Churchill Knight & Boox clients being investigated as Managed Service Companies

[ritwolf]

Excellent thread on this utter debacle. I am a victim of Boox and fortunately I left them at the very start of the 2018/19 tax year so 'only' been caught by this nonsense for 1 year. Nonetheless this has been super stressful.

At the start of my working life I actually worked for HMRC and of course was accutely aware of how they operate....quite fairly back then IMO. After working for consultancies (made redundant twice) and in tough permy roles I decided I had had enough of others controlling my career and made the decision to contract purely to be in control of where I worked, what I worked on, and for how long and of course whilst tax efficiency was part of that, it was not the driver. At the time I was aware of offshore and loan schemes as I knew many contractors that bragged about how much tax they're avoiding and I just thought they were dumb as HMRC will bite them one day. I decided I wanted an accountant that gave me visibility of my business's financial status at all times and the portal through Boox fitted the bill. Never in a million years did I think my choice of accountant would have HMRC repurcussions years later and yet here I am!

Mercifully I do have insurance and have had the appeal lodged and stood over and the advisor has suggested making a POA to reduce interest charges but I am struggling to know what is exactly due as the calculations by HMRC seem to be plucked out of thin air!

What seems to be the general consensus is the total amount of dividends and PAYE paid is put through a tax calculator and the PAYE, NIC for employee and employer is the total amount that would be due for that year. I am also assuming that double taxation will not apply so CT and PAYE will be offset against that liability and the remainder would be the amount to make a POA?

Is that right? Only if that is the case then they owe me a small refund which seems to good to be true.

What a shambles.

I have spoken to a few tax specialists and they all seem to agree that it is the turnover that is being subjected to PAYE, which I find ridiculous because the rest of the money didn't leave the business (in some cases I guess it would have been invested which should be proof that the accountancy firm do not control the business finances).

However, in this thread the understanding seems to be that the PAYE and dividends are involved in the calculation, not the turnover.

Agree it is stressful, but I don't think HMRC cares about the consequences of their actions into people's lives and health.

You can ask HMRC for a breakdown of charges, hopefully that helps understanding where the numbers are coming from.

[nekro]

Excellent thread on this utter debacle. I am a victim of Boox and fortunately I left them at the very start of the 2018/19 tax year so 'only' been caught by this nonsense for 1 year. Nonetheless this has been super stressful.

At the start of my working life I actually worked for HMRC and of course was accutely aware of how they operate....quite fairly back then IMO. After working for consultancies (made redundant twice) and in tough permy roles I decided I had had enough of others controlling my career and made the decision to contract purely to be in control of where I worked, what I worked on, and for how long and of course whilst tax efficiency was part of that, it was not the driver. At the time I was aware of offshore and loan schemes as I knew many contractors that bragged about how much tax they're avoiding and I just thought they were dumb as HMRC will bite them one day. I decided I wanted an accountant that gave me visibility of my business's financial status at all times and the portal through Boox fitted the bill. Never in a million years did I think my choice of accountant would have HMRC repurcussions years later and yet here I am!

Mercifully I do have insurance and have had the appeal lodged and stood over and the advisor has suggested making a POA to reduce interest charges but I am struggling to know what is exactly due as the calculations by HMRC seem to be plucked out of thin air!

What seems to be the general consensus is the total amount of dividends and PAYE paid is put through a tax calculator and the PAYE, NIC for employee and employer is the total amount that would be due for that year. I am also assuming that double taxation will not apply so CT and PAYE will be offset against that liability and the remainder would be the amount to make a POA?

Is that right? Only if that is the case then they owe me a small refund which seems to good to be true.

What a shambles.

Should you not just make PoA for the amount HMRC have demanded regardless of whether it's correct or not?

[GregRickshaw]

If one can PoA then it's a no lose gamble, having said that they still haven't given me my money back.

I suspect though around 95% of those involved in this ran their LTD/PSCs on a shoestring and as a tax avoidance vehicle, so left little money in the company after CT, VAT, NIC etc., so cannot afford the PoA, don't have £000s lying around, so this will have to find the ultimate amount from their own pockets.

This is what I believe is causing the most worry and stress that the debt transfer is coming.

[MrP]

I have spoken to a few tax specialists and they all seem to agree that it is the turnover that is being subjected to PAYE, which I find ridiculous because the rest of the money didn't leave the business (in some cases I guess it would have been invested which should be proof that the accountancy firm do not control the business finances).

.

For the year in question I received income of around 52% of my turnover and of course paid the right amount of tax on that. The rest of the money remains in my business account and I have NOT personally benefitted from that money. Therefore i cannot possibly see how Hector thinks we should pay tax on the whole amount given that when I do pay those monies out I would be taxed again! It blows my mind that this is actually happening!

[jamesbrown]

There aren't too many "tax specialists" that I would trust w/r to the MSC legislation, given the amount of nonsense I've seen written about it. If you're prepared to make the effort, it isn't that hard to read the legislation directly and the accompanying ESMs for HMRCs view about what it says (emphasis on view, but it is not completely unbalanced).

[Fred Bloggs]

There aren't too many "tax specialists" that I would trust w/r to the MSC legislation, given the amount of nonsense I've seen written about it. If you're prepared to make the effort, it isn't that hard to read the legislation directly and the accompanying ESMs for HMRCs view about what it says (emphasis on view, but it is not completely unbalanced).

Indeed. Given a grand total of one settled case, anyone choosing a tax advisor needs to tread very carefully.

As a more general comment, myself, I am very disappointed at how the collective groups set up to deal with various contractor tax issues seem to have worked out. In the main, they appear to be nothing more than an ongoing money pit. As far as I can see stood on the outside looking in, that is.

[Guy Incognito]

I have spoken to a few tax specialists and they all seem to agree that it is the turnover that is being subjected to PAYE

Definitely - I have reproduced the calculations for all three years within 1% of their figures using turnover.

[antuk]

Definitely - I have reproduced the calculations for all three years within 1% of their figures using turnover.

Interesting, I can't get anywhere near their numbers using any figures from my accounts. Its tens of thousands out however I calculate it

[Guy Incognito]

It probably doesn't matter. The method they have used is not the method they say they will use in their own manuals and will be disputed.

[cjb2023]

Ive submitted further appeal 12 Feb 2023 stating that I left CK 30/5/18 and have the formal resignation letter from them. Also spoke with CK via appeals and they also said they have notified revenue of this fact and I should be subject to the MSC rules as I went independent from this point on. See what revenue say...