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Churchill Knight & Boox clients being investigated as Managed Service Companies

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    Originally posted by Chevalier View Post
    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!

    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.



    We don't know enough to know the factors regarding an investigation - all we do know is from the CBS judgments that imply that a low income tax avoiding salary is a probably factor.

    All we do know is that the CBS judgment has allow some legislation that looked completely useless can now be used over a far wider target.
    merely at clientco for the entertainment

    Comment




      Originally posted by eek View Post

      We don't know enough to know the factors regarding an investigation - all we do know is from the CBS judgments that imply that a low income tax avoiding salary is a probably factor.
      Agreed. I’m just taking clues from HMRC.

      “Third activity - that of influencing or controlling the way in which payments to the worker or an associate are made. The company’s officers should determine how the company distributes its profits. The distribution of profits which conform to a standardised product over which in reality the worker as director has little to no control or influence, is an example of influence or control by the person providing that standardised product.

      Fourth activity - that of influencing or controlling the company’s finances or any of its activities.”

      Comment


        Originally posted by GregRickshaw
        All of us who used specialists contract agencies will get letters and we will have huge liabilities, remember this is just the start 17/18.

        Hector is pushing the laws on each test case until they finally have their template to catch everyone, CBS was a victory and exposed new ways, CK will be a victory and will expose even more ways until they have us all.

        There's zero point talking about this until the first tribunal and we finally hear the case against CK the only hope those of you who have not yet been contacted about 17/18 are not contacted (letter issued) until after 5th April 2022.

        If you are lucky in this way then it at least takes something off, but as we all know Hector will change the rules to reach back even further.

        It's almost ironic but I imagine each of us can happily prove we are not IR35 but Hector doing this means we are all tarred with the same brush and there is nothing any of us can do about it.

        Get your MPs involved in this now, get the media involved in this now the fight now is for decent settlements and TTP arrangements.
        Good luck with it, truly. It's so sad that when I gave up on the UK contracting industry several years ago, I knew then it was basically stuffed. Yet HMRC seem to have turned the MSC legislation into something far more dangerous than anyone ever thought. The exemption in the legislation for accountants appears to have been set aside. It's truly tragic for caught individuals and also for the entire UK economy when an entire vibrant wealth creating, tax paying industry is attacked into oblivion. Really a very sad day indeed.
        Last edited by Fred Bloggs; 25 March 2022, 13:40.
        Public Service Posting by the BBC - Bloggs Bulls**t Corp.
        Officially CUK certified - Thick as f**k.

        Comment


          This is a concern - if HMRC are able to make this stick just because I used my accountant's suggested salary and their online portal for recording transactional data, I am in trouble. (I used a different accountant not CK).

          Every accountant and solicitor offers extra services like insurance.

          This is not how MSC legislation was written as I understood it - not that that makes any difference of course.
          Last edited by Peoplesoft bloke; 25 March 2022, 12:39.

          Comment


            Originally posted by eek View Post
            ....at 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.
            According to that articles, debt can be transferred up to the supply chain potentially up to the end-client.

            What would happen with debt transfer if accountancy firm an Ltd used to use was investigated after the Ltd was legitimately dissolved by way of MLV or strike-off?

            i.e., if Ltd was dissolved (CoHouse issued Final Gazette dissolution) say, in end of April 2022, and HMRC initiated investigation in late 2022 against the accountancy firm for say, 2018/2019 a period when Ltd used regular accountancy service from that firm, would HMRC then restore Ltd using court order etc to pursue that investigation and potentially transfer the debt to Ltd's ex-director and up to the supply chain if Ltd and ex-director could not pay?

            Comment


              Essentially, the entire supply chain that was "involved with" the provision of the worker's services up to and including the worker personally (in the first instance) are joint and severally liable:

              https://www.gov.uk/hmrc-internal-man...manual/esm3625

              So, yeah, it's pretty comprehensive.

              Comment


                Sadly, it's a win-win for HMRC.

                Even if they are over-reaching with the MSC legislation, it could take years of litigation to prove them wrong. In the mean time it will have the desired effect of disrupting the sector. I imagine some accountancy firms will exit the space entirely, viewing it as too high risk. A significant number of contractors may switch to PAYE brolly, which is exactly what HMRC want.

                HMRC probably have nothing to lose with this foray.
                Scoots still says that Apr 2020 didn't mark the start of a new stock bull market.

                Comment


                  Originally posted by DealorNoDeal View Post
                  Sadly, it's a win-win for HMRC.

                  Even if they are over-reaching with the MSC legislation, it could take years of litigation to prove them wrong. In the mean time it will have the desired effect of disrupting the sector. I imagine some accountancy firms will exit the space entirely, viewing it as too high risk. A significant number of contractors may switch to PAYE brolly, which is exactly what HMRC want.

                  HMRC probably have nothing to lose with this foray.
                  Absolutely agree with you. But I think we're already a very long way down the road of eliminating the one man contracting company already. The UK was quite unusual in fairly recent times. In a great many jurisdictions around the world, one man contracting companies had largely been legislated out of existence a long time ago.

                  It was good while it lasted. All good things come to an end. I suppose.
                  Public Service Posting by the BBC - Bloggs Bulls**t Corp.
                  Officially CUK certified - Thick as f**k.

                  Comment


                    Originally posted by jamesbrown View Post
                    Essentially, the entire supply chain that was "involved with" the provision of the worker's services up to and including the worker personally (in the first instance) are joint and severally liable:

                    https://www.gov.uk/hmrc-internal-man...manual/esm3625

                    So, yeah, it's pretty comprehensive.
                    I don't see how the debt is transferred to the agency / endclient though given from there

                    In terms of persons within the third category, it is not the intention that persons who have unwittingly been involved with MSCs or have merely received a worker’s services, are issued with Transfer Notices. Issue of Transfer Notices should only be considered to this category of person where there is clear evidence that the person:
                    • Encouraged an individual into a MSC (in this context encouraged has a wide meaning and includes requiring the worker to operate through a MSC as a prerequisite to being offered a job, through to offering financial inducements to operate through a MSC); and/or
                    • Played an active part in the MSC’s provision of the services of the worker such as advertising the services of the worker to prospective clients, or providing transport to enable the worker to undertake work; and
                    • Knew that the company was a MSC or failed to take reasonable steps to determine the status of the company.
                    Exclusions


                    The legislation includes specific exclusions from section 688A(2)(c)/(d) for:
                    • An Employment Business/Agency carrying on its core business of placing work seekers operating through service companies with end clients;
                    merely at clientco for the entertainment

                    Comment


                      I’ve just skimread this thread. I think one critical point that has barely been mentioned, if at all, as far as I can see, is the exemption which should apply here. Namely the exemption for accountancy services provided in a professional capacity. I’d be astounded if CK’s clients don’t win on that point. Unless CK have been doing something particularly provocative, then every single contractor who uses an accountant is going to be caught, and that cannot have been the intention of Parliament.

                      Comment

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