Churchill Knight & Boox clients being investigated as Managed Service Companies

[GregRickshaw]

CK don't set a low salary without a formal instruction / confirmation. I tell them what salary I will be taking that year.

This is very true!

However we now know just one of the charges HMRC have brought have to be satisfied for there to be a breach in the legislation, and thereby CK will lose the case.

Maybe if the tribunal decides it's just one of the things HMRC have charged CK with (they have charged them with 3) it will mean some kind of reduced sentence (I have no idea wishful thinking maybe)

Remember though CK did offer that kind of advice though early doors, around 2012, but as I have said that stopped almost overnight, was this when HMRC started their investigation? Who knows.

Sadly also it seems no matter what any of us did individually we are all caught in the same net. Whether we can then argue it later (more waiting) is maybe what we should be gearing up for.

It's a very clever IR35 raid.

[Fred Bloggs]

Personally, I would assess it the other way round ie 75% likelihood of CK clients winning.

if the courts look at what is fair, like you’ve said, this is entirely different to the Costelloes and ropey EBTs and umbrellas that we’ve seen in the past. I genuinely think it would be massively unfair to go after CK clients. I really don’t think they’ve done anything wrong. And the ramifications of CK losing are vast.

If anyone had a vanilla book keeping service from CK or anyone else, I can't see how they're an MSC. There is no way the MSC legislation was ever written to make vanilla book keeping anything more than it is. It would be a miscarriage of justice with massive implications.

Having said that, custom built client portals were always a terrible idea. But as it turns out, in a way that nobody ever expected.

[GregRickshaw]

If anyone had a vanilla book keeping service from CK or anyone else, I can't see how they're an MSC. There is no way the MSC legislation was ever written to make vanilla book keeping anything more than it is. It would be a miscarriage of justice with massive implications.

Having said that, custom built client portals were always a terrible idea. But as it turns out, in a way that nobody ever expected.

Has anyone a definitive definition of what vanilla bookkeeping is?

It sounds to me like vanilla is like the guy who called every year end and quarter and looked at your books, tallied them all up with your invoices and purchase orders and with your receipts, told you how much tax you could expect to be charged or receive, told you how close you were to your allowances etc., and finally filed your returns.

The accountant (or bookkeeper I think they were called back then) took his fee and you never saw him again for another three months.

I remember when I started using online accountants CK it seemed no different to anything my dad had engaged with for 40 years, just online.

Yes it was electronically (portal) impressive and efficient but seemed no different to the door to door guy.

And yes vastly unfair if CK did involve themselves with some LTDs and not others so much but now we are all caught.

[Peoplesoft bloke]

Array

Thanks Eek, I was about to post much the same thing - we have very little to go on and it’s too early to say anything (the inside/outside IR35 thread was a culmination of several previous posters - this is the first in this instance).

The only thing to say has already been said over many years on this forum - go with an accountant who uses Freeagent or Xero.

Why are you and EEK so wedded to this "Freeagent or Xero" approach - is it mentioned anywhere in the any of the cases?

If the accountant portal doesn't do anything more than Freeagent or Xero why does it matter?

[eek]

Array

Why are you and EEK so wedded to this "Freeagent or Xero" approach - is it mentioned anywhere in the any of the cases?

If the accountant portal doesn't do anything more than Freeagent or Xero why does it matter?

Freeagent and Xero are standardised software packages no different from Sage.

A custom portal isn't that - and opens up a whole different set of areas that HMRC could query / attack

The sole reason for separating them out is to demonstrate that your accountant is doing accountancy activities (outside the remit of the legislation) rather than more general invoicing and bookkeeping ones (possibly inside the legislation).

[jamesbrown]

However I have no idea how they CK can possibly argue that one (monthly fees).

If it weren't for the reduced fee when out of work, it's doubtful that HMRC would be making this argument and near impossible that they would've succeed with it in my view, since (2)(a) is focused on a fee that is related to the services provided by the client company, "benefits financially on an ongoing basis from the provision of the services of the individual".

The interpretation of this cannot be that the client company is in business and that being in business involves the provision of services and that the provision of services allows for the payment of fees and that the payment of fees is sufficient to meet (2)(a) because (3) explicitly excludes accountancy. In other words, as a test of being "involved with" (and hence not an accountant), clause 2(a) is surely focused on fees that are tied to the service provision by the client company. Will the reduced fee when out of work meet this test? Unclear, but there is a good argument to say that it is connected to the amount of work done by the accountant and not to the services provided by the individual, but there is also an argument for the latter that will be tested, I suppose.

[Fazlbob]

What about where CK didnt get something right and I asked for a reduction in fee as a result? In my case I have a few instances where CK didn't implement my instruction correctly and so I requested a fee reduction.

Does this not constitute a fee for a service which when they failed to deliver were penalised (by me) accordingly?

[GregRickshaw]

What about where CK didnt get something right and I asked for a reduction in fee as a result? In my case I have a few instances where CK didn't implement my instruction correctly and so I requested a fee reduction.

Does this not constitute a fee for a service which when they failed to deliver were penalised (by me) accordingly?

I think we all have these kinds of evidence to share but I think we will only get the chance to use our actual dealings with CK when we are 'on our own'

And if we are found guilty by association with CK then overturning it all will take a huge battle (worth doing possibly) but a very very tough task.

[eek]

If it weren't for the reduced fee when out of work, it's doubtful that HMRC would be making this argument and near impossible that they would've succeed with it in my view, since (2)(a) is focused on a fee that is related to the services provided by the client company, "benefits financially on an ongoing basis from the provision of the services of the individual".

The interpretation of this cannot be that the client company is in business and that being in business involves the provision of services and that the provision of services allows for the payment of fees and that the payment of fees is sufficient to meet (2)(a) because (3) explicitly excludes accountancy. In other words, as a test of being "involved with" (and hence not an accountant), clause 2(a) is surely focused on fees that are tied to the service provision by the client company. Will the reduced fee when out of work meet this test? Unclear, but there is a good argument to say that it is connected to the amount of work done by the accountant and not to the services provided by the individual, but there is also an argument for the latter that will be tested, I suppose.

It's hard to see what reduced work exists - they still need to process a VAT return (albeit one that may have reduced / no income), they still need to process PAYE....

I can see the reasons behind the offer but it's hard to see what bit of the workload is actually reduced

[THEPUMA]

It’s important to remember the context of the reason for 2(a). Back in the heyday when MSCs we’re allowed, most MSCPs charged either a fixed fee when the contractor worked or a percentage of fees. So these arrangements were the target.

CK appear to have made an error of judgement in my opinion, by offering this reduced fee on occasion. Their argument that they have a reduced workload may or may not be correct, depending upon the circumstances.

I still think they win on the professional accountancy services exemption, though.