Churchill Knight & Boox clients being investigated as Managed Service Companies

[GregRickshaw]

Just to clear though, sorry if this has been explained elsewhere... does it seem likely there will be a process for offsetting some of the total NI being claimed against tax paid in other sources e.g. corporation tax, dividend tax etc. The full figure they are requesting from me is pretty eye watering - but if it's offset against some of my previous payments then it starts to look a little less frightening.

At the moment that is the 'understanding' so after caveating this statement... The NI figures seems to be the one you will have to pay, the PAYE bill will most probably be wiped out by the returning CT and the Div Tax you paid (no word on VAT as yet - highly unlikely). Leaving you with the NI bill.

Don't take this as gospel though as HMRC can pretty much do whatever they like.

[woody1]

With regards to HMRC regarding this as a penalty rather than tax - is that something you've read somewhere? Would be interested to know where that's coming from. At the moment all of the correspondence I've had from HMRC indicates that they're pursuing it as collection of unpaid tax - in which case I would have assumed that the principle not to tax the same income twice should apply. Thanks

I think WTFH was commenting on the interest. Although it may feel punitive, it's not a penalty. Any taxpayer who is late paying tax or NI is charged interest from when the tax/NI was due.

[geekergosum]

Just received my latest appeal letter from HMRC looking to receive "actual income figures".

Quoting the letter : " These determinations and decisions were based on financial information we hold. I now need actual figures from you, to revise our calculations of what you owe."

I'm glad HMRC didn't just make it up in the first place...

In the request they are asking for :

1. Company turnover
2. Actual amounts paid
   1. Salary via PAYE
   2. Dividends
   3. Pension constributions
   4. All expenses paid
3. Payments made to other individuals

The latest "behavioural nudge" seems to be in the expenses : "We need to check if any expenses met by the worker were allowable. Please explain the business purpose of the expenses and include any supporting documents."

This seems to be a new "let's turn the screw". Especially in terms of providing documents, I mean following HMRC's own advice on document retention would mean that any documentation for the latest year (2019/20) would not be retained :https://www.gov.uk/employer-reportin...record-keeping

I also imagine that the calculation will still be based on X% for PAYE & NIC of total revenue, and not take into account the CT, Dividend Tax and any PAYE& NIC already paid.

Plus I imagine the expenses are another way to extract more money, put can I then claim the expenses from my 'employer Boox?' ... oh hang...

[woody1]

I did ponder a few weeks ago about how complicated this could get. The answer seems to be "very".

I hope they've allocated a lot of staff (who know what they're doing!) if they're going through this with every single person.

[GregRickshaw]

Just received my latest appeal letter from HMRC looking to receive "actual income figures".

Quoting the letter : " These determinations and decisions were based on financial information we hold. I now need actual figures from you, to revise our calculations of what you owe."

I'm glad HMRC didn't just make it up in the first place...

In the request they are asking for :

1. Company turnover
2. Actual amounts paid
   1. Salary via PAYE
   2. Dividends
   3. Pension constributions
   4. All expenses paid
3. Payments made to other individuals

The latest "behavioural nudge" seems to be in the expenses : "We need to check if any expenses met by the worker were allowable. Please explain the business purpose of the expenses and include any supporting documents."

This seems to be a new "let's turn the screw". Especially in terms of providing documents, I mean following HMRC's own advice on document retention would mean that any documentation for the latest year (2019/20) would not be retained :https://www.gov.uk/employer-reportin...record-keeping

I also imagine that the calculation will still be based on X% for PAYE & NIC of total revenue, and not take into account the CT, Dividend Tax and any PAYE& NIC already paid.

Plus I imagine the expenses are another way to extract more money, put can I then claim the expenses from my 'employer Boox?' ... oh hang...

I'm afraid you are getting caught up in a general taxation audit there. Or you have set the 'I want an independent review' hare running.

My advice is get help before you answer anything. There are lawyers for this very thing .

Sadly your last line will have Hector rubbing their hands they love vernacular like 'my employer' in these MSC cases.

Get professional help now.

[geekergosum]

I do feel like I am going to be having a chat with them about what they need / demand. I never asked for the independent review, all I asked for was for the charges to be stood over pending the full FTT.

I've got no Skeltons in the closet. I have amounts invoiced for my work, the payments for salary / vat / dividends etc (notably my dividend amounts are all round numbers because I determined the amount and no use any amounts provided).

And my expenses are travel, food and computer equipment (but these extend past HMRC's view on keeping receipts- and yes I know never get rid of them, but I don't want advice from anyone but HMRC incase I am determined to be an employee of the advice giver...)

The 'my employer' is in the quotation for the sarcasm of it. Boox are evidently not my employer (setup company and business accounts beforehand, and used Boox as a platform to ensure that my tax was correct - you know what an accountant should do and did it because HMRC wanted everything digital). I imagine HMRC want to use the expenses as a way of saying I would not be entitled to them to further increase the amount owed.

Again I think that this is another of the nasty ways they try to scare people into coughing up money. The thing is I have nothing to give for a POA personally, other than taking money from my small children....but as we see from incidents around the loan charge...these people don't care.

I do have a comment on them recruiting more people. It's clear that HMRC are designed to go as slow as possible. They can charge interest from the moment the money is created. If they lose a case they get nothing, if they win in a year they get 1 years interest, but 5-7 years of above rate interest...win win. I imagine that if interest was only accrued from moment of investigation, and paused while being stood over then all of a sudden there may be more urgency in their actions.

[ritwolf]

Just received my latest appeal letter from HMRC looking to receive "actual income figures".

