Churchill Knight & Boox clients being investigated as Managed Service Companies

[GregRickshaw]

speaking? No… These will be the poor handpicked souls that HMRC is investigating, demonstrating the worst possible case.

Possibly CK did say a few cases were already under investigation. All ties in with the 'the investigation started a long time ago' scenario for me. Losing a lot of respect for CK every day.

[GregRickshaw]

This part worries me, what idiots did they speak to that told them this? who tf can't pay themselves without checking the portal(s)? The new tax limits are announced before each new tax year starts, you know right then and there what you'll be paying yourself for the year?

Agreed. In the 10 years I was with CK I never checked once on any portal or with anyone how much to pay myself.

I said many many pages ago, CK did have this advice thing they sent out by email but it stopped late 2012 and never returned.

I definitely used the portal for expenses, I have made no secret of that.

[cojak]

My perspective on this is that HMRC's interpretation is hopelessly wrong, but I assume they just pulled it together so they could send out these letters now.

Contrast it with HMRC's own views expressed in ESM3520:



Further, note its section on the meaning of 'influences':



Read more here: https://www.gov.uk/hmrc-internal-man...manual/esm3520

Though at line 26 of page 4 of …anceandtax.decisions.tribunals.gov.uk/judgmentfiles/… it says

“A person does not fall within subsection (1)(d) merely by virtue of providing legal or accountancy services in a professional capacity.”

But I guess HMRC are totally ignoring this.

(Thanks to NF for this.)

[eek]

Though at line 26 of page 4 of …anceandtax.decisions.tribunals.gov.uk/judgmentfiles/… it says



But I guess HMRC are totally ignoring this.

(Thanks to NF for this.)

HMRC are very clear however that being a Accountant doesn't give you an get out clause from the MSC regulations.

Also HMRC were happy to argue in the Howey case last week that the external employment manual may not reflect the internal manual and that the internal secret manual trumps what is said in the external manual. It seems from the comments I've read that the Judges were happy to accept that argument...

[Hareforthebear]

The accountancy exemption seems too obvious doesn’t it. Presumably this is what HMRC will ultimately be looking to test as I’m sure this is what Boox/CK are basing their defence on as if this holds the other factors are irrelevant as far as I can tell.

I thought perhaps it’s significant that one firm is regulated whereas one is not per se, would they be looking to test this aspect by taking both forward to tribunal? Their manual states the firm needs to be regulated to even have a sniff of being an accountant and not a MSCP. The legislation doesn’t go this far though of course.

[tenten]

HMRC are very clear however that being a Accountant doesn't give you an get out clause from the MSC regulations.

Also HMRC were happy to argue in the Howey case last week that the external employment manual may not reflect the internal manual and that the internal secret manual trumps what is said in the external manual. It seems from the comments I've read that the Judges were happy to accept that argument...

This is why I end up tearing my hair out trying to interpret reality from some alternative world tax fantasy (and not just regarding MSCP/MSC). If I recall correctly, in the judgements from the CBS hearings they took an extremely tight literal meaning from every word of section 61B and weren't convinced by counter evidence in the form of other guidance/documentation/speeches. Yet here they are being non-literal about the explicit accountancy exemption - this bit now gets caveats.

And now you highlight for us that they have inside/secret unseen manuals that they are now allowed to wheel out in court - I was not aware of this. What kinda kangaroo court nonsense is this becoming? The games a bogey if entities are supposed to comply with a secret rule book.

[eek]

This is why I end up tearing my hair out trying to interpret reality from some alternative world tax fantasy. If I recall correctly, in the judgements from the CBS hearings they took an extremely tight literal meaning from every word of section 61B and weren't convinced by counter evidence in the form of other guidance/documentation/speeches. Yet here they are being non-literal about the explicit accountancy exemption - this bit now gets caveats.

And now you highlight me they have inside/secret unseen manuals that they are now allowed to wheel out in court. What kinda kangaroo court nonsense is this becoming? The games a bogey if entities are supposed to comply with a secret rule book.

My problem here is that you think there is an explicit and absolute accountancy exemption - I don't think there is - there is an exemption for accountancy purposes but this case is about the extent of and boundaries of that exemption.

That is however entirely separate to the internal manual arguments HMRC used in Hoey which are very much WTAFFFFF

[DealorNoDeal]

This is likely to lose CK and Boox a lot of business. Can they survive this, will they be in it for the long haul if the case goes to tribunal?

In the CBS case, it appears it was clients who took the case to FTT/UT/CoA. It's not clear CBS were involved at all, which wouldn't surprise me because IoM tax firms have a habit of disappearing when HMRC come knocking.

[GregRickshaw]

This is likely to lose CK and Boox a lot of business. Can they survive this, will they be in it for the long haul if the case goes to tribunal?

In the CBS case, it appears it was clients who took the case to FTT/UT/CoA. It's not clear CBS were involved at all, which wouldn't surprise me because IoM tax firms have a habit of disappearing when HMRC come knocking.

CK and Boox (CK very much UK based) will lose a lot of business they will lose people from Umbrella solutions too, certainly once the wider debt transfer rules mean CK's directors may get hit, clients get very funny when money is deemed to be at risk, just look at the recent Brookson debacle, so many clients lost who weren't even affected.

As to the CBS case though remember, same as this one CK and Boox aren't the ones who have been declared as MSC 'we are' so when it comes to the court cases it will be us who have to go to court to hear/fight the charge. CK have already stated very publicly they are not paying for solicitors/barristers for our cases.

The secret manual thing which eek has just highlighted.... all I can say is FFS! And an eventual Crown Court judge deliberating over a case brought and paid for by the Crown... how well do you think this ends for anyone?

[tenten]

My problem here is that you think there is an explicit and absolute accountancy exemption - I don't think there is - there is an exemption for accountancy purposes but this case is about the extent of and boundaries of that exemption.

Oh don't get me wrong - I do acknowledge that. I think we are probably in agreement on the direction of travel here. The 61B (3) exemption is untested and I expect the CK/Boox cases will change that.

I was expressing some frustration at the inconsistencies and uncertainty this will cause for an already skittish industry. The CBS judges made it clear that 61B (d) legislation was a simple and unequivocal two stage test: do you promote or facilitate the use of a company, and, does the company provide the services of individuals? Yet we need to accept HMRC drafted nuances and caveats on the exemptions to try and work out those boundaries. But that's the world we live in unfortunately.

If you take the the 61B (3) judgement at face value, and combine it with the flimsy HMRC claims put forth in the Boox letter shared on this forum, then HMRC can make the same claims against many services a PSC procures. I mentioned in a previous post with tongue-in-cheek that HMRC could use exactly the same arguments against a PSCs bank and insurance providers. For me, this underlines how this feels like it could all become an utterly ridiculous waste of time/stress or very dangerous.

That is however entirely separate to the internal manual arguments HMRC used in Hoey which are very much WTAFFFFF

Yeah, that sounds like an absolutely staggering development - I must look into this.