Churchill Knight & Boox clients being investigated as Managed Service Companies

[jamesbrown]

I'm also assuming there will be some allowable expenses, of which I'm hoping travel will be one.

No tax free expenses unless you would also get them as an employee of the end client.

[dochkaian]

No tax free expenses unless you would also get them as an employee of the end client.

I noticed that in the guidance. The assumption I took is that if i had been employed by the end client and as my work was not in the companies registered offices (my company was employed by a Tier 1 Contractor working for Cross Rail), I assume the end client would have paid travel expenses.

But how do I demonstrate this?

[eek]

I noticed that in the guidance. The assumption I took is that if i had been employed by the end client and as my work was not in the companies registered offices (my company was employed by a Tier 1 Contractor working for Cross Rail), I assume the end client would have paid travel expenses.

But how do I demonstrate this?

You can't and that wouldn't be the test.

The test is that your journey was not part of a commute to your usual place of work. And there is a gotcha when it comes to umbrella companies and other contracts that fall inside IR35/ under SDC that your place of work changes for every contract so you are usually better off being a permie at that Tier 1 contractor

[rdw1970]

I was advised earlier this week that the claim for relief on DT and CT is 4 years (we should all apply for this to avoid double taxation). I've been sieving through the HMRC internal manual this AM, and according to one page, updated 7 March 2022, it states:

"A claim for relief under this section must be made by the MSC by notice to an officer of HMRC within five years after 31 January following the tax year in which the distribution is made."

Source: https://www.gov.uk/hmrc-internal-man...manual/esm3585

Am I reading this incorrectly, but it says 5 years clearly?

A distribution is a Dividend payment so we have until 31st Jan 2024 to submit this. There has been some confusion re:- CT claims as HMRC seem to keep changing their mind whether they will accept them now or only consider them after the case is resolved. There is also a special rule which may allow us to submit CT claims for 2017 YE too.

[Guy Incognito]

No tax free expenses unless you would also get them as an employee of the end client.

I am interested in this. I was paid expenses by one client on top of work for services (separate line item on invoices). Could I remove this from the calcs on that basis?

[dochkaian]

You can't and that wouldn't be the test.

The test is that your journey was not part of a commute to your usual place of work. And there is a gotcha when it comes to umbrella companies and other contracts that fall inside IR35/ under SDC that your place of work changes for every contract so you are usually better off being a permie at that Tier 1 contractor

Thanks, I must admit I had a feeling that would be the case . . . . better turn the heating thermostat down a couple of degrees!

[jamesbrown]

I am interested in this. I was paid expenses by one client on top of work for services (separate line item on invoices). Could I remove this from the calcs on that basis?

No, this isn't about how (or for what) you invoice, it's about whether you have out of pocket expenses that would be tax deductible were you an employee of the end client, which does not include ordinary commuting. Bottom line, you are unlikely to have any tax deductible expenses (but, by all means, check with a professional) and what the invoice says makes no difference in this regard.

[jamesbrown]

I'll say again that the practical effect of the MSC legislation and its deemed payment is effectively the same as being inside IR35 and one of the major downsides of accepting inside IR35 contracts is, essentially, no tax deductible expenses (that employees wouldn't also get).

[GregRickshaw]

I don't understand about these expenses you are adding to the mix.

If you run a LTD company you need to agree the bill with the client as £XX plus £XX expenses surely.
Some of my clients paid expenses separately some paid them on the invoice but this was all worked out before starting the engagement.
I also charged a client based on which engineer they were getting and also what task they were taking on.

The invoice you then present to the client at the end of the work has your (your employees') expenses on the invoices and this is the total which is paid to your company.

Are we saying now we can somehow claim expenses which were paid to you by the end client can be claimed back?

The way we are discussing this does make many of your companies sound like disguised employment and very IR35 ish. All this talk of travel to place of employment etc., you should have agreed travel/accommodation expenses and how they were going to be paid.

Confused by this expenses talk to be honest.

[jimmyoyang]

Hey all. I’ve got a quick question, again. Apologies if this has already been covered but I can’t seem to find anything on it.

My limited company consists of my self (director) and an employee/shareholder. We pay ourselves the same salary and dividend.

In one year, we made roughly 75K and we paid each other 40% each of the company turnover. This percentage includes dividends, salary and expenses.

my question is… i took out a combined 80% out of the company (20% remained as profit, carried to the following year) but this was paid across to two individuals rather than one, thus the director of the company only took out 40% to pay himself an income, and the other 40% to an employee, which is lesser than the greater amount of the company turnover. I read somewhere if the payment to said director is under 50% then the MSC ledge should not apply.

does the above apply? I am clutching at straws here!