Churchill Knight & Boox clients being investigated as Managed Service Companies

[Fred Bloggs]

It’s important to remember the context of the reason for 2(a). Back in the heyday when MSCs we’re allowed, most MSCPs charged either a fixed fee when the contractor worked or a percentage of fees. So these arrangements were the target.

CK appear to have made an error of judgement in my opinion, by offering this reduced fee on occasion. Their argument that they have a reduced workload may or may not be correct, depending upon the circumstances.

I still think they win on the professional accountancy services exemption, though.

I would agree. Question is, if there's more than one point where Hector thinks CK are caught. Three weaker claims by HMRC, for example, might be enough to convince a tribunal where one wouldn't?

[enda1]

How would one go about suspending their company right now? It seems the company could not be closed and dissolved with this outcome pending?
So in the time being, if I wanted to go back into normal employment, what are the recommended steps?

[rabbleish]

How would one go about suspending their company right now? It seems the company could not be closed and dissolved with this outcome pending?
So in the time being, if I wanted to go back into normal employment, what are the recommended steps?

Making your company dormant appears to be the main approach. I think it costs roughly £100 a year to file paperwork once you have made it dormant.

[frz78]

Ah, that's a very interesting detail, thanks.

i have never ever seen that with CK tbh. My fee is the same all the time unless the company is dormant (instructed by PSC director) and you require a reduced accountancy service i .e annual return once a year etc.

[jamesbrown]

It's hard to see what reduced work exists - they still need to process a VAT return (albeit one that may have reduced / no income), they still need to process PAYE....

I can see the reasons behind the offer but it's hard to see what bit of the workload is actually reduced

Other than the VAT, probably nothing. It isn't as though the company is dormant.

I think we're in agreement (THEPUMA too) that this was a bad call by CK. However, I think THEPUMA is right about the purpose of (2)(a) and I just cannot see this discount being enough to trigger (2)(a), but it will be tested for sure.

[jamesbrown]

It's also worth noting that CK is calling this in inactive company rate, which is more like dormant, so perhaps it really is a dormant company rate afterall.

[jamesbrown]

i have never ever seen that with CK tbh. My fee is the same all the time unless the company is dormant (instructed by PSC director) and you require a reduced accountancy service i .e annual return once a year etc.

Right, so it is sounding more like a dormant company rate, which ties in with the language CK is using. In that case, yes, there is a reduced workload.

It is still tenuously connected to the services of the individual, so it was still a bad idea and is still going to get tested, but emphasis on tenuous.

[frz78]

Right, so it is sounding more like a dormant company rate, which ties in with the language CK is using. In that case, yes, there is a reduced workload.

It is still tenuously connected to the services of the individual, so it was still a bad idea and is still going to get tested, but emphasis on tenuous.

Yeah, i get what you are saying. but in pretty much every area of intercompany business, workload and fee for service are linked. it feels like splitting hairs by HMRC to me - as you say tenuous, but they are clearly in the wolf prowling at the door mode...

[Hareforthebear]

These discussion points around the tests of involvement are only relevant if the firms are deemed to be not accountants right? Or am I missing something here?

Surely the reason the accountancy exemption exists at all is because services provided by an accountant would potentially otherwise fail these tests?

[GregRickshaw]

These discussion points around the tests of involvement are only relevant if the firms are deemed to be not accountants right? Or am I missing something here?

Surely the reason the accountancy exemption exists at all is because services provided by an accountant would potentially otherwise fail these tests?

Agreed. And this is one of the underlying points we all hope will bring this case to a shuddering halt.