Churchill Knight & Boox clients being investigated as Managed Service Companies

[Lance]

I think your maths is wrong, assuming the traditional £1bn = 1,000 x £1m.

For the record, I am assuming that HMRC will go after several of the other contractor specialists if they are successful against CK.

yes. 1 Billion = 1,000 million.
200,000,000,000 / 50,000 = 4,000,000

If successful they will go after firms but I still think that billions is wide of the mark.

HMRC reckon £1.7B total avoided in 2016-17, of which £0.7Bn was income, NI and CGT.
So even if they got EVERY tax avoider for the 6 years they are allowed to go after, that could only ever be just over £4bn.
Tax avoidance - Wikipedia

But realistically they are not going to completely remove UK tax avoidance with this case are they?

[THEPUMA]

You’ve said £2bn but written out 200 billion, and used 200 billion in your calculations. So you are out by a factor of 100. Remember I am not just talking about CK clients either.

I doubt these figures are included within their £1.7bn figure.

[DealorNoDeal]

yes. 1 Billion = 1,000 million.
200,000,000,000 / 50,000 = 4,000,000

If successful they will go after firms but I still think that billions is wide of the mark.

HMRC reckon £1.7B total avoided in 2016-17, of which £0.7Bn was income, NI and CGT.
So even if they got EVERY tax avoider for the 6 years they are allowed to go after, that could only ever be just over £4bn.
Tax avoidance - Wikipedia

But realistically they are not going to completely remove UK tax avoidance with this case are they?

That's 200 billion, instead of 2 billion (2,000,000,000).

But I think you're point is right, this isn't going to net billions. From HMRC's perspective, I suspect this is not primarily about collecting revenue.

[Lance]

That's 200 billion, instead of 2 billion (2,000,000,000).

But I think you're point is right, this isn't going to net billions. From HMRC's perspective, I suspect this is not primarily about collecting revenue.

d'oh.... been a long day. Time for a beer.

[DealorNoDeal]

I know several contractors who use traditional local accountants and they have their hands held a hellavah lot more than I have ever experienced using a digital based service.

There's probably far too many of them for HMRC to go after. They get a much a bigger bang for their buck if they target the large firms.

One other point I haven't seen mentioned: why now?

It sounds like they had an unexpected win at the Court of Appeal which handed them a new weapon, which they're now deploying.

[tenten]

There's probably far too many of them for HMRC to go after. They get a much a bigger bang for their buck if they target the large firms.

Oh definitely - chasing down every corner shop accountant would be unsustainable. It was more an anecdotal observation that in my experience the local accountants appear to be more involved with their clients Ltd co's than the digital platform accountants. If the assumptions on here about the angle of attack from HMRC prove correct, it just seems implausible, and surely not the intentions of parliament, to have all of these arrangement tee'd up as easy pickings and MSCs.

It sounds like they had an unexpected win at the Court of Appeal which handed them a new weapon, which they're now deploying.

That was 3 years ago and it reads like a barmy arrangement that was very unlikely to win on appeal. Maybe I don't appreciate how slow these wheels can turn, but that seems like a lengthy wait for them to scale up the assault.

[DealorNoDeal]

If the assumptions on here about the angle of attack from HMRC prove correct, it just seems implausible, and surely not the intentions of parliament, to have all of these arrangement tee'd up as easy pickings and MSCs.

It wouldn't be the first time HMRC have stretched the bounds of what Parliament intended. CK may be able to provide enough evidence, in rebuttal, to persuade them to back down. Otherwise, unfortunately, you're looking at a lengthy legal battle.

That was 3 years ago and it reads like a barmy arrangement that was very unlikely to win on appeal. Maybe I don't appreciate how slow these wheels can turn, but that seems like a lengthy wait for them to scale up the assault.

HMRC are incredibly sloth like. But it does make you wonder why it's taken them so long. After all, had they acted in 2019/20, they could have gone back to 2015/16.

[Peoplesoft bloke]

One of HMRCs biggest criticisms over the loan charge was the lack of interest/action against schemes for years (decades I think) - they knew it was going on but essentially ignored it until it became a sh1tshow. Are they making the same mistake again?

HMRC got away with the loan charge - there is zero oversight and zero accountability for "mistakes" so they won't (don't) care.

[Peoplesoft bloke]

Absolutely agree with you. But I think we're already a very long way down the road of eliminating the one man contracting company already. The UK was quite unusual in fairly recent times. In a great many jurisdictions around the world, one man contracting companies had largely been legislated out of existence a long time ago.

It was good while it lasted. All good things come to an end. I suppose.

Perhaps I am just being blinkered - but I honestly fail to see why my partner who is a Physio and runs her own ltd should have different tax/employment status, or for that matter my friend who is a dental hygienist. Both work at client premises, using the client's equipment. Then again maybe HMRC will come after them next - they are both one-person operations.

[Peoplesoft bloke]

Given that that is such an obvious exemption / get out clause HMRC clearly think it's not the excuse / fix people on here will be hoping it is.

Interesting to note that both Dave Chaplin and QDOS are trying to make money from this...

Interesting in what way? That's literally their job. I'd rather give money to Dave Chaplin or QDOS than Hector.