Churchill Knight & Boox clients being investigated as Managed Service Companies

[dayd08]

Know exactly how you feel mate. The worst part is the fact we are being punished despite no wrong doing. Just an easy target.

[GregRickshaw]

After my earlier flippancy, it's important to remember here really, HMRC have a good record of working with the end user to make a long TTP affordable, yes it's utter tulip to be in this situation, especially as this is massively different to Loan Schemes etc., Most of us involved in those weren't blameless.

This is very different and very unfair on the end user as was the Christianuyi Ltd precedent, although an absolute slam dunk example of MSCP and MSCs the end users were just poor sods making a living.

Those facing large debts, stay strong and calm you'll get through this there's always a way, don't do anything stupid such as unaffordable re-mortgages etc., seek help from the good tax advisors, mine helped me massively get great TTPs

To use a terrible phrase "It is what it is..."

Good luck all.

[eek]

Know exactly how you feel mate. The worst part is the fact we are being punished despite no wrong doing. Just an easy target.

Not so much an easy target, more plain unlucky for picking the wrong accountants...

[geekergosum]

Followup - I sent HMRC the information needed and now have an email that I summarise as follows:


• Expense Verification: Request for clarification on reimbursed expenses, reasons for reimbursement, and supporting documentation to determine tax deductibility.

• Deductible Expenses: Explanation of tax-deductible expenses, emphasising the requirement of being “wholly, exclusively, and necessarily” incurred for work, with travel expenses needing to be “necessarily” incurred.

• Commuting Expenses: Travel costs between home and a permanent workplace are not deductible.

• Temporary Workplace Definition: A place of work with a limited duration or temporary purpose, not exceeding 24 months or 40% of working time.

• SDC Requirement for MSC: Relief for temporary workplaces is only allowed if the client has no right to supervise, direct, or control the manner of work.

• Travel Expenses Deduction: Ordinary commuting expenses are not deductible.

• Temporary Workplace Rules: Provide evidence for lack of SDC, details of recurring journeys (location, duration, purpose, reason for rule applicability), and explanation for engagements exceeding the initial 24-month limit.

• Expenses for Extended Engagements: Confirm the claimed period, explain the original and changed timeframes, and provide evidence for the initial expectation of less than 24 months and the subsequent change.

• Expense Deduction Criteria: HMRC will first consider if the expenses are deductible under normal travel expense rules, then under the rules for working abroad if not.

• Information Requested: Description of circumstances leading to travel expenses, including reason for journeys, location, service recipients, and duration.

So now this is an IR35 investigation?

[Hareforthebear]

Followup - I sent HMRC the information needed and now have an email.

So now this is an IR35 investigation?

Apologies if it is clear from en earlier post, but what is the context behind this request from HMRC? Have you asked for a detailed calculation or something?

is your appeal not just stood over pending the tribunal or have you taken some other action?

[Chevalier]

So now this is an IR35 investigation?

It’s not an IR35 investigation, but the effects of the MSC legislation are very similar to those of IR35.

The expenses that are “allowable” are those expenses that would not be taxable if you were an employee of the end client company (see section 61E)

https://www.legislation.gov.uk/ukpga...rt/2/chapter/9

For example if you were paid travel expenses to travel to the client offices, then this would normally be seen as a taxable benefit if you were an employee of the client.

What the HMRC officer is asking for is details of the expenses paid, in order to determine whether any expenses paid should be seen as a taxable benefit or not

[computething]

What the HMRC officer is asking for is details of the expenses paid, in order to determine whether any expenses paid should be seen as a taxable benefit or not

HMRC seem to be ignoring the 4 year legal time limit on opening enquiries into expenses in normal circumstances, i.e. not "careless".
I went through this with HMRC before I knew about the 4 year rule. The end result of them trawling through all my expenses, and correcting most of their errors was them continuing to dispute the purchase of two books on behalf of my business. Their agent has used the wrong legislation and contradicted the guidance of a professional accountant.

HMRC are querying expenses now, because the amount of expenses is essential for calculating the tax determination. The original determinations were incorrect because the calculation of "income" was simply revenue minus corporation tax and National Insurance. The calculation should have been PAYE, plus dvidends, plus any unallowable expenses.
The legislation related to Reg 80 Determinations limits alterations to a determination - HMRC can change the amount of a detemination, but not the basis of the determination.
e.g. they could make a better estimate of expenses based on more detailed information. I don't think they can legally change anything beyond that, like changing the basis of the calculation. HMRC still claim the original determinations are "best judgement" despite those calculations being based on a fundamental misunderstanding of how the calculation was supposed to work.

[geekergosum]

The lastest from the back and forth with HMRC:

Clarification of Figures:

A breakdown of salary, dividends, and director loan payments has been reviewed for three tax years. There’s a noted discrepancy between the total amounts recorded and what is accounted for under those categories. Clarification is requested regarding these differences and whether any relate to reimbursed expenses.

Expenses Breakdown:

A summary of certain expenses (excluding company-specific ones like insurance, bank fees, depreciation, and accounting fees) has been provided across the three years. These include costs such as accommodation, computer hardware, mileage, parking, printing/stationery, subsistence, travel, and computer equipment.

For each tax year, the following clarifications are requested:

• Which listed expenses were reimbursed?
• Are there additional reimbursed expenses not yet included? If so, what are they and for which years?
• What do the remaining unexplained amounts from the initial breakdown relate to?

Travel Documentation:

Copies of client contracts are requested for each of the three tax years as supporting documentation for travel-related expenses.

Associate Payments (Dividends to Wife):

Two differing amounts were recorded for payments to an associate in one tax year—one under a current account reference and one as a dividend. Clarification is requested on which figure is correct. Additionally, confirmation is sought on whether the associate performed any work during that period and, if so, what their roles and responsibilities were.

The requested information is to be provided by 24 August 2025.

But also: Yay! We are back on the News page again!

[woody1]

HMRC are going to be busy if they have this palaver with every single person. They might need to learn to work a bit smarter.

[geekergosum]

HMRC are going to be busy if they have this palaver with every single person. They might need to learn to work a bit smarter.

this is just the summary. I have three tax years to go back and forth about expenses, where amounts from hundreds of lines of expenses should go. Contracts to send to discuss that.

it seems all a little if we can’t get them on msc can we get them on ir35, and if we can’t get them on that can we get them on expenses, and if not that what about spousal eligibility of dividends.

why are they asking me about the personal services my company provided and not my so called “employer “ boox? Could it be that they didn’t provide me a managed service of my company?

They also ignored completely my complaints about the impact on my mental health I raised over these invasive and continuing vague investigations.

if you are affected by this …and you do need help…please reach out to the relevant charities.