Churchill Knight & Boox clients being investigated as Managed Service Companies

[Sonic3389]

It's 3.25% per year. It's also simple interest, not compound. The different rates are what was charged at that time. (I think it's BoE base rate + 2.5%)

Interest accrues from when the tax would have been due, so for 2017/18 you're already looking at a few years interest.

Making a PoA now would stop any further interest accruing.

Thanks v.much for the clarity, seems like doing the PoA is the best course of action then.

Either way, this is bad news for all accountants. Not only are they legitimate targets of any debt owed, even personally as directors of an MSCP, but they will be losing a ton of business as this situation snowballs. I cannot see any reason why someone would stay with CK or Boox and accrue further years that will be inevitably opened eventually. But it's probably also the end of any contractor accounting that is even vaguely handholding, regardless of what (and when) the ultimate determination may be on CK and Boox.

Spent 2h today sitting with a chartered accountant who's literally been in the next road over from me for 40 years, uses Sage and does everything CK did for me but half the price so I figure its safer for me to switch over to him ASAP so I dont get done for the next few tax years should CK lose the case. Kicking myself that I just didn't do this from the get go... would have saved myself thousands on the accountancy costs and would not involve in all this BS right now.

[Fred Bloggs]

Thanks v.much for the clarity, seems like doing the PoA is the best course of action then.



Spent 2h today sitting with a chartered accountant who's literally been in the next road over from me for 40 years, uses Sage and does everything CK did for me but half the price so I figure its safer for me to switch over to him ASAP so I dont get done for the next few tax years should CK lose the case. Kicking myself that I just didn't do this from the get go... would have saved myself thousands on the accountancy costs and would not involve in all this BS right now.

Good luck, better late than never. I always thought that the fees charged by the larger "sausage machine" accounting firms was outrageous for what they did.

[GregRickshaw]

Thanks v.much for the clarity, seems like doing the PoA is the best course of action then.



Spent 2h today sitting with a chartered accountant who's literally been in the next road over from me for 40 years, uses Sage and does everything CK did for me but half the price so I figure its safer for me to switch over to him ASAP so I dont get done for the next few tax years should CK lose the case. Kicking myself that I just didn't do this from the get go... would have saved myself thousands on the accountancy costs and would not involve in all this BS right now.

I tried to escape CK's clutches once and they wanted charge a huge amount for final book-keeping even though it was a year end when all things had been filed etc., I was offered an incentive to stay too, they halved their fees for 12 months. With hindsight I wish I had paid the ridiculous amount to migrate away as it is a mere pittance of what I now face.

Did they (CK) try to charge you to leave?

[DealorNoDeal]

Reading this, it's not surprising HMRC went after CBS. They would almost certainly have been on HMRC's radar prior to 2007. Changing their "scheme" from composites to PSCs, to try and circumvent the MSC legislation, would have been like red rag to a bull.

Although it turned out to be a huge blunder micro-managing the PSCs, I can see why they did this. They probably needed to keep the "scheme" as simple for the contractors as being employees of the composites.

Oh, and why does it not surprise me that they were Isle of Man.

https://www.contractorcalculator.co....1810_news.aspx

Thinking about this a bit more.

It's clear, CBS were nothing more than an IoM tax avoidance scheme. Prior to 2007, they were doing exactly what the MSC legislation was designed to outlaw. In 2007, they switched their 1000 or so contractors from composites to PSCs, in a bid to dodge the legislation, and keep the scheme going.

This is a million miles from what CK and Boox have been doing.

[eek]

Thinking about this a bit more.

It's clear, CBS were nothing more than an IoM tax avoidance scheme. Prior to 2007, they were doing exactly what the MSC legislation was designed to outlaw. In 2007, they switched their 1000 or so contractors from composites to PSCs, in a bid to dodge the legislation, and keep the scheme going.

This is a million miles from what CK and Boox have been doing.

There is nothing anywhere that says CBS was a tax avoidance scheme. They were a tax minimisation scheme (composites followed by PSCs) for more risk adverse contractors.

The issue we now have is that both Tax Tribunals and the Appeal court used the CBS case to seriously widen the definition of what a MSC way beyond controlling the money - in the way CBS did and into a position where simply telling people to pay £8000 in income and take the rest in dividends via a fancy portal seems to be frowned upon...

[GregRickshaw]

HMRC have confirmed my appeal is a valid appeal. It's something of a relief in a way.

Now the paying and waiting truly begins.

[PurelyBlue]

Here's the reasoning (almost entirely verbatim; I just shortened 'BOOX' company name) from HMRC's letter regarding why BOOX satisfies the conditions (a), (c) and (d) of Section 61B (2):

• Condition a - HMRC believes this is met as BOOX operate two different payment structures, which I refer to as 'pay monthly' or 'pay in advance'. Under 'pay monthly' a customer pays BOOX each in month in arrears by Direct Debit as per the terms and conditions and customers must continue to pay regardless of whether they are receiving income. Under 'pay in advance' customers pay the fee for six months at a time and should a customer cancel during the six months no refund will be given. Under both payment methods BOOX receive a financial benefit through the provisions of services of the individual.
• Condition c - HMRC believes this condition is met as BOOX's product is designed for customers to follow a low salary, high dividend model. Informing customers, the best way to pay themselves equates to influencing.
• Condition d - HMRC believes this condition is met as the influence over the company's finances exists because of having influenced the way the individual is paid. Also, customers comply with the operating structures of the app/portal and as a consequence BOOX have an element of control over the activities of the company.

As a reminder, here are the conditions from the legislation:

• (a) Benefits financially on an ongoing basis from the provision of the services of the individual
• (c) Influences or controls the way in which payments to the individual (or associates of the individual) are made
• (d) Influences or controls the company’s finances or any of its activities

[forticorse]

Here's the reasoning (almost entirely verbatim; I just shortened 'BOOX' company name) from HMRC's letter regarding why BOOX satisfies the conditions (a), (c) and (d) of Section 61B (2):



As a reminder, here are the conditions from the legislation:

• (a) Benefits financially on an ongoing basis from the provision of the services of the individual
• (c) Influences or controls the way in which payments to the individual (or associates of the individual) are made
• (d) Influences or controls the company’s finances or any of its activities

What's troubling about this is, tell me anyone using an accountant where this doesn't hold? Short of everyone doing their own accounts, what else can you do?

[Fred Bloggs]

Here's the reasoning (almost entirely verbatim; I just shortened 'BOOX' company name) from HMRC's letter regarding why BOOX satisfies the conditions (a), (c) and (d) of Section 61B (2):



As a reminder, here are the conditions from the legislation:

• (a) Benefits financially on an ongoing basis from the provision of the services of the individual
• (c) Influences or controls the way in which payments to the individual (or associates of the individual) are made
• (d) Influences or controls the company’s finances or any of its activities

Oh my. That's harsh.

[Fred Bloggs]

What's troubling about this is, tell me anyone using an accountant where this doesn't hold? Short of everyone doing their own accounts, what else can you do?

Well, I have to say, I pretty much agree with you having seen that. FreeAgent subscription is going to increase and many accountants are going to lose a lot of monthly cash flow. Oh dear.