Churchill Knight & Boox clients being investigated as Managed Service Companies

[mudskipper]

One thing is clear we will be the ones who may lose our homes ...

If found to be an MSC (which, from what you've said, if given proper legal advice sounds unlikely) is this a company liability or personal liability?

[malvolio]

If found to be an MSC (which, from what you've said, if given proper legal advice sounds unlikely) is this a company liability or personal liability?

Personal. This is about earned income that has been calculated for you. Although i think that may be hard to prove from what's been said so far

[AdamEdwards]

If found to be an MSC (which, from what you've said, if given proper legal advice sounds unlikely) is this a company liability or personal liability?

I believe it’s a company one. But there’s also transfer of debt if you company can’t pay it. So they can come after the director and shareholders. I’m not a expert and just going from the information that I read.

[jamesbrown]

Interesting, of those I have just read I can't see how CK can be accused of any of those possibly very tenuously point four. Not sure about their other clients but none of my dealings with CK and their dealings with me would fall into any of the five mentioned.

There's more to this than those points, which CK are answering based on Hector's approach. They (CK) have given Hector answers (diluted for morons like me to understand) on all of those.

As I said earlier something is 'off' here and my tiny brain cannot possibly comprehend tax or employment laws (let alone the combination of the two).

CK have so far been very good and transparent so as more info comes to light we may be able to determine further the root cause.

It is probably not a coincidence that they went for CK. I don't know much about them, but they seem to offer a lot of things - accountancy, umbrella, wealth management, "CIS Limited Company". It does all look a bit "solution-ey", not a plain vanilla accountancy practice.

That said, if they were shown to be a MSCP, I struggle to see how anyone receiving plain vanilla accountancy services from them could be considered an MSC. Highly doubtful. I can understand the concern - it must be pretty worrying to receive this - but it doesn't stack up; however, I take your points about there being more to this than meets the eye.

[jamesbrown]

Hmmm, some stuff on their website has alarm bells ringing for me.

We have carefully constructed our limited company packages to suit contractors and freelancers at each career stage. If you want to take care of some of the work yourself or prefer a completely hands-off approach, you have the option to choose.

https://www.churchill-knight.co.uk/s...pany/packages/

I mean, what on earth is a "completely hands-off" approach in the context of running a company? What is a "package" at "each career stage"? I appreciate this could be superficial, but it's very poorly chosen language, at best, and I can see how an HMRC person looking at their website might wonder what is happening under the hood.

[Fred Bloggs]

Hmmm, some stuff on their website has alarm bells ringing for me.



https://www.churchill-knight.co.uk/s...pany/packages/

I mean, what on earth is a "completely hands-off" approach in the context of running a company? What is a "package" at "each career stage"? I appreciate this could be superficial, but it's very poorly chosen language, at best, and I can see how an HMRC person looking at their website might wonder what is happening under the hood.

That's exactly the kind of stuff I have been referring to. Superficial or not, that's going to have to be defended. It won't be easy explaining why a "completely hands off" company isn't an MSC.

Taken as far the composite company providers did, it basically meant sham incorporation. With no business risk or exposure to the normal rough and tumble of running a small business. There were even fighting funds set aside to fight off tax investigations.

The language you posted is more or less what the composite company providers were saying back then. As a result we got MSC legislation.

It's not that difficult to see the connection? I am surprised it took so long actually.

[jamesbrown]

That's exactly the kind of stuff I have been referring to. Superficial or not, that's going to have to be defended. It won't be easy explaining why a "completely hands off" company isn't an MSC.

Taken as far the composite company providers did, it basically meant sham incorporation. With no business risk or exposure to the normal rough and tumble of running a small business. There were even fighting funds set aside to fight off tax investigations.

The language you posted is more or less what the composite company providers were saying back then. As a result we got MSC legislation.

It's not that difficult to see the connection? I am surprised it took so long actually.

No, indeed, that sort of language is not going to help their situation at all. They may be the tip of the iceberg (although, again, plain vanilla accountancy is really not within the scope of the MSC legislation), but they were not chosen randomly.

[cojak]

Ok Greg. This looks like a subset of ‘In Business on Your Own Account’.

While CK are looking like they’ve got questions to answer, it looks as if you have solid answers to those questions.

So organise your folder with EVERYTHING that shows that you are a businessman. Dig out all correspondence for organising your Ltd, Vat and everything else (digital and paper) that shows that you set up and run the LTd on your own. Also demonstrate that you make all the financial decisions for your company. Make sure that those answers are given to your tax advisor and your MP.

Here are tips to show that you are outside IR35: https://www.contractoruk.com/private...side_ir35.html

And remember to put all of this evidence into your appeal to HMRC - you have 30 days from the date of the letter to return it.

View this as a form of IR35 investigation - HMRC are wrong in your circumstances and a good defence will get you out of this.

[DealorNoDeal]

I am looking into transferring ownership of my house to my partner, as what we have seen so far is there is no provision to chase the debt from anyone other than the debt owner. I am aware normally of Hector's stance when you move money etc., but it does not seem to apply in this transfer of debt legislation.

HMRC routinely petition for bankruptcy to recover debts. Bankruptcy trustees can go back 5 years and set aside any transfers of assets at undervalue. In which case, they would pursue your partner, with the option of bankrupting them if they refused to settle the debt.

Having said that, if HMRC do litigate against CK, this could easily drag on for more than 5 years.

If I were you, I'd look into this very carefully before taking the drastic step of transferring your house.

[AdamEdwards]

I’ve also started to prepare for the worst now.?
HMRC gave an option to pay the amount while the investigation was pending so there no interest on the amount. The letter stated that this stance does not consider the MSC legislation to apply. It will be return if CK win.
Also does it make sense to leave CK for a smaller firm for the future as I’m confident that all my work carried out is outside IR35?