Churchill Knight & Boox clients being investigated as Managed Service Companies

[jamesbrown]

The current state is... confusion...

Firstly HMRC rejected the conditional claims as they were late. However they (HMRC) sent out the option to claim after the deadline (yip)
Then HMRC agreed the claims (conditional) were valid
Then HMRC said this was not true and the claims were late so invalid.

Apparently the PAYE inspectors know nothing about CT rules/laws and the CT inspectors don't want to get involved in a PAYE inspection.

As always no sod actually knows what is going on.

Right, which is why I said probably. HMRC has a history of playing hardball in these circumstances, but the general pattern is that the taxes paid will be accounted for in the end. Just bear in mind (others more than you) that the interest could start to become significant with rates now increasing and the only way to stop that is a payment on account.

[VSCodeDude]

I emailed CK asking a few questions
1. If we did contribute would we be asked for more money later?
2. 10% from all their clients seems excessive any chance of a reduction

1. They said the lawyer will not ask for more than £1.3m and CK will not ask their client for more money.
2. They did not comment on the reduction.

Like many others, I have no idea what to do.
I do have the funds to contribute but I don't have trust in CK to hand it over.

[GregRickshaw]

Right, which is why I said probably. HMRC has a history of playing hardball in these circumstances, but the general pattern is that the taxes paid will be accounted for in the end. Just bear in mind (others more than you) that the interest could start to become significant with rates now increasing and the only way to stop that is a payment on account.

Yip totally agree and again relying on a court to make the final call. Don't assume anything.

I did poA anyway to begin with, no sign of that coming back any time soon though, this is now my next fight to get that back. Initial reactions from 'experts' is they may not return it until this thing is over!! FFS!

[Guy Incognito]

Initial reactions from 'experts' is they may not return it until this thing is over!! FFS!

Slightly facetious question, but can you not pay another bill and tell them to use the credit balance?


Boox advised me that payment on account would be a mistake because HMRC will lose but take at least nine months to repay monies on account.

[Elder Flower]

This is all very suspicious Churchill Knight asking for money. They put us in a mess so they have to sort this out.

I have a couple of questions:
1. Will they fight the case only for those who are contributing? If they win the case which means its a victory for those who dont pay to Churchill Knight correct?
2. If we lose then we lose the money that we are going to pay CK and also we have to pay the penalty to HMRC.

I have decided not to pay CK. Anybody who is paying please explain the rationale.

[GregRickshaw]

Slightly facetious question, but can you not pay another bill and tell them to use the credit balance?


Boox advised me that payment on account would be a mistake because HMRC will lose but take at least nine months to repay monies on account.

Problem I have is I had it ring fenced. Otherwise that would have been genius except I haven't got any other bills.

There are also horror stories emerging of some who paid on account and HMRC have taken it as a full payment of the determination. The downside is the poor sod has been hit with 13% in interest charges.

[Bonerp]

I sent an email to DK (and CKA) suggesting they speak to each other as they both seem to be preparing test case challenges.... An email from DK suggests he is requesting a meeting with CKA. So hold fire on anything.

I requested how much CKA are trying to raise because in my companies example £12k is absurd (when I've already covered what I thought was its liability!!!). Based on 1000 firms/contractors they will be raising c£5m or more if they all have 'liabilities' of £5000+.
I do not understand their totally finger in the air estimate. They haven't explained how they came to this but then went on to say they will refund if it doesn't cost this much....yeah right. CKA appear to be bludgeoning their reputation due to the way this is being handled. Will thee be anything left of them at the end?! They need to fight to clear their name.

They provided my firm with simply accountancy services. They were never involved in managing the company or its contracts. So wtf do HMRC think were they managing?! Cannot be that hard to prove?!
I fully expect to have to contribute and will where I can, but it will be an amount I can manage. This is remortgaging territory and I ain't doing that in the current climate! I asked whether those of us who cannot pay will be thrown to the dogs and Tom said no....
The company was very loyal to this firm. I expect better.

[InformationDesigner]

I asked CK a few questions on receipt of the email request for funds yesterday (they asked me for 7K). Here are are their responses if it helps anyone:

• How will the 1.3 million be spent and if not all it is spent, is the remaining balance returned to us? What happens if costs escalate?

The amount is based on the estimate that the Osborne Clarke have provided. We have let them know that if they go over budget that it will need to be absorbed as we will not be requesting any further funds from clients. If we received over the target amount then additional funds would be redistributed backed to contributors.

• What exactly are the estimations of 10% of total liability to achieve the target and that it would 'cost significantly more' based on?

Legal representation and council, both of which would be secured for test cases within the group fund. If someone is able to find both for less than their 10% contribution then we completely respect that and their potential decision not to contribute.

• How is the fund being protected? Who has access to the fund?

The funds are being paid into an account that is completely separate to our funds. As soon as the target amount is secured this will be paid across to Osborne Clarke and so regardless of Churchill Knight's finances, your fighting fund is protected. Although we do not have a deadline date for funding at the moment, as you can imagine we do not want it dragging out and money sitting there. Therefore at a certain point depending on how we are progressing we will look to set a deadline date.

• What is the formula you are using? What does it include/exclude? How many are being asked to contribute?

I can confirm that these are estimated to include all PAYE and NI. You would not have received the NI notice for 17/18 as yet but HMRC have confirmed that they are sending them out. The amounts do not take into account any tax reclaims due to all notices that HMRC send not including any subtractions for reclaims. We can confirm that if your actual notices (when received) were to be lower and you had already paid 10% then we would look to repay you any overpayments.

