calculations confuses me.

I was of the understanding that the determination letters do not take in to consideration corp and dividend tax paid in 17/18 and that was the whole purpose of the conditional reclaim.

Are you saying that this is not the case and the determination notice amounts estimated account for corporation tax amd dividend reductions?

Ignore the complications of apportionment and just imagine you had a turnover of £100k and you paid £20k in corporation tax.

They are basically saying you need to pay PAYE,NI etc. on the £80k (NET Trading profit).

It would be FAR BETTER to reclaim the £20k back and pay the PAYE, NI etc. on the £100k.

They are doing us no favours by "including" it in the calculation.