Churchill Knight & Boox clients being investigated as Managed Service Companies

[Bruce88]

HMRC can interpret the legislation in any way they like. If we don't like it we have to go through the courts.

I understand that HMRC will attempt to apply their own interpretation of the rules but ultimately if this is not realistic they will lose the case. I think clause 61B(1)(b) is quite specific in saying 'payments made to the individual' this can't include employer pension contributions as these are made to a pension scheme. The individual does not receive these contributions. Referring to ESM3510, the HMRC guidance given on this clause is 'The individual receives payments (or an aggregate of payments and benefits).' But employer pension contributions are not reportable to HMRC as benefits (therefore not classed as such). I would be interested to hear other opinions on the matter.

[Guy Incognito]

With regard to IPETA 61B(1)(b),

‘payments are made (directly or indirectly) to the individual (or associates of the individual) of an amount equal to the greater part or all of the consideration for the provision of the services,’

I understand that HMRC may be trying to include pension contributions as part of the payment calculation. Surely these can’t be considered as ‘payments to the individual’? I could understand an argument for including contributions via salary sacrifice or personal contributions from earned money. However, I think most ltd company directors would make an employer contribution direct from the company business account to the pension scheme. Contributions made in this way are not paid to the individual.

HMRC can interpret the legislation in any way they like. If we don't like it we have to go through the courts.

[jamesbrown]

Many thanks for this, it makes a lot of sense.

I hope that, if we lose the case, HMRC at least does the right thing and doesn't make us drag the case to avoid getting double-taxed. But you seem to be talking from knowledge of previous cases so I don't have much hope.

I think there is quite a lot of hope w/r to not getting double-taxed. No tribunal judge is likely to allow that, on request to decide about quantum when no agreement can be reached, especially if you can present timely evidence about how you tried to prevent it. I would suggest it is close to certain, in a tribunal scenario. But, of course, it's equally certain that HMRC will play hardball because that's what they do - the point is, they don't get to decide this unless you accept their liability calculation (although I appreciate a tribunal is an expensive endeavour to pursue).

[ritwolf]

I continue to be surprised that HMRC would entertain a claim in advance of a confirmed liability. It all sounds very odd to me and inconsistent with their past behaviour. The usual scenario is that any liability crystallizes long after the deadline for a revised CT600 and associated refund of CT paid and HMRC then play hardball. In a tribunal scenario, the judge can be asked to decide, and you probably would not be double-taxed. Still, I've always been skeptical about this idea of registering a prospective claim with HMRC. That said, it may help in a tribunal situation if you can show foresight about this with HMRC administration and foot dragging being the only barrier to a timely claim, which is true. In other words, if you're going to make this "claim", keep a record of any correspondence.

Many thanks for this, it makes a lot of sense.

I hope that, if we lose the case, HMRC at least does the right thing and doesn't make us drag the case to avoid getting double-taxed. But you seem to be talking from knowledge of previous cases so I don't have much hope.

[Bruce88]

With regard to IPETA 61B(1)(b),

‘payments are made (directly or indirectly) to the individual (or associates of the individual) of an amount equal to the greater part or all of the consideration for the provision of the services,’

I understand that HMRC may be trying to include pension contributions as part of the payment calculation. Surely these can’t be considered as ‘payments to the individual’? I could understand an argument for including contributions via salary sacrifice or personal contributions from earned money. However, I think most ltd company directors would make an employer contribution direct from the company business account to the pension scheme. Contributions made in this way are not paid to the individual.

[jamesbrown]

Hi guys, my accountant contacted me regarding the overpayment relief claim. HMRC has told him that because the case is pending, they can't register an interest or make the claim relief, and this can only be done after a liability has been paid.

It sounds contradictory to me as I read in previous posts that there was a deadline to make these claims.

- Does the answer by HMRC make sense to you?
- If not, can I do something about it? I'd like the claims to be registered so that I'm not double-taxed with the excuse that the claim was not registered on time

I continue to be surprised that HMRC would entertain a claim in advance of a confirmed liability. It all sounds very odd to me and inconsistent with their past behaviour. The usual scenario is that any liability crystallizes long after the deadline for a revised CT600 and associated refund of CT paid and HMRC then play hardball. In a tribunal scenario, the judge can be asked to decide, and you probably would not be double-taxed. Still, I've always been skeptical about this idea of registering a prospective claim with HMRC. That said, it may help in a tribunal situation if you can show foresight about this with HMRC administration and foot dragging being the only barrier to a timely claim, which is true. In other words, if you're going to make this "claim", keep a record of any correspondence.

[ritwolf]

Hi guys, my accountant contacted me regarding the overpayment relief claim. HMRC has told him that because the case is pending, they can't register an interest or make the claim relief, and this can only be done after a liability has been paid.

It sounds contradictory to me as I read in previous posts that there was a deadline to make these claims.

- Does the answer by HMRC make sense to you?
- If not, can I do something about it? I'd like the claims to be registered so that I'm not double-taxed with the excuse that the claim was not registered on time

[Guy Incognito]

HMRC are clown shoes

[jimmyoyang]

In addition to this topic, I too am having difficulty making PoA despite now having the funds to do so. There should be a SAFE ref number which is documented for the PAYE determinations (it is the same number across all years relating to the Notice of Reg 80) that should be used for reference purposes, however, there is no SAFE number for the National Insurance contributions notice which I am in the midst of trying to sort out.

In the interim, I've been advised to directly email them (the email on the letter: esimscteam@hmrc.go.uk) stating I'd like to make a PoA for the above, and they should, in theory, offer guidance on the next steps. This method was advised by my tax advisor. In addition, I also tried calling HMRC on numerous occasions and managed to get through to multiple departments who had no idea what I was talking about!!! So, I share your confusion and frustrations too.

Lastly, I am also yet to hear from the contact I emailed as advised though it's only been a week thus far.

Will keep you all updated if anything changes... the uncertainty continues...

[GregRickshaw]

You should have received a reference number in your correspondence with HMRC.

You need to use that reference number to pay on account. If you have, as it sounds, started a dialogue with HMRC then ask them for a reference number to allow you to pay on account. Once you have the number payments can begin.

As is well documented here I had my first two years thrown out, however despite paying HMRC in March 2022 I still haven't received the PoA amounts back