Churchill Knight & Boox clients being investigated as Managed Service Companies

[DealorNoDeal]

However, there is a spectrum here. At one end of the spectrum, you have CBS.

You're not kidding. I suspect most of their contractors barely knew what a PSC was. They were only moved to a PSC arrangement in an attempt to dodge the MSC legislation.

The proposed MSC legislation, however, prompted the i4 group to develop a new product which would be put in place by April 2007 to enable existing composite company clients to switch over onto the new product which, it was intended, would not be caught by the new rules.

In fact, one of the contractors whose appeal was overturned in this ruling, Dr Jacek Trzaski, was: “was unaware that he had a registered office or that he needed one and was unaware that he had needed a company secretary or, indeed, that he had one.”

[jamesbrown]

Right, CBS was blatant. But this is how HMRC operate, they look for test cases to establish precedent and, following a win, they dramatically overreach. However, in that process, they may nudge things in their direction and the costs are relatively trivial, so it's completely logical. I don't think even they believe that the most simplistic arguments they are currently advancing (e.g., the mere payment of a fee) will succeed, but there are also some interesting nuggets in that CBS case that allude to the legislation having a much wider interpretation than anyone thought previously, so the spectrum of "acceptable accountancy" is now in flux and many will be looking to eliminate the risk altogether.

[tenten]

Yup, guilty as charged here. A few in the industry (generally the techy case law bods rather than those working in accountancy firms) did highlight it a few years ago following the Christianuyi case. It didn't get much fanfare at the time, I totally missed it, but there's some "I told you so"s now!

Even if the accountant/MSCP didn't control the bank account, I always hated the "payslips" that some firms produced for clients, £X salary, £Y expenses reimbursed, £Z dividends (dividends should never appear on a payslip!). Especially as typically £Z would be the exact retained profit for that month. Not only bad business sense (leaving zero rainy day fund) but also did seem a bit too much the accountant telling the client exactly what to withdraw, plus the question mark over the legitimacy of one bank transaction being a combination of salary/dividends etc.

Yes, that pattern is clearly just an all-encompassing-payroll by another name. Albeit convenient for the clients, it is dangerous territory for a Ltd co director to be blind to the underlying machinations that were formulating a hefty singly monthly withdrawal.

[GregRickshaw]

Yes, that pattern is clearly just an all-encompassing-payroll by another name. Albeit convenient for the clients, it is dangerous territory for a Ltd co director to be blind to the underlying machinations that were formulating a hefty singly monthly withdrawal.

Sadly though whatever we think or how we interpret the law and how CK interpret the law (interpret has got us into this bother).

This is in the hands of the legal system now and they are the ones who will (find in HMRC's favour) oops did I type that... decide where/when/what and if any laws were broken.

[eek]

Right, CBS was blatant. But this is how HMRC operate, they look for test cases to establish precedent and, following a win, they dramatically overreach. However, in that process, they may nudge things in their direction and the costs are relatively trivial, so it's completely logical. I don't think even they believe that the most simplistic arguments they are currently advancing (e.g., the mere payment of a fee) will succeed, but there are also some interesting nuggets in that CBS case that allude to the legislation having a much wider interpretation than anyone thought previously, so the spectrum of "acceptable accountancy" is now in flux and many will be looking to eliminate the risk altogether.

It's worse than that - CBS was blatant but the judgment opened up a whole area regarding suggested salary and dividends which expanded the target from a small subset of the market to near enough everyone and everything.

What I find surprising is that only 2 accountants seem to have been picked up in wave 1 and while Boox was really obvious example of pushing the limits CK on the face of it are no where near the next worst...

[Fred Bloggs]

It's worse than that - CBS was blatant but the judgment opened up a whole area regarding suggested salary and dividends which expanded the target from a small subset of the market to near enough everyone and everything.

What I find surprising is that only 2 accountants seem to have been picked up in wave 1 and while Boox was really obvious example of pushing the limits CK on the face of it are no where near the next worst...

That might well be a deliberate part of the strategy. To see how far Hector can stretch the MSC legislation before a tribunal pushes back. It wouldn't surprise me at all if there is a list of candidate accountant firms with a risk rating against them.

[jamesbrown]

It's worse than that - CBS was blatant but the judgment opened up a whole area regarding suggested salary and dividends which expanded the target from a small subset of the market to near enough everyone and everything.

What I find surprising is that only 2 accountants seem to have been picked up in wave 1 and while Boox was really obvious example of pushing the limits CK on the face of it are no where near the next worst...

The question will be what that area looks like when there is none of the other extremely substantive evidence afforded for being "involved with" that appeared in the CBS case. My expectation is that it will look very flimsy and will eventually not succeed, but we'll see.

On others, yes, *cough*, Brooksons, *cough*, Danbro....

[eek]

That might well be a deliberate part of the strategy. To see how far Hector can stretch the MSC legislation before a tribunal pushes back. It wouldn't surprise me at all if there is a list of candidate accountant firms with a risk rating against them.

The bit I don't get is that they are now too late for the 2017/18 tax year and you would have thought that given the more obvious examples we all know about I would have expected way more than 2 firms to be included in these test cases.

[Fred Bloggs]

The question will be what that area looks like when there is none of the other extremely substantive evidence afforded for being "involved with" that appeared in the CBS case. My expectation is that it will look very flimsy and will eventually not succeed, but we'll see.

On others, yes, *cough*, Brooksons, *cough*, Danbro....

Absolutely. I wouldn't be surprised at all if Hector has his list of composite company providers who became accountants overnight. I am surprised it took this long, frankly.

[eek]

The question will be what that area looks like when there is none of the other extremely substantive evidence afforded for being "involved with" that appeared in the CBS case. My expectation is that it will look very flimsy and will eventually not succeed, but we'll see.

On others, yes, *cough*, Brooksons, *cough*, Danbro....

Sadly I'm with Greg here - while the claims shouldn't last 30 seconds under scrutiny there are way too many examples recently where tribunals have sided with HMRC in ways few observers expected.