Churchill Knight & Boox clients being investigated as Managed Service Companies

[enda1]

The David Kirk webinar was interesting. Seems reasonably confident in us winning, though not at all certain.

[Hareforthebear]

The David Kirk webinar was interesting. Seems reasonably confident in us winning, though not at all certain.

I found it interesting he seemed to think it was the benefitting financially test that would be problematic and dismissed the other two a bit. Bit of a contrast to WTT

[GregRickshaw]

I found it interesting he seemed to think it was the benefitting financially test that would be problematic and dismissed the other two a bit. Bit of a contrast to WTT

It was really good webinar, as was WTTs and also GT`s briefings have been very good too.

I have been saying this for a while it`s the fee test which is the part I am deeply afraid of and I can`t see how the companies can argue it or defend it. But yes I thought he spoke very well indeed.

One point though which I didn`t quite get was, David thinks the accountants are paying for our defences (test cases), I asked CK this when it first happened and they quite categorically said no they weren`t paying. Maybe things have changed.

As an aside though I also never realised IR35 was a company debt and not transferable!

[Guy Incognito]

Finance Bill 2007: Explanatory Notes

HM Revenue and Customs Finance Bill 2007 Resolutions: 21 & 22 - Clause 25 and Schedule 3: Managed Service Companies

19. Paragraph (a) sets out the first criterion: that the MSC provider, or an associate, benefits financially on an ongoing basis from the provision of the services of an individual through the company that has been promoted or facilitated. This criterion differentiates between the person who receives a fee irrespective of the company’s income, and the person who, by virtue of their specific relationship with the company and the individual, receives payment linked to the individual’s provision of their services through the company.

[GregRickshaw]

Finance Bill 2007: Explanatory Notes

HM Revenue and Customs Finance Bill 2007 Resolutions: 21 & 22 - Clause 25 and Schedule 3: Managed Service Companies

19. Paragraph (a) sets out the first criterion: that the MSC provider, or an associate, benefits financially on an ongoing basis from the provision of the services of an individual through the company that has been promoted or facilitated. This criterion differentiates between the person who receives a fee irrespective of the company’s income, and the person who, by virtue of their specific relationship with the company and the individual, receives payment linked to the individual’s provision of their services through the company.

We all are puzzled by HMRC's definition of the above... but as clear as it may seem, why are all the companies who are looking to fight this WTT, GT and David worried about that point more than the others?

I'm still very concerned about that one, the other two not so much.

[DealorNoDeal]

Finance Bill 2007: Explanatory Notes

HM Revenue and Customs Finance Bill 2007 Resolutions: 21 & 22 - Clause 25 and Schedule 3: Managed Service Companies

19. Paragraph (a) sets out the first criterion: that the MSC provider, or an associate, benefits financially on an ongoing basis from the provision of the services of an individual through the company that has been promoted or facilitated. This criterion differentiates between the person who receives a fee irrespective of the company’s income, and the person who, by virtue of their specific relationship with the company and the individual, receives payment linked to the individual’s provision of their services through the company.

That's woolly.

[Guy Incognito]

This is how the CBS case was lost

Microsoft Word - Christianuyi v HMRCl.docx (publishing.service.gov.uk)

“We consider that in each case CBS benefited financially on an ongoing basis from the services provided by the individual…The fixed fee per transaction basis of charging was also clearly related to the services provided by the individual. The fee was only charged when a payment was received by the personal service company. Moreover, the fee related to the number of payments received by the client (from the agency) rather than the number of times the payroll had to be run or a payslip produced. Thus, if the client received two payments in one week from the agency, CBS ran one payroll and produced one payslip, but charged two fees. Thus, the fees relates to the number of payments received (which was a factor of the amount of work done by the client) rather than the number of times it had run a payroll or produced a payslip. This, in our view, is a sufficiently close link to establish that CBS benefited “from” the services provided by the individual.”

In my view this IS a link between payments and fees in the CBS case.

I don't think the link exists in the case of Boox.

[jamesbrown]

We all are puzzled by HMRC's definition of the above... but as clear as it may seem, why are all the companies who are looking to fight this WTT, GT and David worried about that point more than the others?

I'm still very concerned about that one, the other two not so much.

This is just HMRC chancing their arm and/or using placeholder arguments until such time as they need to make serious ones. Of the arguments they are currently making, I would be least concerned about (2)(a) and most concerned about (2)(c).

[GregRickshaw]

This is just HMRC chancing their arm and/or using placeholder arguments until such time as they need to make serious ones. Of the arguments they are currently making, I would be least concerned about (2)(a) and most concerned about (2)(c).

Possibly but they have chosen their placeholder well then as it is the only one none of us can even attempt to argue (so we need the law to help us there), the other two at least we have some chance to fight.

[jamesbrown]

Possibly but they have chose their placeholder well then as it is the only one none of us can even attempt to argue (so we need the law to help us there), the other two at least we have some chance to fight.

They have a fig leaf of an argument with CK regarding a reduced fee for dormant companies, but that will almost certainly fail because there is a clear commercial reason. With (2)(c), on the other hand, there is a respectable argument, so it would make sense to gather all evidence that the financial decisions were ultimately yours. Forget about (2)(a), it’s threadbare and there is nothing much to be argued or countered on that point, it is elementary.