Churchill Knight & Boox clients being investigated as Managed Service Companies

[kogollus]

Hi all, I've made some calculations and from the initial payments HMRC are requiring (NI + PAYE), if I substract the Corporation Tax Reclaim and Dividend reclaim the total i have to pay becomes approx. 30% of what HMRC is claiming. Is this also your case? Could we count in case we lost the case, that we could claim back (or substract from HMRC claim) those amounts?
I would be much more relaxed thinking I will just have to pay that 30% in case we lost...
Thanks

[jamesbrown]

Hi all, I've made some calculations and from the initial payments HMRC are requiring (NI + PAYE), if I substract the Corporation Tax Reclaim and Dividend reclaim the total i have to pay becomes approx. 30% of what HMRC is claiming. Is this also your case? Could we count in case we lost the case, that we could claim back (or substract from HMRC claim) those amounts?
I would be much more relaxed thinking I will just have to pay that 30% in case we lost...
Thanks

I can't comment on your specific figures, but there are at least three factors here:

1. The amount HMRC is claiming as owed vs. what the legislation says. There are differences of opinion about whether it is the turnover or amount distributed to users that is taxed as income (I think the legislation is clear that it's the latter), the former being much larger and more akin to IR35, of course.
2. The taxes already paid and whether they can be offset, notably CT and dividend tax. Depending on the category of tax, there are time limits for refunds, and HMRC usually play interference or hardball with these time limits in tax disputes. In the end, though, a tribunal judge can rule on quantum and they will probably rule in your favour (based on historical evidence). That said, I believe some of you have made conditional claims and HMRC may have provisionally accepted/acknowledge them, so I'm not sure whether they're actually playing hardball in this case. Either way, you will probably win this aspect even in the worst case scenario.
3. Interest. This is accruing continuously unless you may a POA.

The outcome will depend on how these factors materialise, but I would certainly expect that, even in the worse case scenario, you end up paying much less than the initial pie-in-the-sky figures from HMRC. Remember, they put out these claims in a massive rush to beat a deadline and their accounting is generally crap/biased anyway.

[jamesbrown]

the former being much larger and more akin to IR35, of course.

( I mean for a typical contractor Ltd, as distinct from the composite companies that the MSC legislation was initially introduced to tackle. Of course, for anyone who has paid out everything to users, there's no practical difference. )

[DealorNoDeal]

1. Interest. This is accruing continuously unless you may a POA.

This has become a lot more significant now. If interest rates stay high, and the case drags on for several years, this could add a substantial % to the final bill.

[SwissSaffa]

Try not to let it consume your life.

I think this is the bottom line for all us caught up in this mess.

Luckily I have legal representation insurance, but I am not letting this consume my life.

It's going to be many many years before this gets resolved.

I have moved on with my life. I don't even live in the UK anymore. I left in 2020 due to IR35/Brexit/MSC/cost of living crisis/covid.

Keep your chins up gals/lads, we gonna be fine. I have a good feeling about this.

[geekergosum]

Keep your chins up gals/lads, we gonna be fine. I have a good feeling about this.

I agree with this as well...despite how hard it is to put to one side the threat of a huge financial impact.

I don't believe HMRC have got this right, and the arguments and methods they have used are both poorly thought through and spiteful. I have nothing but disdain for those involved in the development of this process. I also believe that they have zero incentive to do so as they can stretch the investigations out and by doing so increase the interest owed and hope that they can claim statute of limitations on CT refunds.

Maybe if the rules stated that interest was on hold while being 'stood over' they might be a bit more efficient? /s

But...

I will not let them take my spirit. I wish nothing but misery for them, but I am not going to be miserable myself. No faceless drone at HMRC is going to stop me being happy that my son just beat a Titan in the latest Pokemon game, or being proud that my daughter did great in her music recital at school.

I hope you all have a good Easter break.

[nekro]

Has anyone here being represented by WTT for their FY17/18 Reg 80 appeal gone ahead with further representation for their NICs appeal? Was the appeal letter the same?

[ExLuninKiwi]

Yes I have, but the appeal was substantially different. It also contains evidence of the companies independence from my acct.
HMRC has also been given a deadline to reply to the points which are quite substantive, and make a lot of sense based on case law.

Hope that helps!

[Guy Incognito]

What is the basis of a deadline? My understanding is if you are stood over, either you go to FTT or you wait.

[jamesbrown]

What is the basis of a deadline? My understanding is if you are stood over, either you go to FTT or you wait.

Nothing, and they (HMRC and WTT) will know that.