Churchill Knight & Boox clients being investigated as Managed Service Companies

[Fred Bloggs]

Indeed. I'm sure I'm not the only person heavily involved in what might be deemed a "contractor accounting firm" who has raised an eyebrow to these challenges.

Reality is myself and peers in similar firms all forgot about MSC regs years ago. We've never invoiced on behalf of clients, or had any control over their banking. We don't "control" them at all.

However, do we influence our clients financial decisions? Of course we do! If we didn't, we'd be rubbish accountants! Do we recommend what salary/dividend levels clients opt for? Again yes...but so did the top 10 firm I trained with >15 years ago! That's not running someone's business, that's being an adviser.

I very much hope (and also do expect) this ends up being considered massive over-reach by HMRC, and they get slapped down accordingly.

As a long time FreeAgent accountant, I really don't think your clients have anything much to worry about. I would be saying to them just prepare for the worst should it happen, so you can defend yourself.

[GregRickshaw]

https://www.contractoruk.com/news/00...rs_warned.html

I had to smile at CK's response to potentially it being their portal under investigation.... to build a portal to assist. Ok so it was a grimace rather than a smile.

[DealorNoDeal]

Thanks, I'm still not exactly sure that I'm looking at though - it says 3.25% but what's the history about? is that just showing how the % goes up and down over time? It seems to change almost month by month so am I to assume this interest is accrued monthly? 3.25% every month is a hell of a lot.

It's 3.25% per year. It's also simple interest, not compound. The different rates are what was charged at that time. (I think it's BoE base rate + 2.5%)

Interest accrues from when the tax would have been due, so for 2017/18 you're already looking at a few years interest.

Making a PoA now would stop any further interest accruing.

[rdw1970]

FYI if there are any Boox clients who haven't received 2 emails from the Director Chris Clark yet, please call them as they advised that HMRC sent them a list of clients they will be writing to. However, it seems Hector has sent letters to Boox Clients (former in my case) whose names weren't on this list hence no emails were received.
The 2nd email contains a draft appeals letter and apparently a support helpline will be set up.

[tenten]

Indeed. I'm sure I'm not the only person heavily involved in what might be deemed a "contractor accounting firm" who has raised an eyebrow to these challenges (in far more an "I'm slightly scared" than "Ha, look at them" kind of way!).

However, do we influence our clients financial decisions? Of course we do! If we didn't, we'd be rubbish accountants! Do we recommend what salary/dividend levels clients opt for? Again yes...but so did the top 10 firm I trained with >15 years ago! That's not running someone's business, that's being an adviser.

Am I naive to think that there will a community of accountancy practices who are doing more than raising an eyebrow to this imposition? I don't know how much good it would actually do for those currently in the cross-hairs, but I would like to think there is a movement of support in the industry brewing behind the scenes.

[jamesbrown]

Am I naive to think that their will a community of accountancy practices who are doing more than raising an eyebrow to this imposition? I don't know how much good it would actually do for those currently in the cross-hairs, but I would like to think there is a movement of support in the industry brewing behind the scenes.

Not naive, but it's hard to see what a collection of accountancies could do. It isn't clear that even CK and Boox can be placed in the same box, let alone that either will be found to be an MSCP, let alone that CK/Boox are comparable to many other accountancies (or, rather, the size of the "bad" group if they are found to be "bad"). There is a pretty diverse spectrum of contractor accounting out there from very limited guidance to, it seems, full handholding "solutions" (it's amusing that Brookson was not targeted in the first round, for example, as they are known for pushing the boundaries, at least historically).

Either way, this is bad news for all accountants. Not only are they legitimate targets of any debt owed, even personally as directors of an MSCP, but they will be losing a ton of business as this situation snowballs. I cannot see any reason why someone would stay with CK or Boox and accrue further years that will be inevitably opened eventually. But it's probably also the end of any contractor accounting that is even vaguely handholding, regardless of what (and when) the ultimate determination may be on CK and Boox.

[DealorNoDeal]

Reading this, it's not surprising HMRC went after CBS. They would almost certainly have been on HMRC's radar prior to 2007. Changing their "scheme" from composites to PSCs, to try and circumvent the MSC legislation, would have been like red rag to a bull.

Although it turned out to be a huge blunder micro-managing the PSCs, I can see why they did this. They probably needed to keep the "scheme" as simple for the contractors as being employees of the composites.

Oh, and why does it not surprise me that they were Isle of Man.

https://www.contractorcalculator.co....1810_news.aspx

[LivingtheDream]

There isn't a straightforward answer to that because different taxes have different time limits for correction/refund. With CT, it's four years. Natural justice would suggest that taxes already paid should be used to offset whatever is due, but HMRC take a different view about this (no surprise). In a tribunal situation, where no agreement is reached, the tribunal judge can be asked to rule. In the end, it would probably be factored in, but I don't think it's guaranteed.

Not only will they not allow a CT offset, they deem unpaid PAYE as a BIK and tax the tax due as income! Its MAX TAX time!

[RP1234]

FYI if there are any Boox clients who haven't received 2 emails from the Director Chris Clark yet, please call them as they advised that HMRC sent them a list of clients they will be writing to. However, it seems Hector has sent letters to Boox Clients (former in my case) whose names weren't on this list hence no emails were received.
The 2nd email contains a draft appeals letter and apparently a support helpline will be set up.

Thanks for this, I've just called them as I was not on the list. It seems as if there are many that were not on the list sent to Boox as the chap mentioned that's all he's been dealing with this AM

[tenten]

Either way, this is bad news for all accountants. Not only are they legitimate targets of any debt owed, even personally as directors of an MSCP, but they will be losing a ton of business as this situation snowballs. I cannot see any reason why someone would stay with CK or Boox and accrue further years that will be inevitably opened eventually. But it's probably also the end of any contractor accounting that is even vaguely handholding, regardless of what (and when) the ultimate determination may be on CK and Boox.

Ohh absolutely. This has the potential to hollow out a legitimate sub-sector. I would be surprised if CK and Boox haven't already lost swathes of their Ltd co PSC clients looking for damage limitation and I can't imagine there will be many new clients queueing up any time soon due to the ongoing perceived reputational impact. I expect many PSCs with other accountants will be assessing their own relationships closely and acting accordingly too - I know I have..... and I use an accountant and tools that the wisdom of this forum would suggest is probably OK.