Churchill Knight & Boox clients being investigated as Managed Service Companies

[malvolio]

I am not an expert in the accounting industry. But I should think that away from the sausage machine contractor firms, a generalist accounting firm won't as a rule offer monthly subscription plans? A sweet shop, joinery firm, haulage company etc... won't have a monthly subscription, will they? That fits what seems to be emerging as a sensible way forward from where we are today.

Oh I don't know. Would you bet your income on a client having the money to pay you after you've analysed their accounts?

[eek]

I am not an expert in the accounting industry. But I should think that away from the sausage machine contractor firms, a generalist accounting firm won't as a rule offer monthly subscription plans? A sweet shop, joinery firm, haulage company etc... won't have a monthly subscription, will they? That fits what seems to be emerging as a sensible way forward from where we are today.

I think a lot of them do - my hairdresser was complaining about the monthly fee her accountant charges going up (I think it was to £68 so I kept very quiet on that point).

Monthly fees are very attractive to a lot of firms as regular fees are easier for clients to pay and make cashflow management easy.

[Fred Bloggs]

Oh I don't know. Would you bet your income on a client having the money to pay you after you've analysed their accounts?

I just said I am not an expert. But it looks to me like folks are going to be doing exactly that going forward. I doubt anyone's going to pay upfront for year end accounting? Would you pay a decorator before he had painted your living room?

[Fred Bloggs]

I think a lot of them do - my hairdresser was complaining about the monthly fee her accountant charges going up (I think it was to £68 so I kept very quiet on that point).

Monthly fees are very attractive to a lot of firms as regular fees are easier for clients to pay and make cashflow management easy.

I did acknowledge my lack of knowledge there. So, are hairdressers going to be MSCs too? I don't see the difference in trade being significant.

[GregRickshaw]

I did acknowledge my lack of knowledge there. So, are hairdressers going to be MSCs too? I don't see the difference in trade being significant.

I posed this many pages ago too. The hairdressers, the builders, the lorry drivers (my mate pays his accountant/bookkeeper to raise his invoices too - all manual no portal - has been doing it for donkeys years). All of those should be caught if this case goes through unedited.

Someone has to pay for Covid

[eek]

I did acknowledge my lack of knowledge there. So, are hairdressers going to be MSCs too? I don't see the difference in trade being significant.

If the hairdresser used a limited company then quite possibly - but chances are they are just self employed at which point I do wonder how much an accountant offers that a decent software solution doesn't. Heck even Quickbooks does a decent attempt at calculating tax owed and just putting receipts into the system as you buy stuff will collect 90% of the data they need.

GregRickshaw Lorry Drivers using Limited Companies is a whole different can of worms. After almost disappearing last April, one agency has started allowing (read insisting) on limited company drivers in an attempt to keep costs low. When HMRC find out (in about 6 months when agency reporting arrives through the door) I suspect a world of pain will descend on some people.

[tenten]

I did acknowledge my lack of knowledge there. So, are hairdressers going to be MSCs too? I don't see the difference in trade being significant.

I also posed this question in a prior post. As per the CBS judgement, if you only take a very strict literal interpretation of the legislation, then the net is cast incredibly wide at both the MSCP (accountants, banks, insurance etc) and consequentially the MSC levels (almost any ltd co selling services). These are the points that HMRC is now blatantly taking liberties with and seeing how far they can stretch them.

If I recall correctly, the CBS judgement did give some light consideration to the intentions of parliament. But they left it at something like "CBS was exactly the sort of mischief the legislation was designed to target"..... it was. It seems implausible and highly unlikely to me that a court would accept that the intentions of parliament were to ensnare almost any ltd co selling services.

Hope might be a dangerous commodity to rely on in the circumstances, but I hope that common sense prevails. I am inclined to lean toward JamesBrowns view on how this will likely play out. That said, I have taken some steps to mitigate some of the potential risks.

[DealorNoDeal]

I think we all know who HMRC are really going after here. Highly paid individuals, working for the same client for months/years, basically looking to them like employees.

IR35 is ineffective because it's too resource intensive pursuing individuals on a case-by-case basis. MSC, on the other hand, is a way of bagging 1000s in one fell swoop. And, it has the added prospect of disrupting the "enablers".

[Peoplesoft bloke]

Array

I think we all know who HMRC are really going after here. Highly paid individuals, working for the same client for months/years, basically looking to them like employees.

IR35 is ineffective because it's too resource intensive pursuing individuals on a case-by-case basis. MSC, on the other hand, is a way of bagging 1000s in one fell swoop. And, it has the added prospect of disrupting the "enablers".

The tax system is stupidly complex. As for "working for the same client for months/years, basically looking to them like employees." the "to them" is significant here.

When I was still able to do contract work, I would work at the same client for typically no more than a year but often several months - delivering the knowledge of how to implement a particular bit of SaaS.

Generally they can't afford to hire a permie for this - and they don't want to. If HMRC are really saying that everyone needs to pay tax as if they were an employee that's one thing, but all the lines are very blurred and HMRC can come back way after the fact and try to redefine everything - and that's crazy.

I would love to know what HMRC's actual endgame is.

Just in case anyone doubts the crazy thinking in some parts of it - one proposal when they introduced RTI was for employers to hand over gross pay to HMRC and HMRC take the tax and NI they wanted ..........and they didn't really understand why anyone might think that was a bad idea (even though they hardly ever answer the phone!).

[GregRickshaw]

HMRC want contractors to be employees with zero rights.... oh hang on.