Churchill Knight & Boox clients being investigated as Managed Service Companies

[Fred Bloggs]

There's some astonishing stuff coming out. The ruling that seems to be triggering all this appears to have interpreted the original 2007 legislation way beyond what it was intended for.

It looks to me now like the only way forward to be definitely not an MSC is to DIY your own finances, using an accountant for year end, if you need it. An in house designed portal for contractors was always a terrible idea anyway compared to market place alternatives. Today it looks positively awful.

I would still be astonished if any contractor using a monthly paid accountant for vanilla book keeping gets caught as an MSC. But it certainly looks as though that might ultimately be the direction of travel. Amazing.

[cojak]

There's some astonishing stuff coming out. The ruling that seems to be triggering all this appears to have interpreted the original 2007 legislation way beyond what it was intended for.

It looks to me now like the only way forward to be definitely not an MSC is to DIY your own finances, using an accountant for year end, if you need it. An in house designed portal for contractors was always a terrible idea anyway compared to market place alternatives. Today it looks positively awful.

I would still be astonished if any contractor using a monthly paid accountant for vanilla book keeping gets caught as an MSC. But it certainly looks as though that might ultimately be the direction of travel. Amazing.

Yep, DIY accounting seems to be the only safe way to go. Free agent helps a lot with this but you’ll need to put away a grand or so for year-end accountant review.

[hudson]

Would I be affected by any of this? I'm with an Umbrella company paying full PAYE and NIs?

[jamesbrown]

Would I be affected by any of this? I'm with an Umbrella company paying full PAYE and NIs?

No (unless you had a company in the past and were using an accountant then).

[frz78]

The problem all of us have who have been caught up in this had no idea anything was possibly wrong. DIY your own finances? How the hell do you do that when you are just starting out how would we know what to do? It's fine 10 years on but at the start.

An accountant to do your books and to offer some advice it's what everyone does isn't it? Use some high tech to do your books great surely that's the way forward.

I have many friends who use accountants who come to your house and take your receipts etc;, month by month to do the books, tell them how much they can spend, how much they are entitled too. CK did no different (not for me anyway).

Local High Street accountants will do your books and offer you advice.

So an accountant uses a bit of tech to help out, doesn't everyone live their lives on apps, portals for paying bills etc. I get my broadband bill via a portal I pay it via a portal same with my mobiles, everything goes through a portal of some sort or other.

As to using your own software how many of us would fall foul of Hector for messing something up because we're not accountants?

This from my very first gambit is 'off' something is not right here or every accountant in the land who offered any advice is a target.

I seriously don't get it and simply despair now, the abyss I'm staring into I cannot get my head around this anymore. I'm certainly not hanging around for years not knowing.

Basically I give up. Good luck to you all.

You ok?

[SoConfused]

I could not agree more with GregRickshaw . I use my accountants to do my accounts. Yes, they have a portal which shows some information but no more information than a spreadsheet with some calculations in it would or an in house finance team would offer up. I don't use that information either for managing my dividend payments. I plan that in advanced of each financial year. I contract outside IR35 in the public sector and have always followed the rules. Now, I am being targeted for using an online accountancy service which I pay a fixed amount of money for each month. No tailored deal with them. It is a complete joke the whole thing!

[SoConfused]

Yep, DIY accounting seems to be the only safe way to go. Free agent helps a lot with this but you’ll need to put away a grand or so for year-end accountant review.

I have taken a look at freeagent. Can you explain to me how this is any different to an online portal offered by an accountancy firm?

[jamesbrown]

I have taken a look at freeagent. Can you explain to me how this is any different to an online portal offered by an accountancy firm?

It is impossible to answer that without seeing the "online portal offered by an accountancy firm". These portals vary widely.

Nevertheless, you are probably presented with some of the same basic accounting information, such as balance sheet totals and profit/loss.

One major difference is that you should have full edit access to everything within FA (although it can be reduced, in principle) and you should be able to prepare and submit all relevant information to the appropriate authorities (HMRC and CH) independently of your accountant. In other words, it's just a tool and does not invoke any assumptions or make any suggestions in itself (indeed, it couldn't because it is used by a diverse set of businesses, not just contractors); whether an accounting portal is contractor-centric and makes contractor-centric assumptions or suggestions will depend on the portal.

It sounds as though HMRC are disputing whether a contractor-centric accounting portal can be within the rules or, rather, where the line is drawn. We're all speculating, though.

[eek]

QDOS now have an article up The MSC legislation – what to do if HMRC contacts you (qdoscontractor.com) and are seemingly implying that other contractor accountancy firms are impacted.

And as jamesbrown points out while we can guess at what HMRC are actually using to get their claws in no one on here knows.

That QDOS article is going to scare Agencies and end clients though as it implies that claims can be extended to them if sufficient money isn't recovered (I need to check the MSC legislation as I really can't remember if that is the case.

[Chevalier]

I’d also bear in mind there may well be other factors to bear in mind when considering any potential investigations.

Dividends is one area, but salary level is another - especially in the context of any suggestions made.

Going forwards it would probably be best (In my opinion only)

1) Avoid potential MSC providers like the plague.
2) Document how you decided financial decisions like salaries and dividend distributions.
3) If there any suggestions made I would go out of my way to do something clearly different unless it’s a very specific recommendation to you and you only! (Or b - Leave immediately!)

It doesn’t fully follow that all Co.s are “managed”, so it’s also demonstrating there is neither any control nor any influence on your business.

Regards in house finance teams, I doubt they would never make any suggestions about “distribution” without understanding if all the information provided was complete or what future cash flows were looking like.