Churchill Knight & Boox clients being investigated as Managed Service Companies

[DealorNoDeal]

One thing which hasn't been mentioned so far is... who on earth pays for this hearing, these appeals, who is it who prepares legal experts, barrister etc., to fight Hector on this?

CK have already engaged legal representation, which is a good sign. And they've formally responded to HMRC. It may be quite a while before they hear back as to whether HMRC accept or reject their argument as to why the MSC legislation doesn't apply.

At this stage, all you (and others) need to do is appeal any assessment you receive from HMRC.

If HMRC don't accept CK's argument, then it will probably proceed to the first-tier tax tribunal (FTTT). It will probably take at least a couple of years to get a hearing at the FTTT. I would hope CK would defend the case*. My guess is, one or two contractors will be selected as test/lead cases.

* it's in their interests to do this because, if any contractors can't pay the tax/nics/interest, CK could end up on the hook for this

[DealorNoDeal]

CK have engaged legal representation to dispute their MSCP provisioning (NOT to help us with fighting the assessments/demands).
This of course is the first point though because if CK win then everything else collapses (for now)

That makes sense.

And once you've appealed an assessment, I wouldn't expect anything further to happen until the final* outcome of the CK MSCP case, which could take years.

Even if CK lose the MSCP case, it doesn't necessarily prove that every contractor was an MSC. People could still appeal individually, although it might be an uphill struggle with a ruling that CK was an MSCP.

* potentially FTTT -> Upper Tribunal -> Court of Appeal -> Supreme Court

[eek]

Interesting in what way? That's literally their job. I'd rather give money to Dave Chaplin or QDOS than Hector.

Because apart from a brief piece of work now - initial appeal, nothing is going to happen for years - while they (I suspect) charge a monthly fee.

everuone wants a slice of a “big group” style cash flow

[tenten]

CK have engaged legal representation to dispute their MSCP provisioning (NOT to help us with fighting the assessments/demands).
This of course is the first point though because if CK win then everything else collapses (for now)

CK do have several lead cases which have been chose to go to the FTTT

Hi Greg. Thanks for sharing your experiences and perspective with the forum. I appreciate that it is unlikely you can share any specifics, but from the information you have seen from CK combined with your time as a client, and your own correspondence with Hector, is there something distinct about CK and how they managed their Limited Co client base?

In other words, is there an area around the MSCP/MSC criteria that makes CK and their clients vulnerable? I am perhaps misinterpreting the situation and your posts, but I sense you want to settle which may suggest you don’t believe there is merit in a challenge.

As has been suggested on here, other than the probably misleading “hands-free” promotional blurb on their web site, their current services (at face value to a non-CK client) don’t read too differently to many other digital accountants.

[jamesbrown]

As to hands free, not sure how anyone else handles their books/expenses/CT/VAT/Employee PAYE/apprentice Levy/NI etc., but I wouldn't have a clue, I still don't and I don't want anything to do with that stuff, so of course they are our 'hands-free' I mean what else do accountants do?

I mean, to be blunt, that is as bad a take as the CK marketing. You really should understand all of these things as a business owner. If you don't understand these things, how can you possibly review any of them, identify mistakes (accountants do make mistakes) and fulfill your statutory duties? Reading this and the CK marketing, you can begin to see where HMRC are coming from TBH. That isn't to say there aren't many others that have the same attitude as you, including sole traders who also use accountants, but it's a poor attitude.

[malvolio]

And you knew all this from the moment you started did you?

So what would be the point of having any accountants ever

So every single contractor in the land apart from you are financial experts who know how to do all of those things. You know what you said is utter nonsense, every lorry driver, builder, hairdresser in the land has to worry according to you.

That is utter nonsense what you just said and you know it is deliberately provocative and Hector I'm sure don't expect anyone to be an expert on these things.

Not sure what companies you have worked at but every single one has an accountancy wing, the business owners trust the accountants. The guys who run business run the business and the business experts run the business at hand and you know this.

