Churchill Knight & Boox clients being investigated as Managed Service Companies

[jamesbrown]

I was actually responding to your comment about U.K. taxes applying to U.K. companies, but never mind. Should be clearer in future!

Oh, I see. Fair enough - I agree that the deemed payment calculation is harder in some cases. Underlying all of this is a basic territorial limitation in being chargeable to UK tax.

[GregRickshaw]

It’s your last point that I believe I fall under. My company provides services to an end client abroad, so we spent a large amount of our time abroad in Italy and France. Not sure how they could fall under U.K. employment law…

thanks for your insight

Then find someone to go to HMRC with those facts, as most on here have said they (HMRC) are not reading the appeals mainly because they have received around 2000 heavily templated letters.

You need to get a sit down with them.

[Fred Bloggs]

Then find someone to go to HMRC with those facts, as most on here have said they (HMRC) are not reading the appeals mainly because they have received around 2000 heavily templated letters.

You need to get a sit down with them.

Hector's probably going to ask to see the evidence of tax being paid in Italy and France then? It's not possible to work in Europe without paying tax somewhere. Obvious exceptions to that, but Italy, France and UK all levy personal and corporate taxes on income.

[GregRickshaw]

Yes very true. Their operating model though may not fit MSC, sounds as though the company were a Managed Service Provider

[Fred Bloggs]

Yes very true. Their operating model though may not fit MSC, sounds as though the company were a Managed Service Provider

In fact it's possible that if the compay officers spend significant time in France or Italy, if it was drawn to the attention of their authorities then the company might well be liable to Italian or French corporate tax. There's extensive discussion over the years about this at CUK. In the shoes of the person involved, the last thing I would be doing is making a song and a dance about spending significant time working in another country. My thinking would be that it's unlikely to end well.

It is actually very easy to be tax resident in multiple jurisdictions. Personally, I have been tax resident in multiple jurisdictions at the same time. For a couple of years I was tax resident in three countries at the same time. And several years tax resident in two jurisdictions. It's extremely complex.

[jimmyoyang]

Good morning fellow acquaintances.

I've been spending this morning trying to work out my liability. I know there are many assumed methods, and more recently, I've been made aware of using the IR35 Calculator to get the closest liable figure. The 'DEEMED PAYMENT SPREADSHEET' can be found on the Gov.uk website: http://www.hmrc.gov.uk/gds/ir35/ir35.xlt

The determined PAYE I received matches the spreadsheet's outcome, so I imagine this is what they are using to determine our liability, whilst not using much else in their calculations at present (like how much tax we've already paid which ofc will need to be raised).

As follows (hoping this helps others or if this is incorrect, then also let me know) according to the spreadsheet calculator:

– Swivel down to the 2017/18 date
– Box A type in your turnover
– Box D will show the income (a+b+c) that will be apportioned between deemed payment and NIC's
– Box C will show the outstanding Employer's NICs
– Box N will show the deemed payment

I then typed the deemed payment into an online tax calculator (in this instance, Listentotaxman.com) for the outstanding year, and behold, the Total Tax Due reflects the Determined PAYE I received from them. In addition, the Employers NI on the calculator also reflects Box C (in the above IR35 spreadsheet provided by them). I then also extracted the figure of the Employee's NIC.

Lastly, I added the following:

– Outstanding PAYE + NICs (employee and employer) and then deducted this against what I paid for my Corporation Tax and Dividend Tax. The difference will be in theory what we owe.

This is probably my 100th calculation, but it's the one that closest matches what I have been served with so far. I am just hesitant paying £££ for someone to work out my liability when in due course, we will find out. But, for peace of mind, I believe the above will show the closest match.

Thoughts?

[jamesbrown]

Thoughts?

Sounds about right. An inside IR35 calculator will provide a good idea of your liability because the deemed payment under Chapter 9 is effectively the same as Chapter 10 (not Chapter 8 where you still get 5% for expenses). Worst case scenario, add interest to that amount, unless you make a PoA, plus the cost of defending the case, I suppose. Best case scenario will be with PoA and CT and dividend taxes refunded. In the end, the CT and dividend taxes will almost certainly get refunded, even if it takes a tribunal judge to rule - but HMRC always plays hardball to begin with.

[jimmyoyang]

Sounds about right. An inside IR35 calculator will provide a good idea of your liability because the deemed payment under Chapter 9 is effectively the same as Chapter 10 (not Chapter 8 where you still get 5% for expenses). Worst case scenario, add interest to that amount, unless you make a PoA, plus the cost of defending the case, I suppose. Best case scenario will be with PoA and CT and dividend taxes refunded. In the end, the CT and dividend taxes will almost certainly get refunded, even if it takes a tribunal judge to rule - but HMRC always plays hardball to begin with.

Thanks.

Interest rates

Just looking at interest rates on their website (https://www.gov.uk/government/public...interest-rates).

Will this be a Late payment or a Repayment? The difference in interest is quite significant! Between 3% and 0.5%!

IR35 calculator

As for the inside IR35 calculator... the one I downloaded from their website automatically calculates the 'less 5% of the amount to cover other unspecified expenses". So, the figure I ended up with (which also matches the determination I received) I would presume had the 5% expense allocated to it, as when I manually remove the 5% allowance I end up with a higher PAYE figure than what was presented to me.

NIC's Employee

Does anyone know if this will be something we are liable for (I EXPECT YES!!!)? Has anyone received a determination for this?

[jamesbrown]

Thanks.

Interest rates

Just looking at interest rates on their website (https://www.gov.uk/government/public...interest-rates).

Will this be a Late payment or a Repayment? The difference in interest is quite significant! Between 3% and 0.5%!

It's the higher of the two rates (late payment), the lower is what they pay you for overpayments (yeah, ). However, it's base rate plus 2.5%, so currently 5.5% and heading upwards, probably to 6% imminently, so that starts to build up.

As for the inside IR35 calculator... the one I downloaded from their website automatically calculates the 'less 5% of the amount to cover other unspecified expenses". So, the figure I ended up with (which also matches the determination I received) I would presume had the 5% expense allocated to it, as when I manually remove the 5% allowance I end up with a higher PAYE figure than what was presented to me.

That's curious, but I guess it just shows how lazy they were. There's no 5% for expenses under Chapter 9 (or Chapter 10) and never was, only Chapter 8, IR35.

Does anyone know if this will be something we are liable for (I EXPECT YES!!!)? Has anyone received a determination for this?

Yes, certainly, both ErNI and EeNI. From what I understood in this thread so far, many have already received those determinations...

[antuk]

So assuming HMRC win this - then by the nature of it being deemed payment, the money is subject to income tax and not corp tax. However we have not had the benefit of this money as it sits in the company accounts. So does that mean by paying this bill you can also take out the deemed payment from the company (or any amount up to it) to you personal accounts tax free?