Churchill Knight & Boox clients being investigated as Managed Service Companies

[GregRickshaw]

I have a feeling there is quite some distance between paying a monthly fee for the services you describe and the kind of practices that Costelloe were up to that allowed hector the win.

I was pretty old school - all managed in a spreadsheet which was used for quarterly vat calcs and end of year by the accountants. I made ALL payments for everything by cheque (yes I know), and the accountants were paid by direct debit. I decided when and where profits were drawn, what was a valid expense, pension amounts etc.

Also accountants cocked up and I had to make them correct returns a couple of times. I cocked up a couple of times too. Wouldn't have happened if someone else was doing all the work like Costelloes as I wouldn't have known.

It's still possible that hector might try and claim that somehow that is MSC like but I took all decisions, and the accountants just provided a spreadsheet which allowed them to do the vat and CT. Never used a portal as they didn't have one.

I think they will be looking at the more automated, system driven end of the market.

Funny you mention spreadsheets because that is what CK did for most of us. Send out a spreadsheet pretty much. The portal people are focusing on was really for expenses, there were pdfs of the spreadsheets etc.,

As I said CK were the technical version of the guy who showed up at your house with a book and carbon paper.

For what we paid them they actually did very little really.

I think forget what accountants with spreadsheets do and what 'specialist' accountants do argument now and we all just need to wake up to this; It's a stealth IR35 raid on those who they can't be arsed to chase individually or can't normally get on the rules.

[GregRickshaw]

Sorry probably the wrong implication given by the use of the word automated..

I meant the stuff that Costelloe was doing in their cookie cutter process, like automatically adding themselves as directors to each company, registering the companies in the first place, registering for VAT, managing the bank accounts, making payments, probably deciding any dividend amounts for their clients, dipping in and grabbing the interest the accounts generated. All of that smacks of a tightly controlled process, under the control of Costelloes, not the client.

This has been said a few times and CBS you can see why they were caught in the MSC legislation and therefore broke the rules, not sure why it took three years to prove that when you look at the charges sent their way.

However, all of us involved (on here anyway) can state CK did none of those things for us (the things you list above), not one thing. As I said early doors in 2012 CK did do some kind of advice thing but it stopped abruptly. Maybe this is when Hector first started his investigation in CK, who knows.

I went my own way so much I ended up with a DL, now if CK were involved and paying me etc., etc., they would have caught that before year end and not allowed it to happen. They CK had zero control over us.

This is nothing more than a stealth IR35 raid.

[GregRickshaw]

What I would say is don't sign up for a monthly payment scheme now - get your initial appeal in ASAP but once you've done that all you can do is wait until a decision is made at some dim and distant future point.

HMRC are refusing to talk about settlements at the moment, read into that what you will. The dim and distant future is a future I can't face personally.

[eek]

Array

I don't see the logic of this. All the custom code does is calculations surely? You could use a spreadsheet for that - HMRC surely can't argue because you let a professional expert furnish you with calculations you had an MSC?

Why not?

As for monthly payment scheme - why would paying monthly for bookkeeping and accountancy equate to an MSC?

None of that makes any sense.

Along with everyone else I'm trying to work out exactly what HMRC are seeing here that we can't. So the bits I'm focussed on are what makes CK look different from your local high street accountant and that comes down to:-

1) monthly fees rather than pay per task (so 1 annual fee for annual accounts, separate quarterly fee for VAT (if required), separate fee (monthly) for PAYE
2) a website portal that does something
3) crap advertising....
4) the number of firms (0,000s that can be caught at the same time).

One thing I would be very interested in is whether Crunch has been caught by this or not...

[DealorNoDeal]

This is nothing more than a stealth IR35 raid.

Yep.

And I bet HMRC know they're taking a punt. It's worth a punt because of the potential prize. And, even if they ultimately don't succeed, it will create a ton of FUD and hugely disrupt the PSC market.

[Jarman]

It seems that the matter is getting more coverage, some answers might become known very soon if CK provides explanation in public.....:

https://www.contractorcalculator.co....5710_news.aspx

[tenten]

Along with everyone else I'm trying to work out exactly what HMRC are seeing here that we can't. So the bits I'm focussed on are what makes CK look different from your local high street accountant and that comes down to:-

1) monthly fees rather than pay per task (so 1 annual fee for annual accounts, separate quarterly fee for VAT (if required), separate fee (monthly) for PAYE
2) a website portal that does something
3) crap advertising....
4) the number of firms (0,000s that can be caught at the same time).

One thing I would be very interested in is whether Crunch has been caught by this or not...

Yeah they are all plausible factors to consider but I would be surprised if this was enough on their own or even combined. Like everyone else I struggle to see them standing up to scrutiny relative to how many street corner local accountants operate.

1) As far as I can tell, its very common practice amongst many accountants big and small to operate a subscription like payment model - it's convenient for all parties.

2) Having a custom digital web/mobile app is obviously unique to bigger organisations. But it's very difficult to accept this is any different to many other standard working methods when interfacing with an accountant. I would say this is especially true when the portal supports any business types - not just freelancers.

3) Yeah advertising might give a false impression on the level of "involved" that might be where HMRC are trying to hitch their case.

4) The CK volume could certainly look enticing...... if they can win, and I still think that's a pretty big if.


Regarding Crunch: although they support freelancers they are also pretty big on supporting all small businesses and start-ups. It just seems implausible to think barbers and florists could all of a sudden find they are an MSC.

[GregRickshaw]

From what I know of this, Hector only has to capture one thing of the things tested to win.

Of the 5 things in our letter Hector has tested CK is guilty on at least three.

And if the other two can be proven otherwise (I have no idea how) then if Hector needs just one. This one;

'Benefitting financially on an ongoing basis' is the one which will bring CK and all of us down.

Hectors view is a monthly fee for services is enough for CK to 'benefit'

CK can't win.

[eek]

It seems that the matter is getting more coverage, some answers might become known very soon if CK provides explanation in public.....:

https://www.contractorcalculator.co....5710_news.aspx

That's the money grab I referred to earlier I wouldn't call it much publicity and even QDOS's attempt on LinkedIn hasn't got much traction.

[Fred Bloggs]

It seems that the matter is getting more coverage, some answers might become known very soon if CK provides explanation in public.....:

https://www.contractorcalculator.co....5710_news.aspx

"MSC Survivors Group"

Is that a cash register like "kerchingggg....." I can hear? Big Group v2.0?