Churchill Knight & Boox clients being investigated as Managed Service Companies

[Lotok]

Yeah, I've already applied for this and received a letter back saying my claim was noted but nothing will be actioned until the Regulation 80 Determination is finalised. Once finalised, I would then need to make the claim for the overpayment. There was no talk or information about time limits (other than them noting about the investigation... this is from the CT department not MSC) – and since this was a generic response, I presume we all received something similar? Basically, however long this case takes... we can only apply for a refund after the case is closed (meaning the timeframe/deadline is redundant, surely).

Quote from a DK email on the subject

For the years to 31^st January 2019, 2020 and 2021 the deadlines are 31^st January 2023, 2024 and 2025 under the normal rule. You may have heard that HMRC have been saying that they cannot be submitted until the PAYE matter is sorted out. This is legally incorrect and more recent correspondence that I have had from is not consistent on this point: some of it implies that they can and other pieces maintain the original line.

[Lotok]

It was mentioned a while ago that CK were raising a fighting fund. How did this go in the end, did they reach target?

What about Boox? What are they doing to fight this?

Anyone know if the CK & Boox tribunal cases will be heard together, or separately?

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I genuinely feel sorry for anyone caught up in this because it's probably going to drag on for many years.

Try not to let it consume your life.

I don't expect much from Boox

[DealorNoDeal]

It was mentioned a while ago that CK were raising a fighting fund. How did this go in the end, did they reach target?

What about Boox? What are they doing to fight this?

Anyone know if the CK & Boox tribunal cases will be heard together, or separately?

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I genuinely feel sorry for anyone caught up in this because it's probably going to drag on for many years.

Try not to let it consume your life.

[Bruce88]

Some further points to add regarding the updated HMRC case

Regards condition a

‘If clients fail to pay then access to the online portal is suspended’

This is incorrect I have on more than one occasion had trouble with payments going through to Boox. Normally a quick phone call or email and the issue is sorted. At no point has access to the portal ever been suspended.

‘Clients must continue to pay BOOX regardless of whether they are receiving income’

I continue to pay Boox during periods when no income is received because my company is still an ongoing concern which requires the services of an accountant to meet statutory submissions to HMRC. This includes quarterly VAT returns, EoY accounts, corporation tax returns, RTI submissions, as well has having an accountant available for general accounting enquiries. This points to me paying Boox for their service not them benefiting financially from the provision of my services.

Regards condition d

‘BOOX influence the company’s finances or any of its activities by influencing the choice of bank account used by the client companies. Without choosing a certain bank account, BOOX’s product wouldn’t work as intended and the individual client companies would have to complete additional admin tasks’

Boox have never made any conditions as to which bank account I should use. In fact, a few years ago I changed my bank account to a new fintech start-up bank, at no point did Boox ever say this was a problem or incompatible with their systems.

[jimmyoyang]

My understanding is you will need to claim back CT however there is a limit to how far back you can go, which causes some issues. I know DK group put in conditional claims for CT so the claim is in on time.

Yeah, I've already applied for this and received a letter back saying my claim was noted but nothing will be actioned until the Regulation 80 Determination is finalised. Once finalised, I would then need to make the claim for the overpayment. There was no talk or information about time limits (other than them noting about the investigation... this is from the CT department not MSC) – and since this was a generic response, I presume we all received something similar? Basically, however long this case takes... we can only apply for a refund after the case is closed (meaning the timeframe/deadline is redundant, surely).

[GregRickshaw]

Well with the speed HMRC move they probably found it and have only now started acting.

[rdw1970]

I think HMRC finally found the YouTube video posted months ago here.

I doubt it as Boox removed it along with all their social media accounts long before they folded

[GregRickshaw]

I think HMRC finally found the YouTube video posted months ago here.

[geekergosum]

I'm caught up with Boox, and waiting for my latest letters...but based on the comments below the point I have with HMRC is only reinforced.

On Condition A:

I chose Boox so I had an easy and convenient portal with which to operate my business and ensure that all tax was calculated both correctly and efficiently. I relied upon a professional accountant to give a service I lacked the knowledge in, just as my end clients chose me to provide a service.

By using a service I expect to pay for it. If I don't pay for it I don't get it...what is true for Boox is true for Netflix, or the TV licence, or My Broadband. I pay even if I didn't use it.

Condition C:

I asked for the best way to pay my tax, and the advice from Boox was the same as a cursory Google Search. At no point did they say 'you must' and at best it was 'you could'. The end decision with me was my own.

Again HMRC need to check the law...High Tax Avoidance through tax planning does not equal Tax Evasion, and it apparently my fiduciary duty my company's Shareholders to pay the least amount of tax owed:

https://www.theguardian.com/technolo...change-law-tax

On the three separate payments...is HMRC saying making it easier to do your accounts is bad?

Condition D:

The use of the portal was to simplify the process, like using Excel instead of a calculator and some graph paper for the data analysis. It wasn't 'control', it was a 'tool'.

There was independence, I used to send a CSV of my business bank account so they could make up the accounts. I could have sent my own invoices but would have had to have provided them for them to do the bookkeeping. If I had used some formulas in Excel via a blogpost on how to have run a low salary/high dividend model would I be an Employee of Microsoft and BackstreetAccountants.com?

This makes me think the HMRC attack is more flimsy than ever, and are relying on overly aggressive techniques rather than anything based on real work accounting.

[jamesbrown]

Especially as the HMRC have yet to explain why the accountancy clause has not been applied, because where do you draw the line between accountancy advice and influence.

The thing to bear in mind with 61B(3) is that it doesn't say accountants operating in a professional capacity are exempt, rather that they are not automatically caught. This points to case law determining the line between an accountant operating in a professional capacity and an MSCP. In summary, I don't think there's much comfort in 61B(3) and, in any case, it isn't for HMRC to look for reasons to disapply the legislation, rather to look for reasons to apply it. Again, there's an important distinction between a client seeking advice from an accountant and an accountant who proactively offers advice that favours a low salary/high dividend approach. I have no idea (beyond what I've read here) whether CK/Boox made assumptions or suggestions that pointed towards a low salary/high dividend approach but, honestly, there's probably an indistinct line between these things, which is why I think Condition C is more challenging.

Regarding what you've said about Condition D, I personally never bought the portal argument as being particularly strong, but HMRC clearly sees this as central to their case (it isn't a coincidence that they chose CK and Boox in this regard). If the portal operated much like a more general purpose bookkeeping tool (e.g., Xero or FA), with no significant configuration or restrictions on default functionality, I think they are left with the much weaker argument in relation to Condition D that "There is no independence from the portal". I doubt that is enough because there obviously needs to be a mechanism to share information when an accountant is operating in a professional capacity and a portal doesn't really tie hands in that regard (any more than a relationship with a local accountant sharing paper would tie hands), it simply facilitates information sharing.