Churchill Knight & Boox clients being investigated as Managed Service Companies

[enda1]

By appealing, can HMRC remove ones company from investigation by taking a closer look at it's affairs and relation with CK?
Or does it require that the outcome of the investigation of CK take place?

[SoConfused]

FWIW I don't believe CK to be a sham company, maybe they played a little fast and loose with the rules (which may be their downfall here) or maybe they did what was legal at the time. At this stage we just don't know what Hector has on them and this induces panic (100% in my case). The only thing I can see is from Hector if we appeal now we will get refunded if CK win the case.

Settlements though you rarely get those returned.

For me I simply can't stand two years of sleepless nights (AGAIN) so I'm swallowing the pill and getting on with my life. That is of course if Hector agree to settle it's not on the table yet but as eek says they will see this a success as maybe they got someone who was outside IR35 who they would never have got with IR35 rules.

Good luck to you too

When you go for a settlement, would that be for the years 17/18, 19/20 and 20/21? Currently, HMRC are only chasing 17/18

[jamesbrown]

If CK are found to be an MSCP, does that automatically mean that all their clients are MSCs?

No, to be an MSC, the MSCP must be "involved with" the MSC, which depends on the facts of the relationship. It could be that an MSCP is also an accountant, offering plain vanilla accountancy to some clients.

If so, can MSCs individually appeal all the way to tribunal even after the sample 5 companies potentially lose their case?

Well, in practice, if the MSCP were offering a particular package and N companies were all using that package and one of the N was determined to be an MSC, then all would be MSCs. If CK are offering the same type of accountancy to all companies, it would likely be a none or all situation, but it seems as though they have different "packages" or degrees of hand-holding (according to their marketing, which is terrible) and it would depend on the facts.

[DealorNoDeal]

Regarding lodging an appeal.

I don't know if you have to state your grounds of appeal but, if so, it would be worth getting some advice on this.

It would certainly be worth conveying, for the record, that your company is not, and never has been, an MSC and you only ever used CK for run of the mill accountancy services.

I can understand you not relishing the prospect of a protracted dispute with HMRC but you shouldn't have to accept being penalised, for something you haven't done, just to make it go away.

[pr1]

I started contracting late 2014 and was recommended CK by a friend, so started up with them and did a few months - I found it very fishy how hands on they appeared to be, I've found an example email from one of my early invoices which prompted an automatically-written email as soon as they had detected a matching payment into my company account

Dear XXXX

Your company, XXXX Limited, has received the following payment net of VAT:

Invoice No / Invoice Date / ex-VAT Amount
100012 / 03/04/2015 / £ XXXX.00
Please see the attached Remittance Advice. We have calculated the amounts you can draw from your company account leaving sufficient reserves to pay your future company taxes. In accordance with your company's income distributions instructions, we advise that you can make up to the following payments:

PersonName /Salary and Expenses Payable / DividendPayable / Reference
XXXXXX / £ XXXX /£ YYYY /Remit_014

Based on your instructions the above value(s) are available for you to transfer. We advise that, as a Limited Company, where possible you make the transfer for Salary & Expenses separately to the transfer of Dividends (please note that Dividends are commonly transferred a maximum of once per month).

Please ensure that you quote the exact reference and transfer up to the amounts advised. This will aid the bookkeeping for your company and ensure you do not have a loan on which there could be additional taxes to pay.

Remember, if you are a higher rate tax payer you should set aside part of this payment in respect of your personal higher rate tax bill. If you have any queries please email [email protected] or call our Personal Tax team on 01707 871610.

Please be aware, you are responsible for checking your Remittance Advice and immediately informing us at [email protected] should there be a discrepancy in your opinion. A delay in informing us of a discrepancy could have serious consequences.

