Churchill Knight & Boox clients being investigated as Managed Service Companies

[eek]

HMRC are looking for a "catch all", not a "catch some of". OK, a "catch some of" is better than nothing but it's not what they were after.

If you look at the history of Costelloe, you can see why that was the perfect "catch all". Prior to 6th April 2007, it consisted of about half a dozen or so composite companies, with each company having about 100 employees receiving small salary and dividends. In an attempt to get around the MSC legislation, Costelloe created 1000 or so individual PSCs and moved the employees from the composites to these. The deal made with the contractors was that they'd barely notice any difference; Costelloe would take care of everything.

HMRC could be totally confident that what applied to one Costelloe PSC, applied to all PSCs. As they are now probably discovering, the same cannot be said of CK/Boox. HMRC could cherry pick the most MSC looking examples to take to tribunal but, even if they won, others could legitimately claim different individual circumstances, which then turns it into a bit of an IR35 like crap shoot, which is absolutely not what they wanted.

Anyway, only time will tell how this pans out.

You can't say that yet - the only cases that have been removed are where the PSC has been formerly closed.

And reopening them when the case hasn't been won is a very big step for HMRC to take.

Also, we don't know if the same was true with Costello - it's possible that anyone who managed to close their company before HMRC started the case was equally excluded.

Finally it doesn't surprise me if HMRC remove the awkward companies before the tribunal begins. The whole point is that they want to say these 5 companies are guilty and we want the other 950 identical cases treated the same way. Removing the awkward cases makes it a lot easier to argue all 950 other cases are identical.

[ns1]

The whole point is that they want to say these 5 companies are guilty and we want the other 950 identical cases treated the same way. Removing the awkward cases makes it a lot easier to argue all 950 other cases are identical.

Except, under the CPR, HMRC can't achieve that unless the 950 applied to the tribunal to agree to be bound by the outcome, which they'd be foolish to do. Everyone is entitled to their own individual tax hearing, and you'd be daft not to consider that if your circumstances are different to the 5 test cases HMRC have selected.

[GregRickshaw]

Except, under the CPR, HMRC can't achieve that unless the 950 applied to the tribunal to agree to be bound by the outcome, which they'd be foolish to do. Everyone is entitled to their own individual tax hearing, and you'd be daft not to consider that if your circumstances are different to the 5 test cases HMRC have selected.

I've said it many times just because there was a degree of P from CK/Boox does not mean automatically we are all MSC's. Problem is it will be a huge uphill struggle to prove your own company was not an MSC if the accountant are proved guilty of being a MSCP.

Then you have to ask yourself can you afford/be bothered to fight when after the double taxation is removed (fingers crossed) the amounts are not that huge.

[DealorNoDeal]

I've said it many times just because there was a degree of P from CK/Boox does not mean automatically we are all MSC's. Problem is it will be a huge uphill struggle to prove your own company was not an MSC if the accountant are proved guilty of being a MSCP.

Then you have to ask yourself can you afford/be bothered to fight when after the double taxation is removed (fingers crossed) the amounts are not that huge.

Yep, there is that.

A lot would depend on the specifics of the tribunal ruling (assuming it went HMRC's way). It probably wouldn't be worth it, unless you could show that the factors which swung the ruling in HMRC's favour didn't apply to the way your company was run.

[eek]

Except, under the CPR, HMRC can't achieve that unless the 950 applied to the tribunal to agree to be bound by the outcome, which they'd be foolish to do. Everyone is entitled to their own individual tax hearing, and you'd be daft not to consider that if your circumstances are different to the 5 test cases HMRC have selected.

but as others have implied the CPR doesn't really help you if your tax bill is £20,000 or so and a tribunal hearing is going to cost your £25,000+ (and it would cost that because you would be mad to go into a post MSCP hearing without expert help to demonstrate why you weren't an MSC).

It just ends up cheaper paying the tax bill - which is after all what HMRC wants.

[DealorNoDeal]

As an aside, with interest rates going though the roof and HMRC charging base+2.5%, if this drags on for a few years, accrued interest could add a huge amount to the final bill. Making a payment on account would stop it accruing. Otherwise, you may need to find even more money.

[GregRickshaw]

Yip hurt at the time but I would encourage everyone to PoA.

Got to wonder just where HMRC then invest all that money? I hope we are not funding other investigations.

[Fred Bloggs]

but as others have implied the CPR doesn't really help you if your tax bill is £20,000 or so and a tribunal hearing is going to cost your £25,000+ (and it would cost that because you would be mad to go into a post MSCP hearing without expert help to demonstrate why you weren't an MSC).

It just ends up cheaper paying the tax bill - which is after all what HMRC wants.

Regrettable, but in the majority of cases that's probably quite true.

[GregRickshaw]

What would one have to lose by going to tribunal alone or without professional help?

Would it be the court costs if the case is lost. No idea what they run at for say 5 days, but if one had professional help and still lost then it's a double whammy.

I seem to recall someone posting (I've searched but couldn't find it) how self representation can be a reasonable option and the judge can be quite protective of an individual against professional lawyers.

[DealorNoDeal]

What would one have to lose by going to tribunal alone or without professional help?

Not a lot. If you lose, you're no worse off than if you'd just settled.

Would it be the court costs if the case is lost. No idea what they run at for say 5 days, but if one had professional help and still lost then it's a double whammy.

There's only a relatively small application fee for an appeal at the FTTT. Costs are not awarded at the FTTT, and only in very rare cases at the UTT. It's only when you get to Court of Appeal and above, that costs become a problem.

I seem to recall someone posting (I've searched but couldn't find it) how self representation can be a reasonable option and the judge can be quite protective of an individual against professional lawyers.

That was me.