Churchill Knight & Boox clients being investigated as Managed Service Companies

[Fred Bloggs]

The rules were explicitly designed because the easiest escape route for an MSC Provider would have been to employ an accountant and use the accountant escape route while continuing as before.

Its a shame I need to repeat this but the accountancy clause isn't a complete escape route - the law includes provisions to cover the point where an accountant exceeds their accountancy remit and moves into the territory of MSC Provision. And the problem is that the line between being an accountant and being an MSC may be scarily narrow.

Hence my surprise that it's taken so long for there to be MSC cases brought. Back in the day, I was fully expecting the most extreme of the composite company providers to be targeted. But they overnight became accountants. So far, successfully. Until now.

[eek]

Hence my surprise that it's taken so long for there to be MSC cases brought. Back in the day, I was fully expecting the most extreme of the composite company providers to be targeted. But they overnight became accountants. So far, successfully. Until now.

If you read the Costello judgments you can see that the bar (which seemed to be rather high to actually be an MSC) has being very significantly lowered. This case seems to be designed to check if the incredibly low bar set within the Costello judgment is actually valid or is significantly higher than that judgment implies.

[tenten]

Well I won't get into an argument about it. Fact remains, anyone can call themselves an accountant, but if you want to describe your service as "regulated" or "chartered" then someone somewhere in your organisation needs to be chartered to one of the accountancy bodies. Does that get let MSC's off the hook? Well I doubt it, but we will have to wait and see.

Yeah the Costelloe hearings skirted around the 61B(3) exclusion somewhat. In the FTT the appellants didn't contest that CBS was an MSCP. In the UTT they changed their mind but tried to turn the case on the ambiguity of 61B(1)(d) rather than the 61B(3) exclusion. CBS presumably never claimed to be accountants if they didn't even try on 61B(3).

Then in the CA hearing they were back for another go at the 61B(1)(d) ambiguity which did lead to a discussion on the 61B(3) exclusion: "An accountant or other support service will not be caught even if some of its customers are PSCs because although in a broad sense it might be regarded as facilitating those PSCs in the running of their business, that assistance is merely a consequence of the services it provides, it is not in the business of doing that."

At first reading of the above and the HMRC guidance, a professionally qualified and regulated accountant in the business of providing accountancy services that also involves creating/facilitating PSCs, are exempt. But I suspect HMRC will be looking to test that.

And then we move on to the 3 contested "involved" points.

[GregRickshaw]

And then we move on to the 3 contested "involved" points.

And ultimately the dreaded monthly fees so oft quoted.

I have resigned myself to a few years of putting money I can barely afford on account and just forgetting about it all now, I can't see how CK can win.... we'll see.

If Hector wins then every other year after 17/18 will come tumbling in and no doubt there will be a retrospective reach back to 2007.

Sad kin times

For the first time in 20 years I've started doing the lottery, (it's been so long it's doubled in price £2!!) another tax on the poor.

[tenten]

I can't see how CK can win.... we'll see.

I can. It's not obvious from CKs website or LinkedIn how many qualified and/or chartered accountants they have. But I presume they have at least some and would almost certainly challenge on the 61B(3) exemption unlike CBS. If they succeed on that then those "involved" points are moot. I don't think the "involved" points are a foregone conclusion either (based on the info shared on this forum).

[DealorNoDeal]

If Hector wins then every other year after 17/18 will come tumbling in and no doubt there will be a retrospective reach back to 2007.

It's extremely unlikely Parliament would support that.

I suppose HMRC may try and get the MSC legislation strengthened going forward.

[GregRickshaw]

It's extremely unlikely Parliament would support that.

Ha ha good one.

[tenten]

Ha ha good one.

HMRC would have to prove negligence to go back 6 years and deliberate malfeasance to go any further than that. In the circumstances it just seems implausible to me that either bar could be reached - why would you not assume your accountant was exempt from, you know, the explicit accountant exemption.

[GregRickshaw]

HMRC would have to prove negligence to go back 6 years and deliberate malfeasance to go any further than that. In the circumstances it just seems implausible to me that either bar could be reached - why would you not assume your accountant was exempt from, you know, the explicit accountant exemption.

Simply because the more you read into companies like CK and their evolving status, they don't seem to be 'accountants' at least not in the true professional sense as in chartered. Boox clearly state they are chartered whereas CK do not. I liken CK to more like very sophisticated tech-savy bookkeepers, though I suspect the line between the two is very thin.

Look I really don't know how the exemption will be applied. Everything we talk about on here, from here on in is pure speculation now.

The battle lines have been clearly defined and marked out.

We have the facts presented to us, we have the tests HMRC have applied and (according to HMRC) CK have failed on.

Nowhere in CK's response have they pushed the 'exemption' card, maybe they are keeping it as their ace/joker.

There is a CK rep on here so maybe they could answer the accountant question.

[frz78]

So i got an email from HMRC today regarding the appeal. and i think they have breached GDPR regulations in the email.
I am speaking to insurers with regards to legal stuff soon - so i have thrown that into the mix.