Churchill Knight & Boox clients being investigated as Managed Service Companies

[jamesbrown]

I think HMRC's point re CK's fee structure is that their fee was reduced in a month where the contractor wasn't working, which is crucially different to how most accountants operate.

Ah, that's a very interesting detail, thanks.

[jamesbrown]

I am happy to share it with you in a DM. As I said we value your insight and opinions.

Received, thanks.

[jamesbrown]

Received, thanks.

My first impression of the letter is that they have indeed focused on those aspects of (2) that we thought they might. However, it is incredibly sparse in detail and woolly about what behaviors they consider to have breached the conditions they mention. It is unconvincing, but that doesn't mean they won't stumble upon a more convincing argument at some stage.

I think (2)(a) would probably be a non-issue except for the point that PUMA made, which is an interesting and unfortunate detail, but it's as loose as a payment plan could possibly be that remains somehow connected to the services (far different than CBS). Unfortunate, but I think it's defensible.

They do seem to be making a big deal of a client not being able to change things directly (as would be the case in something like FA or Xero), but that also seems tenuous to me unless the barrier to changing something is higher than "please change this and confirm". It depends how it was presented, though. If the information is presented along the lines of "these are your monthly salary and dividend payments for year X-Y, please action them with your bank", then it's much worse because an accountant wouldn't do that.

Anyway, it's clearly a million miles away from CBS, but whether it is close enough is what they are testing. I think they're completely wrong, based on what I've seen so far.

[mudskipper]

For IPSE members, Andy Chamberlain (the policy director) spoke to CK today - details on the IPSE forums (no great revelations, but worth a read)

[SwissSaffa]

Anyone know if closing your company (something I'm intending to do later this year) protects against this sort of crap (if HMRC do widen the net)?

It does not. I have been trying to close my company since 2021 and HMRC revealed only this month that they blocked the closing of my company due to them investigating my accountant Boox. Boox has also written to my today to confirm.

[jamesbrown]

My first impression of the letter is that they have indeed focused on those aspects of (2) that we thought they might. However, it is incredibly sparse in detail and woolly about what behaviors they consider to have breached the conditions they mention. It is unconvincing, but that doesn't mean they won't stumble upon a more convincing argument at some stage.

I think (2)(a) would probably be a non-issue except for the point that PUMA made, which is an interesting and unfortunate detail, but it's as loose as a payment plan could possibly be that remains somehow connected to the services (far different than CBS). Unfortunate, but I think it's defensible.

They do seem to be making a big deal of a client not being able to change things directly (as would be the case in something like FA or Xero), but that also seems tenuous to me unless the barrier to changing something is higher than "please change this and confirm". It depends how it was presented, though. If the information is presented along the lines of "these are your monthly salary and dividend payments for year X-Y, please action them with your bank", then it's much worse because an accountant wouldn't do that.

Anyway, it's clearly a million miles away from CBS, but whether it is close enough is what they are testing. I think they're completely wrong, based on what I've seen so far.

Also, FWIW, the CK response is pretty good. They make some compelling points about why they were offering vanilla accountancy and nothing more. There are some pointers for (e.g., the marketing materials, the reduced fee structure), but the pointers against are overwhelmingly more convincing IMHO.

[THEPUMA]

Would anyone mind DMing me the CK response?

[GregRickshaw]

Also, FWIW, the CK response is pretty good. They make some compelling points about why they were offering vanilla accountancy and nothing more. There are some pointers for (e.g., the marketing materials, the reduced fee structure), but the pointers against are overwhelmingly more convincing IMHO.

Thanks jamesbrown for taking the time to share your opinions, actually it's quite comforting but I know there's a long and tortuous road ahead for many of us.

[oleanderwand]

The link to main HMRC manual about MSC is below. Subsequent links there provides in detail the procedure HMRC would take, how to calculate deemed payment and NICs due (if proven MSC), debt transfer, time limits, appeal etc, including which legislation would take precedence in situation where a case was deemed to fall within both IR35 and MSC legislations.

https://www.gov.uk/hmrc-internal-man...manual/esm3500

Thanks jamesbrown for your link in previous post that directed me to the main manual and for your thought that dissolution is not a bar. Having read the HMRC manual and the legislations behind it, I incline to agree with you. Although, if Ltds were already dissolved legitimately and no objection made during the closing process, there would still be due process of restoration to follow etc.

@ Moderator, is it possible to have a separate sticky for MSC legislation to summarise factual information about the legislation itself and what contractors could do to avoid falling foul with real MSCP scheme?

[SwissSaffa]

I would be so grateful if someone could tell me which address HMRC is using to send the letter.

I have left the UK years ago and no longer have access to my post - do they send it to the registered company address or place of business address?