Quoting the letter : " These determinations and decisions were based on financial information we hold. I now need actual figures from you, to revise our calculations of what you owe."

I'm glad HMRC didn't just make it up in the first place...

In the request they are asking for :

1. Company turnover
2. Actual amounts paid
   1. Salary via PAYE
   2. Dividends
   3. Pension constributions
   4. All expenses paid
3. Payments made to other individuals

The latest "behavioural nudge" seems to be in the expenses : "We need to check if any expenses met by the worker were allowable. Please explain the business purpose of the expenses and include any supporting documents."

This seems to be a new "let's turn the screw". Especially in terms of providing documents, I mean following HMRC's own advice on document retention would mean that any documentation for the latest year (2019/20) would not be retained :https://www.gov.uk/employer-reportin...record-keeping

I also imagine that the calculation will still be based on X% for PAYE & NIC of total revenue, and not take into account the CT, Dividend Tax and any PAYE& NIC already paid.

Plus I imagine the expenses are another way to extract more money, put can I then claim the expenses from my 'employer Boox?' ... oh hang...

It doesn't make much sense... why would they send a letter to find out exact numbers if they are busy preparing the test cases? Did you get confirmation that your case is being stood up? Because maybe it's gone through a different route...

Has anyone else received a letter asking for these numbers?

[GregRickshaw]

It doesn't make much sense... why would they send a letter to find out exact numbers if they are busy preparing the test cases? Did you get confirmation that your case is being stood up? Because maybe it's gone through a different route...

Has anyone else received a letter asking for these numbers?

I agree. This is odd, everything is pretty much 'frozen' until 2026 so why letters of this nature would come out now is a bit odd.

geekergosum are you sure this is part of the MSC investigation, I mean is this what the letter states clearly?

[geekergosum]

I agree. This is odd, everything is pretty much 'frozen' until 2026 so why letters of this nature would come out now is a bit odd.

geekergosum are you sure this is part of the MSC investigation, I mean is this what the letter states clearly?

The last letter I received was the Pay now, CCJ or if you still want to appeal sign away your rights...I chose option 3 (as cannot do the POA for the 10's of thousands they demanded).

The letter is from the same team (esimscteam@hmrc.go.uk) and goes as follows :

Your appeal - please send us your actual income figures

Managed Service Company legislation at Chapter 9 Part 2 Income Tax (Earnings and Pensions) Act 2003 (ITEP 2003) and the Social Security Contributions (Managed Service Companies) Regulations 2007

We've previously issued Regulation 80 determinations and Section 8 decisions for Income Tax and National Insurance Contributions (NICs) we think you owe. We received appeals against these, and the charges are stood over while we continue with the enquiry.

These determinations and decisions were based on financial information we hold. I now need actual figures from you, to revise our calculation of what you owe.

What you need to do by 27 June 2025

For the 2017/18, 2018/19 and 2019/20 tax year/s, please send me the following details:

1. The Company turnover, including a breakdown of when amounts were received.
2. The actual amounts [me] Limited paid you, including but not limited to:
   1. salary through PAYE
   2. dividends
   3. contributions to registered pension schemes all expenses paid to you as a director

We need to check if any expenses met by the worker were allowable. Please explain the business purpose of the expenses and include any supporting documents.

1. Any payments made to other individuals, associates or shareholders by the company.

[detail about document handling]

HMRC Person
On behalf of the MSC Team

It does seem to have a different case number from the initial letters I received at the start.

[GregRickshaw]

The last letter I received was the Pay now, CCJ or if you still want to appeal sign away your rights...I chose option 3 (as cannot do the POA for the 10's of thousands they demanded).

The letter is from the same team (esimscteam@hmrc.go.uk) and goes as follows :

Your appeal - please send us your actual income figures

Managed Service Company legislation at Chapter 9 Part 2 Income Tax (Earnings and Pensions) Act 2003 (ITEP 2003) and the Social Security Contributions (Managed Service Companies) Regulations 2007

We've previously issued Regulation 80 determinations and Section 8 decisions for Income Tax and National Insurance Contributions (NICs) we think you owe. We received appeals against these, and the charges are stood over while we continue with the enquiry.

These determinations and decisions were based on financial information we hold. I now need actual figures from you, to revise our calculation of what you owe.

What you need to do by 27 June 2025

For the 2017/18, 2018/19 and 2019/20 tax year/s, please send me the following details:

1. The Company turnover, including a breakdown of when amounts were received.
2. The actual amounts [me] Limited paid you, including but not limited to:
   1. salary through PAYE
   2. dividends
   3. contributions to registered pension schemes all expenses paid to you as a director

We need to check if any expenses met by the worker were allowable. Please explain the business purpose of the expenses and include any supporting documents.

1. Any payments made to other individuals, associates or shareholders by the company.

[detail about document handling]

HMRC Person
On behalf of the MSC Team

It does seem to have a different case number from the initial letters I received at the start.

This is very strange to me, especially the Pay now or CCJ. Sign away rights? Is the stayed letters/solution HMRC came up with so HMRC could effectively waive the 6 year rule?

Do you mind telling us when you got this letter.?

Seems quite strange these are coming now unless you appealed via your own route or even had an independent review. The benefits of going with lawyers and people who know what they are doing, they will prompt you the answers to give (the correct ones) in these type of cases so you don't throw yourself even deeper in the hole you are in.

It's total plausible HMRC are trying to determine whether you are actually liable, there are many reasons why you can't be a MSC (50/50 rule, more than one person band etc..) but I suspect they are just asking for figures as they always do because, in your case, they don't know.

Get help as soon as possible.

I agree on the glacial pace