I have a task for one of the team to produce something regarding the calculation to share and we also want to get confirmation from HMRC asap so we can test the calculations against the notices. As I say we appreciate they are estimates and so are more than happy to make repayments where they have been over estimated.

If we received over the target amount then additional funds would be redistributed backed to contributors. There are huge variations in how much someone owes. ...affordability is all relative and I have seen £4k being owed which one person might pay and be done with it whilst another say they couldn't possibly pay this. Both would have received an email asking for £400 contribution.

Personally? Not reassured right now because I like details before I hand over large sums. No details that tell me the account for the fund is ringfenced (I need something more than a vague reassurance it is 'protected'), no breakdown of costs or estimates yet, and whilst I get there are "huge variations in how much someone owes", the example given by CK to me is way lower than any of the amounts I've seen requested so far.

They give all the impression that they hope that a certain number of those affected that they know have retained profits in their business account will cough up the funding to cover test cases but instead of asking for voluntary contributions for such a fund as a starting point and providing clear breakdowns of the costs involved and how that funding will be protected in the short term, they've managed to terrify people instead. They really are terrible communicators.

In their concluding remarks to me, they mention updating the portal and adding FAQs and that they've received quite a few questions. Interested to see further responses from CK but I am not comforted by their response so far.

[GregRickshaw]

This is all very suspicious Churchill Knight asking for money. They put us in a mess so they have to sort this out.

I have a couple of questions:
1. Will they fight the case only for those who are contributing? If they win the case which means its a victory for those who dont pay to Churchill Knight correct?
2. If we lose then we lose the money that we are going to pay CK and also we have to pay the penalty to HMRC.

I have decided not to pay CK. Anybody who is paying please explain the rationale.

1. I asked the director this very thing answer was no all would still be fought for.
2. Yes you lose your legal fees as that is not in dispute here you would be paying for a barrister and the legal time, the courts don't award (so I have read on this forum) costs to either party. Hence why I did consider fighting this myself.

I think CK would have had a better reaction had the request come from their lawyers and it was the lawyers bank account the money was going to, maybe they will change it. I am not going to be paying CK for obvious reasons, however was I still involved I would be asking lots more questions and may consider the fund if it was the lawywers and it was the £1.2 million split between the 1300 (I think) of us, which is less than £1k

[GregRickshaw]

I asked CK a few questions on receipt of the email request for funds yesterday (they asked me for 7K). Here are are their responses if it helps anyone:

• How will the 1.3 million be spent and if not all it is spent, is the remaining balance returned to us? What happens if costs escalate?

The amount is based on the estimate that the Osborne Clarke have provided. We have let them know that if they go over budget that it will need to be absorbed as we will not be requesting any further funds from clients. If we received over the target amount then additional funds would be redistributed backed to contributors.

• What exactly are the estimations of 10% of total liability to achieve the target and that it would 'cost significantly more' based on?

Legal representation and council, both of which would be secured for test cases within the group fund. If someone is able to find both for less than their 10% contribution then we completely respect that and their potential decision not to contribute.

• How is the fund being protected? Who has access to the fund?

The funds are being paid into an account that is completely separate to our funds. As soon as the target amount is secured this will be paid across to Osborne Clarke and so regardless of Churchill Knight's finances, your fighting fund is protected. Although we do not have a deadline date for funding at the moment, as you can imagine we do not want it dragging out and money sitting there. Therefore at a certain point depending on how we are progressing we will look to set a deadline date.

• What is the formula you are using? What does it include/exclude? How many are being asked to contribute?

I can confirm that these are estimated to include all PAYE and NI. You would not have received the NI notice for 17/18 as yet but HMRC have confirmed that they are sending them out. The amounts do not take into account any tax reclaims due to all notices that HMRC send not including any subtractions for reclaims. We can confirm that if your actual notices (when received) were to be lower and you had already paid 10% then we would look to repay you any overpayments.

I have a task for one of the team to produce something regarding the calculation to share and we also want to get confirmation from HMRC asap so we can test the calculations against the notices. As I say we appreciate they are estimates and so are more than happy to make repayments where they have been over estimated.

If we received over the target amount then additional funds would be redistributed backed to contributors. There are huge variations in how much someone owes. ...affordability is all relative and I have seen £4k being owed which one person might pay and be done with it whilst another say they couldn't possibly pay this. Both would have received an email asking for £400 contribution.

Personally? Not reassured right now because I like details before I hand over large sums. No details that tell me the account for the fund is ringfenced (I need something more than a vague reassurance it is 'protected'), no breakdown of costs or estimates yet, and whilst I get there are "huge variations in how much someone owes", the example given by CK to me is way lower than any of the amounts I've seen requested so far.

They give all the impression that they hope that a certain number of those affected that they know have retained profits in their business account will cough up the funding to cover test cases but instead of asking for voluntary contributions for such a fund as a starting point and providing clear breakdowns of the costs involved and how that funding will be protected in the short term, they've managed to terrify people instead. They really are terrible communicators.

In their concluding remarks to me, they mention updating the portal and adding FAQs and that they've received quite a few questions. Interested to see further responses from CK but I am not comforted by their response so far.

I had a similar response and still not convinced.

What's the rush when no tribunal is forthcoming

Where did the 1.3 million figure come from?

Apparently 1300 of you are involved in this so that's less than £1000 each

The obvious thing also (to me) would be to hook up with Boox's client base and (the wording of one of their capture is slightly different but not the point) instruct one legal team.

As always HMRC disputes are a cash cow for 'experts', lawyers and HMRC (without winning) it's the fear factor.