Churchill Knight & Boox clients being investigated as Managed Service Companies

[dayd08]

The bit I'm struggling to get my head around..surely this is double taxation!?!

[woody1]

Do you have to have the full amount on account or what is the minimum amount you should have on account?

You can pay any amount on account. Eg. if your potential total liability is £50k, you could pay £10k on account. However, interest would continue to accrue on the remaining £40k.

[WTFH]

The bit I'm struggling to get my head around..surely this is double taxation!?!

Without getting into the semantics of the wording, it’s a fine/penalty, not tax, that’s HMRC’s line on it. You’d be best to speak to tax experts (not solicitors or anyone related to any of the companies that may have got you into the mess).
We have good reports for Gilbert Tax and others. They aren’t going to come up with schemes, but will take the headache away from you and help with getting a reasonable time to pay.

[woody1]

One slight consolation is the interest is simple, rather than compound, but even so base+4% will rack up if this drags on for years.

[woody1]

I regard you guys as unfortunate victims in this (others may disagree). You didn't join a dodgy tax avoidance scheme, you were just using a firm of accountants. I therefore hope the mods will allow me to post this.

This is a drastic option, and only you can decide if it's even worth contemplating. It will only work if this drags on for many years. I think the magic number is 6 but don't quote me on that.

I know of someone who has done this and HMRC got diddly squat.

Early on in the dispute, they were caught up in, they transferred all their assets to their partner (savings, investments, their share in the family home). Then many years down the line they filed for personal bankruptcy.

Bankruptcy isn't something to be taken lightly. It can have all sorts of ramifications for employment, obtaining credit etc. But when the only other option is surrendering a substantial portion of your net worth to HMRC it may be a least unpalitable option.

If anyone thinks this might be suitable for them, before you do anything, talk to an Insolvency Practitioner first.

[jowolfe]

I also received a letter notifying me of the change in situation with the test cases. The options in the letter are to ask for an independent review, notify appeal to the tribunal, settle, or stay behind the test cases.

My situation is that I had set up my company a number of years before I started using Boox as an accountant, fully managed my own company/ sales/ marketing etc, and I was always working with multiple clients at the same time - never on a long-term contract that could be conceived as being within IR35.

Should I continue to stay behind the test cases or is it worth going for an independent review?

[woody1]

I also received a letter notifying me of the change in situation with the test cases. The options in the letter are to ask for an independent review, notify appeal to the tribunal, settle, or stay behind the test cases.

My situation is that I had set up my company a number of years before I started using Boox as an accountant, fully managed my own company/ sales/ marketing etc, and I was always working with multiple clients at the same time - never on a long-term contract that could be conceived as being within IR35.

Should I continue to stay behind the test cases or is it worth going for an independent review?

I would tread carefully here. As I recall, "independent reviews" are more of a rubber stamping exercise. If they uphold the original assessment, then you're usually only given 2 options: settle or appeal to tribunal. Will they still give you the option to stay behind the test cases? Don't know.

Are you not getting professional advice for stuff like this? Because you should be.

Maybe the CK folks have been advised on how to respond to this letter, and can share that advice.

[GregRickshaw]

I also received a letter notifying me of the change in situation with the test cases. The options in the letter are to ask for an independent review, notify appeal to the tribunal, settle, or stay behind the test cases.

My situation is that I had set up my company a number of years before I started using Boox as an accountant, fully managed my own company/ sales/ marketing etc, and I was always working with multiple clients at the same time - never on a long-term contract that could be conceived as being within IR35.

Should I continue to stay behind the test cases or is it worth going for an independent review?

Unfortunately the scenario you are painting is not the one you are facing. This is not an IR35 review or indeed a challenge on how you ran your own company the latter being the point here HMRC are claiming you didn't run your own company (Boox did allegedly).

For reference I got caught up in the first two years despite employing 5 people up to the end of those years, so unless you can evidence you were an employer (not of your partner) then you very much in this.

There are many caught up in this who did just as you did it makes no difference. HMRC are claiming Boox and CK benefitted from your revenue (there's way more to it than just that of course) and thereby created you as an MSC and them and MSCP.

I can't say whether you should stay behind or not as others will tell you and you really should seek professional advice.

In my opinion best to leave the court cases in the hands of experts but I am certainly not an expert. Seek advice from the ones dealing with this and from Tax specialists such as Gilbert, David Kirk (seems to be good option too)

My advice is the same as the professionals are giving. Do NOT go for the independent review as it sets the wheels in motion. It's merely a tick box exercise for HMRC and the independent review is really just someone from... HMRC making sure the process has been done correctly. It does not mean you are being judged anywhere by anyone.

[GregRickshaw]

I regard you guys as unfortunate victims in this (others may disagree). You didn't join a dodgy tax avoidance scheme, you were just using a firm of accountants. I therefore hope the mods will allow me to post this.

This is a drastic option, and only you can decide if it's even worth contemplating. It will only work if this drags on for many years. I think the magic number is 6 but don't quote me on that.

I know of someone who has done this and HMRC got diddly squat.

Early on in the dispute, they were caught up in, they transferred all their assets to their partner (savings, investments, their share in the family home). Then many years down the line they filed for personal bankruptcy.

Bankruptcy isn't something to be taken lightly. It can have all sorts of ramifications for employment, obtaining credit etc. But when the only other option is surrendering a substantial portion of your net worth to HMRC it may be a least unpalitable option.

If anyone thinks this might be suitable for them, before you do anything, talk to an Insolvency Practitioner first.

Agree nearly everyone in this mess are victims, I would also say CK are victims too. Even the people caught up in the Costello cases were victims.

We could argue forever about these packaged products v High Street accountants and FCSA regulated accountants not actually being accountants. Actually this is exactly what HMRC are arguing.

FWIW this is terrible advice. I know because I 100% thought about this during the Loan Charge debacle I got caught up in. Hector will probably hit people who do this with some kind of deliberate evasion and wrong doing. They even mentioned 20 years lookback if they suspect deliberate wrong doing. You could argue HMRC have no right saying moving money is wrong doing but they will suspect it was only done because they want to be paid.... which leads to wrong doing.


The absolute best thing to do here is to POA, as much or as little as people can even if it's weekly. If POA is a non starter, then the solution will be a long TTP not this route.

Many involved in this also probably have given up the 6 year rule, from memory HMRC offered a sweetner to those who would waive the 6 year rule anyway.

The key thing here to all involved is do not despair, do not do anything stupid. HMRC will allow long TTP and you'll be surprised how somehow you find the money.

[woody1]

My advice is the same as the professionals are giving. Do NOT go for the independent review as it sets the wheels in motion. It's merely a tick box exercise for HMRC and the independent review is really just someone from... HMRC making sure the process has been done correctly. It does not mean you are being judged anywhere by anyone.

This tallies with what I've heard.

The danger is that the outcome of the review will leave you with only 2 options; settle or appeal to the tribunal. Unless you feel like taking on the appeal yourself, it means hiring expensive lawyers (£££££).

In any case, HMRC may apply to the tribunal to have your individual appeal stayed behind the main CK/Boox case.

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As an aside, if HMRC win the CK/Boox case, I could see them issuing Follower Notices to deter anyone from lodging individual appeals to the tribunal.