Yours sincerely
Churchill Knight & Associates Ltd

They seemed very keen on their clients distributing exact amounts (to the penny) of salary and dividends each month to match the invoices received so that the exact amount was left in the company account to cover VAT/CT etc

I asked them some questions about quarterly dividends and some other things about tax optimisation (i.e. not withdrawing all the dividends the company afford, rather stop at the high tax boundary) and really wasn't satisfied with their responses. I didn't like how controlling it all felt so moved to a freeagent accountant after 6 months or so. I/we exported everything from the CK portal and re-built the accounts in freeagent from scratch (not a big job with only a handful of transactions by that point) and never looked back at CK.... pretty glad I did now

[eek]

The problem I have had throughout my career is I haven't got a clue about financial doings.

Don't blame yourself here - there but for the grace of God goes probably every single contractor - who could have just as easily chosen to use CK or someone else.

The other thing you have to remember is the CBS was a unique case - a lot of other MSC operated a fairly hands off approach to the money while telling people what they needed to do.

[ChurchillKnight]

Just to emphasise these are the steps I am taking for my own piece of mind, they will not suit everyone and from what I have seen CK also seem confident.

Also when we do find out (if we do) what Hector have on CK I suggest we don't share it here, there are eyes everywhere and who knows it may skew the case in their favour.

CK seem to have a good handle on this but that's not good enough for my state of mind and health.

Good luck to everyone in their own fights/appeals

We appreciate that this is a stressful time, but we will support you throughout the investigation. If you have any questions or concerns, or you wish to speak with someone at Churchill Knight about this, please message us via the portal, and we will get back to you shortly.

Churchill Knight is doing everything possible to close this investigation and prove we are not a Managed Service Company Provider. However, we do not want to comment publicly because we don't want any comments to be taken out of context or misquoted elsewhere. We also don’t want to risk hindering the outcome of the investigation. Therefore, we are encouraging our clients to contact us via the portal so we can respond quickly. Please keep logging into the portal for the latest updates.

[SoConfused]

I have discussed this in depth with other people who use other accountants with online services and they all do the same as CK. Not one person has said anything different to how I manage my business accounts using CK to how they do using their accountants. This is a worrying time

[eek]

We appreciate that this is a stressful time, but we will support you throughout the investigation. If you have any questions or concerns, or you wish to speak with someone at Churchill Knight about this, please message us via the portal, and we will get back to you shortly.

Churchill Knight is doing everything possible to close this investigation and prove we are not a Managed Service Company Provider. However, we do not want to comment publicly because we don't want any comments to be taken out of context or misquoted elsewhere. We also don’t want to risk hindering the outcome of the investigation. Therefore, we are encouraging our clients to contact us via the portal so we can respond quickly. Please keep logging into the portal for the latest updates.

Could you add a link to the portal - or the appropriate means of contacting you in case there is anyone effected who doesn't have your details and stumbles across the thread here first (unlikely but you never know)..

[Fred Bloggs]

I started contracting late 2014 and was recommended CK by a friend, so started up with them and did a few months - I found it very fishy how hands on they appeared to be, I've found an example email from one of my early invoices which prompted an automatically-written email as soon as they had detected a matching payment into my company account



They seemed very keen on their clients distributing exact amounts (to the penny) of salary and dividends each month to match the invoices received so that the exact amount was left in the company account to cover VAT/CT etc

I asked them some questions about quarterly dividends and some other things about tax optimisation (i.e. not withdrawing all the dividends the company afford, rather stop at the high tax boundary) and really wasn't satisfied with their responses. I didn't like how controlling it all felt so moved to a freeagent accountant after 6 months or so. I/we exported everything from the CK portal and re-built the accounts in freeagent from scratch (not a big job with only a handful of transactions by that point) and never looked back at CK.... pretty glad I did now

You did the right thing. What you state here along with the "a completely hands-off approach" and talk of "solutions" by CK does present potentially serious problems. In my humble opinion.

How'd you explain it away in front of a tribunal? Saying stuff like "we didn't mean it like that" or "it's just marketing" or "that's not how we intended it be" aren't going to carry much weight. The tribunal will look at what actually happened if there's any control at all, and it sounds like possibly there was. Then it might just fall under MSC rules.

It's becoming clearer to me how Hector might be framing this investigation. It's going to be very interesting.

I am just very happy I ran my own affairs completely at arms length from any accountants and latterly did DIY.

Good luck to anyone unwittingly caught up in this.