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Churchill Knight & Boox clients being investigated as Managed Service Companies

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    #11
    I don't know anything really about CK. Were they one of the composite company operators like Brookson were? And became accountants overnight when the MSC legislation came in?
    Public Service Posting by the BBC - Bloggs Bulls**t Corp.
    Officially CUK certified - Thick as f**k.

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      #12
      Originally posted by GregRickshaw

      Not sure Fred, I believe they were accountants first and foremost, their umbrella offering came later (AFAIK).
      Thanks. CK is not a company I recall knowing anything about. Other than at one time I looked at their website and saw they were ridiculously expensive for what they offered. I was just wondering if they had been on Hector's radar since composite company days. I know quite a few companies operating as what became MSCs were under close observation at the time. Some companies publicly boasted about their fighting funds if Hector came calling.

      Then the MSC legislation came in and MSC operators became accountants overnight.
      Public Service Posting by the BBC - Bloggs Bulls**t Corp.
      Officially CUK certified - Thick as f**k.

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        #13
        Originally posted by Fred Bloggs View Post

        Thanks. CK is not a company I recall knowing anything about. Other than at one time I looked at their website and saw they were ridiculously expensive for what they offered. I was just wondering if they had been on Hector's radar since composite company days. I know quite a few companies operating as what became MSCs were under close observation at the time. Some companies publicly boasted about their fighting funds if Hector came calling.

        Then the MSC legislation came in and MSC operators became accountants overnight.
        A quick google search found this old PDF 2. Recruiters Short Guide to Managed Service Company (MSC) Legislation and Transfer of Debt 2007 20170313 RB5 (churchill-knight.co.uk)

        It's very much a case of "doth protest too much, methinks"

        And I suspect it will all boil down to very historic commissions paid to agencies from the MSC companies.
        merely at clientco for the entertainment

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          #14
          Originally posted by eek View Post

          A quick google search found this old PDF 2. Recruiters Short Guide to Managed Service Company (MSC) Legislation and Transfer of Debt 2007 20170313 RB5 (churchill-knight.co.uk)

          It's very much a case of "doth protest too much, methinks"

          And I suspect it will all boil down to very historic commissions paid to agencies from the MSC companies.
          I wouldn't care to speculate on that. However, if the accountant has done things like invoice on behalf if the contractor, or told the contractor how much salary and dividends to take, or had direct access to the contractor's business bank account etc. Then any of those might convince Hector he has a case. For the benefit of the doubt, I am absolutely not suggesting CK has done this. It's simply me thinking out loud about what could initiate an enquiry under the legislation.
          Public Service Posting by the BBC - Bloggs Bulls**t Corp.
          Officially CUK certified - Thick as f**k.

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            #15
            Originally posted by GregRickshaw
            Looking through the PDF it seems CK were not MSC during the period Hector is now querying which makes this whole thing seem even stranger.

            Possibly earlier circa 2005? They do seem to have changed their model to fit with legislation in 2006, so again confusing as to why Hector thinks the year they are investigating is relevant.

            The whole thing clearly has something more to it than meets (well my uneducated) the eye.

            Oh the whole thing comes down to what I suggested at in my previous post - HMRC regards CK's portal as providing too much access to CK and that their clients may not be being that careful..
            merely at clientco for the entertainment

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              #16
              Originally posted by GregRickshaw
              Looking through the PDF it seems CK were not MSC during the period Hector is now querying which makes this whole thing seem even stranger.

              Possibly earlier circa 2005? They do seem to have changed their model to fit with legislation in 2006, so again confusing as to why Hector thinks the year they are investigating is relevant.

              The whole thing clearly has something more to it than meets (well my uneducated) the eye.

              Hence my speculation regarding what might trigger an MSC investigation. I have no idea what CK were or were not doing back then.

              I can remember several of the very prominent players in the composite company provider space. I don't recall any of them being called CK. Not that it means anything, I'm nobody.

              It will however, be rather interesting to see what first triggered the investigation. It was quite common for accountants to be actively hand holding contractor Ltd Co's back then. After the MSC legislation, they had to be seen to be far more at arms length.

              I watch with interest.
              Public Service Posting by the BBC - Bloggs Bulls**t Corp.
              Officially CUK certified - Thick as f**k.

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                #17
                An MSC that was pitched to me back in the early noughties involved all the contractors being employees of a composite company which paid them salary & dividends, thereby somehow circumventing IR35.

                I take it that what HMRC are accusing CK of is something different, since it sounds like all the contractors have their own individual Ltds?

                Are HMRC using the MSC angle to avoid having to carry out individual IR35 investigations?
                Last edited by DealorNoDeal; 18 March 2022, 14:19.
                Scoots still says that Apr 2020 didn't mark the start of a new stock bull market.

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                  #18
                  Originally posted by DealorNoDeal View Post
                  An MSC that was pitched to me back in the early noughties involved all the contractors being employees of a composite company which paid them salary & dividends, thereby circumventing IR35.

                  I take it that what HMRC are accusing CK of is something different, since it sounds like all the contractors have their own individual Ltds?
                  Indeed. But a one person Ltd Co on it's own isn't a 100% defence against being an MSC. See my comments above about how some accountants operated and how the MSC legislation forced the accountant relationship with contractor companies to be much more at arms length. It's going to be fascinating to find out what exactly triggered the investigation. If we find out.
                  Public Service Posting by the BBC - Bloggs Bulls**t Corp.
                  Officially CUK certified - Thick as f**k.

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                    #19
                    Originally posted by DealorNoDeal View Post
                    An MSC that was pitched to me back in the early noughties involved all the contractors being employees of a composite company which paid them salary & dividends, thereby somehow circumventing IR35.

                    I take it that what HMRC are accusing CK of is something different, since it sounds like all the contractors have their own individual Ltds?

                    Are HMRC using the MSC angle to avoid having to carry out individual IR35 investigations?
                    Composite companies were one of the "umbrella" options of the late 90's, early 00's - they invoiced the client and paid salary / dividends - partly it ensured enough shareholders to bypass some IR35 rules but it also made running things easier as the management of the company wasn't done by the contractor. Composites are really the forerunner of today's umbrella firm now everything has to be PAYE.

                    Later on composite companies were banned it moved to an MSC approach where the contractor was the director of the company but the accountant did all the work..

                    Then eventually even MSC got banned...

                    But the MSC angle opens up a more interesting point than IR35 - remember the PDF I posted early the tax and penalties for being an MSC can be passed to the accountant and / or the agency....
                    Last edited by eek; 18 March 2022, 15:05.
                    merely at clientco for the entertainment

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                      #20
                      Originally posted by GregRickshaw
                      ...Hector clearly smells blood here...
                      They could be chancing their arm. It wouldn't be the first time they've tried it on.

                      The trouble is, even if they've got a really flimsy case, they might still let it go to tribunal. It wouldn't be the first time they've done that either.

                      Hopefully CK go the distance, and don't leave clients high and dry like many firms have in the past.
                      Scoots still says that Apr 2020 didn't mark the start of a new stock bull market.

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