Poor response.

No, appropriate response IMVHO...

How long have you been contracting? A month or three to get your head around - or at least appreciate - all the various complexities perhaps, but after that you really must have a handle on the business side of things. You're running a limited company with a set of responsibilities clearly laid out in statute. Not knowing what they are how to meet them is no excuse if you get it wrong.

Yes you need advice, we all do of course, but you ought to be in a position to criticise that advice, not follow it slavishly.

[jamesbrown]

And you knew all this from the moment you started did you?

So what would be the point of having any accountants ever

So every single contractor in the land apart from you are financial experts who know how to do all of those things. You know what you said is utter nonsense, every lorry driver, builder, hairdresser in the land has to worry according to you.

That is utter nonsense what you just said and you know it is deliberately provocative and Hector I'm sure don't expect anyone to be an expert on these things.

Not sure what companies you have worked at but every single one has an accountancy wing, the business owners trust the accountants. The guys who run business run the business and the business experts run the business at hand and you know this.

Poor response.

You've admitted that you shouldn't have been running a company and I completely agree with you. You don't understand your basic statutory duties as a company director. These duties apply to directors of all UK companies, small and large. It's an astonishing admission in the context of this thread. Again, you're not alone - there are very many people like you that shouldn't be running companies - but that is absolutely no excuse. In your own words, in order to run a company, you needed your accountant to take all responsibilities away from you so that you were "hands free". Combined with the marketing from CK, which purports to offer a "completely hands-off approach", you were seemingly made for each other. I can now better understand why you want to settle. The sad thing for all concerned is that HMRC will be looking for someone like you as a test case.

The reason to have an accountant is to assist with the preparation of your accounts and other statutory submissions, not to render something easily accessible (running a company) that would otherwise be inaccessible to you. Indeed, that was the point of the MSC legislation. If you didn't understand the contents of these submissions and were unwilling to learn, then you were always hoping for the best and could absolutely expect the worst, not just from HMRC (e.g., Darren Upton).

To answer your question, yes I knew my statutory duties from the beginning because I bothered to read about them and took them seriously. I am not the only one.

I wouldn't wish the stress of an HMRC investigation on you or anyone else, you do have my sympathies on that front, but in the immortal words of Radiohead, you do it to yourself, you do, and that's what really hurts.

[DealorNoDeal]

To be fair, I think this way of "running" a contractor Ltd is widespread. Maybe even the majority?

A lot of contracting is not like other businesses. Most contractors only have one client at a time, for long periods, and they could use a simple brolly if it wasn't for the tax advantages of using a Ltd. Therefore, it's not surprising most opt for a hands-off approach.

[Peoplesoft bloke]

Does this mean that if I have had cause to question/correct something my accountant's did I'm in the clear? If so, happy days as they were pretty inept at times. Sadly I am sure it isn't that simple.

As I said, I may be blinkered but this seems like a massive overreach by HMRC - of course directors have responsibilities, but most of us depend on accountants and other professionals to help with things we aren't experts on. If we have to fulfil the entire function of an accountant ourselves in order for it not to be an MSC there would be no point in accountants - something which I hope is resonating with the accountants now.

[eek]

Does this mean that if I have had cause to question/correct something my accountant's did I'm in the clear? If so, happy days as they were pretty inept at times. Sadly I am sure it isn't that simple.

As I said, I may be blinkered but this seems like a massive overreach by HMRC - of course directors have responsibilities, but most of us depend on accountants and other professionals to help with things we aren't experts on. If we have to fulfil the entire function of an accountant ourselves in order for it not to be an MSC there would be no point in accountants - something which I hope is resonating with the accountants now.

Of course it's massive overreach - however, the CBS case has made it possible due to their focus on low wages relative to dividends - quite often ignoring the far stupider things that CBS also did.

So I can see why HMRC are trying it on because the reality is that HMRC may well win the case.