Churchill Knight & Boox clients being investigated as Managed Service Companies

[Fred Bloggs]

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.

I believe you are right on that point. However, I have to say, that's a pretty disgraceful interpretation of the MSC legislation, in my humble opinion. The agency definitely benefits in that way since they skim every £ the contractor earns.

[GregRickshaw]

I believe you are right on that point. However, I have to say, that's a pretty disgraceful interpretation of the MSC legislation, in my humble opinion. The agency definitely benefits in that way since they skim every £ the contractor earns.

I wonder if the agency angle may come into this at all.

For me I had no agency during the periods

Not sure what Hector expect an accountant to do to make money. The fee could easily have been a one off sum for CT, VAT, bookkeeping that we chose to pay in instalments. I paid for my public liability insurance that way.

Apparently Hector has spent 3 years building this case before acting so we know they have a great chance of winning, as they have potentially missed three years worth of revenue. Of course when they win they will hit us with the forward years before finally passing legislation to go back to 2007.

[DealorNoDeal]

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

Doesn't every contractor accountancy firm do this?

[GregRickshaw]

Doesn't every contractor accountancy firm do this?

I have only used two CK and then a one man band (who charged monthly too). I did enquire at a well known High Street/corner shop accountancy firm and they too did charge a monthly fee. So I would imagine they all do.

[jamesbrown]

Accountancy is explicitly not within the scope of the MSC legislation. Accountants charge a fee for their work.

Again, most of the commentary here continues to be pointless (or ill-informed) speculation about the line between accountancy and an MSCP being "involved with" an MSC as it relates to CK and other companies.

The delay between HMRC winning the CBS case and seemingly taking a maximal interpretation of other service providers says very little in the context of a pandemic and their general incompetence; the idea that this means they have a watertight case is laughable. They have a poor record, in general, and CBS was as clearcut a case as you could possibly imagine. But we'll see in due course, they may have a reasonable case, especially given some of what has been written here (and some general cluelessness on both sides of the service provision).

There is really nothing more (useful) to say until the specific charges become clearer and CK's defence is clarified. Even then, it will probably take years to resolve.

[eek]

Accountancy is explicitly not within the scope of the MSC legislation. Accountants charge a fee for their work.

Again, most of the commentary here continues to be pointless (or ill-informed) speculation about the line between accountancy and an MSCP being "involved with" an MSC as it relates to CK and other companies.

The delay between HMRC winning the CBS case and seemingly taking a maximal interpretation of other service providers says very little in the context of a pandemic and their general incompetence; the idea that this means they have a watertight case is laughable. They have a poor record, in general, and CBS was as clearcut a case as you could possibly imagine. But we'll see in due course, they may have a reasonable case, especially given some of what has been written here (and some general cluelessness on both sides of the service provision).

There is really nothing more (useful) to say until the specific charges become clearer and CK's defence is clarified. Even then, it will probably take years to resolve.

And the way the CBS judgment opens up an attack via the use of a low salary with dividends - when surely the whole point of an accountant is to recommend the most tax efficient approach.

[GregRickshaw]

Accountancy is explicitly not within the scope of the MSC legislation. Accountants charge a fee for their work.

Again, most of the commentary here continues to be pointless speculation about the line between accountancy and an MSCP being "involved with" an MSC as it relates to CK and other companies.

The delay between HMRC winning the CBS case and seemingly taking a maximal interpretation of other service providers says very little in the context of a pandemic and their general incompetence; the idea that this means they have a watertight case is laughable. They have a poor record, in general, and CBS was as clearcut a case as you could possibly imagine. But we'll see in due course, they may have a reasonable case, especially given some of what has been written here (and some general cluelessness on both sides of the service provision).

There is really nothing more (useful) to say until the specific charges become clearer and CK's defence is clarified. Even then, it will probably take years to resolve.

Not pointless at all, I find this forum very useful.

We know the specific charges and we know the responses.

We are keeping this post alive as we find out more information which is daily at the moment.

People are finding this daily so any new information is greatly received.

I love it when people who are not involved throw out words like 'take years'.... that is not helpful to those of us suffering this every waking moment and are facing genuine financial ruin, I'm glad you can be so flippant about it I wouldn't wish this on anyone.

[eek]

Not pointless at all, I find this forum very useful.

We know the specific charges and we know the responses.

We are keeping this post alive as we find out more information which is daily at the moment.

People are finding this daily so any new information is greatly received.

I love it when people who are not involved throw out words like 'take years'.... that is not helpful to those of us suffering this every waking moment and are facing genuine financial ruin, I'm glad you can be so flippant about it I wouldn't wish this on anyone.

I don't think Jamesbrown and I are being flippant we are just being honest. Look at the CBS case - it started before April 2012 (given the 2007/8 tax year was in play) and the time frames are

First Tribunal - 15 – 18 September 2015
Upper Tribunal - 27-29 November 2017 - Judgement 19 Jan 2018
Court of Appeal - 19 March 2019

So that is 7 years from the initial letters to the final judgment and 3.5 years until the initial tax tribunal - and remember that you may not be part of the initial case but just party to the end result.

Which is why I'm currently saying don't run for the monthly fee options because that could be 7 years of £50+ a month until things even kick off - and it's likely to go to the Court of Appeal because this is definitely an extension to the MSC rules...

[Peoplesoft bloke]

Aren't we all on the same side here?

I agree with James Brown - just because HMRC have "spent ages" putting their case together doesn't mean it has any merit - they have spent plenty of taxpayer cash on IR35 cases that they ultimately lost.

I agree a lot of the speculation is pointless too, but I enjoy it (sorry) and I am using it to try and gather information about the likely pattern of this venture by HMRC, because I'm interested.

I'm not unsympathetic to GregRickshaw at all but I am curious to know why he/she/they are seemingly so keen to settle this with HMRC - however I understand people may not want to share details in public.

[tenten]

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.

I presume CK are still contesting that they are not an MSCP via 61b 3? https://www.legislation.gov.uk/ukpga/2003/1/section/61B. This certainly seems to be a grey area that I don't think the Costelloe judgements really covered enough. When does the "accountancy services in a professional capacity" exemption no longer apply and venture into "promoting and facilitating the use of companies".... and how can that ever be defined clearly/fairly?

Regarding the MSC condition 2a that you mention: "benefits financially on an ongoing basis from the provision of the services of the individual". The very fact that you have a Limited company implies the need for ongoing accountancy support. Whether that is paid for monthly or annually or ad-hoc feels a bit irrelevant. CK didn't benefit financially or commensurately from the provision of your services - I am sure Hector will want to present it such that they did so indirectly.

Are you in a position to indicate which are the other two clauses from section 2 that they are pursuing? Presumably c and d?