Churchill Knight & Boox clients being investigated as Managed Service Companies

[jamesbrown]

May I just ask those of you using CK or Boox - was there any aspect of those companies conducting transactions on your behalf - eg invoicing clients and receiving funds, or making payments to HMRC etc - or did all of that remain under your control? I'm just curious as to how it worked in relation to other "full service" type accountancy outfits.

Not with either of them, but they won't have engaged in any of those things (i.e., sending invoices or operating bank transactions), otherwise there wouldn't be much question about it.

[Guy Incognito]

May I just ask those of you using CK or Boox - was there any aspect of those companies conducting transactions on your behalf - eg invoicing clients and receiving funds, or making payments to HMRC etc - or did all of that remain under your control? I'm just curious as to how it worked in relation to other "full service" type accountancy outfits.

They literally made suggestions for salary and dividends and were paid monthly.

You are right to be worried.

No mid-size accountancy firm is going to be safe if HMRC win this.

[GregRickshaw]

May I just ask those of you using CK or Boox - was there any aspect of those companies conducting transactions on your behalf - eg invoicing clients and receiving funds, or making payments to HMRC etc - or did all of that remain under your control? I'm just curious as to how it worked in relation to other "full service" type accountancy outfits.

I can confirm CK never did any of those things. There was a portal you (your company) used to submit expenses/receipts etc., and you could have it create your invoices, there was a way to personalise the invoices with your business address, logo etc.,

CK never paid anyone anything let alone HMRC.

All monies went to your bank based on your invoices etc.,

The thing CK did have very early on (I have mentioned before many times) was a kind of 'you should pay yourself this much' to maximise your return, this model was dropped around 2013.

CK filed your end of year, reminded you VAT was due etc., but everything and every bill you paid 100% yourself.

The portal isn't the problem here. The packaged products (which I believe CK ironically now offer) and the fees are the sticking point.

[mogga71]

I can only speak for Boox and they didn't do any of those things you mentioned.

As per previous posts, the main sticking point is Boox operated 2 different payment structures - pay monthly /pay in advance. Hector says both methods result in Boox being paid regardless if the contractor is receiving income or not and therefore benefits financially on an ongoing basis from the provision of services of the individual.

I don't think the other 2 conditions Hector identified will stand up but they only need to prove 1 of the 5 points for Boox\CK to be an MSCP.

If this is Hectors main attacking point then I simply cannot see them winning .... it's a totally absurd argument. The vast % of accountancy firms are paid monthly and have been for the last 30 years at least. If they somehow win their cases then it basically means that about 90% of contractors who have been outside ir35 at some point in the last 4 years are potentially in trouble ... not to mention placing many accountancy firms in a very precarious position. Surely they must have something more substantial than the 'paid monthly' argument?

[eek]

If this is Hectors main attacking point then I simply cannot see them winning .... it's a totally absurd argument. The vast % of accountancy firms are paid monthly and have been for the last 30 years at least. If they somehow win their cases then it basically means that about 90% of contractors who have been outside ir35 at some point in the last 4 years are potentially in trouble ... not to mention placing many accountancy firms in a very precarious position. Surely they must have something more substantial than the 'paid monthly' argument?

It also makes zero sense because the MSC legislation is focussed on the MSCP profiteering from the work the client does.

Which was why I picked up on the fact CK offered discounted rate when the company wasn't being used far earlier in this thread (i.e. you are working, you pay CK more -> CK profit when from the work you do == falls within the definition of an MSCP)..

[Fred Bloggs]

I think it's absurd too but is the one point that is worrying people the most as Hector could argue this point in their favour.

The other 2 conditions Hector believes were met were Boox's product was designed for customers to follow the low salary/high dividend model and advising customers on the best way to pay themselves. Touched on this in my last post, as chartered accountants Boox are allowed to advise their clients on the most tax efficient way to pay themselves. Again this had to be agreed with the client and was not set by default.

Their last point was slightly vaguer - influences or controls the company finances or any of its activities. A couple of the webinars suggested this was to do with banking. Boox had no access to my business bank account and I made all of the payments myself from mobile/online banking - not via Boox's portal. I understand there are (or were) some accountants out there who made all the Tax payments from the client's business account on their behalf!

That used to be pretty common before Darren Upton went rogue. If you don't know who he was, Google will help you understand.

[GregRickshaw]

It also makes zero sense because the MSC legislation is focussed on the MSCP profiteering from the work the client does.

Which was why I picked up on the fact CK offered discounted rate when the company wasn't being used far earlier in this thread (i.e. you are working, you pay CK more -> CK profit when from the work you do == falls within the definition of an MSCP)..

This is a moot point indeed and the one CK will be found guilty on.

I can see how those who had dormant companies (i.e the example above) who paid less so CK benefitted differently based on the income possibly of a company. This is a good HMRC argument.

However many of us (certainly me) did not have a different pricing structure for any of the years HMRC are claiming, so CK did not benefit or not from my companies status (and ultimately my employees earnings). Yet here we are HMRC are still saying point (a) IS valid in my case. So the monthly fee may well be the argument that CK benefitted while my company was active.

This is why I urge everyone to fight this individually (or at least prepare your cases as individuals). Individually HMRC's case is weak very weak, against CK it's strong.

[GregRickshaw]

I think it's absurd too but is the one point that is worrying people the most as Hector could argue this point in their favour.

The other 2 conditions Hector believes were met were Boox's product was designed for customers to follow the low salary/high dividend model and advising customers on the best way to pay themselves. Touched on this in my last post, as chartered accountants Boox are allowed to advise their clients on the most tax efficient way to pay themselves. Again this had to be agreed with the client and was not set by default.

Their last point was slightly vaguer - influences or controls the company finances or any of its activities. A couple of the webinars suggested this was to do with banking. Boox had no access to my business bank account and I made all of the payments myself from mobile/online banking - not via Boox's portal. I understand there are (or were) some accountants out there who made all the Tax payments from the client's business account on their behalf!

I agree the last point. Boox clients received slightly differently worded claims to CK clients, though in a nutshell it's the same (influenced control).

The early days of CK you could argue there was a degree of attempts at controlling by 'telling/advising' what to pay yourself. This stopped though way before the years HMRC are after.

CK are not chartered accountants like Boox so they are on shakier ground there, if the accountant exemption is even a thing.

It does appear absurd but the more we delve into this you can see why HMRC are pushing these cases.

[jamesbrown]

accountant exemption

Exemption is the wrong way to look at it. Not automatically stuffed for being an accountant is the proper way to look at it.

[eek]

Exemption is the wrong way to look at it. Not automatically stuffed for being an accountant is the proper way to look at it.

It's important to emphasis that you need to read both every individual point, the overall act AND the intention of the act..

The Accountant exception is there so that accountants have a bit more leeway and were not automatically caught by the act - the one thing it's definitely not is a "get out of jail" clause.