Churchill Knight & Boox clients being investigated as Managed Service Companies

[eek]

Yeah. I wonder if this is the scenario that is least likely simply due to the time factor. If these cases take 2-3 years to get through tribunals and apoeals for example, then for a dissolved company it really will be diminishing returns for them to go after it, assuming the normal 4 years window is in place.

Why? The whole point of restoring the limited company is to pass the debt on to the director of the limited company which they can only do be restoring the company

[rabbleish]

But this is why they are issuing protective assessments for 17/18. The time limit has been met and you can be pretty sure it will continue to be met for subsequent tax years too. For accountants other than the ones caught up here, the usual time limits to assess will apply, of course.

Fair point. Of course the canary in the coalmine will be lots of notices being sent about company restoration.

Hector can't issue protective assessments without reinstatement as there is no entity to send the protective assessment to.

[jamesbrown]

Fair point. Of course the canary in the coalmine will be lots of notices being sent about company restoration.

Hector can't issue protective assessments without reinstatement as there is no entity to send the protective assessment to.

Right, a Reg 80 cannot be issued to a dissolved company but, in principle, there is no escape either for companies closed some time ago or companies that will be closed in the coming years, since a company can be restored and then the debt transferred to individuals involved with the MSC.

I agree that it's a less enticing prospect for HMRC when the company was closed before they were ready to issue a Reg 80, but HMRC don't really care about cost vs. benefit in a narrow sense. This isn't surprising because there wouldn't be much of a deterrent were they to look at things this way (but it also leads to them going too far on many occasions).

[mogga71]

Right, a Reg 80 cannot be issued to a dissolved company but, in principle, there is no escape either for companies closed some time ago or companies that will be closed in the coming years, since a company can be restored and then the debt transferred to individuals involved with the MSC.

I agree that it's a less enticing prospect for HMRC when the company was closed before they were ready to issue a Reg 80, but HMRC don't really care about cost vs. benefit in a narrow sense. This isn't surprising because there wouldn't be much of a deterrent were they to look at things this way (but it also leads to them going too far on many occasions).

TBH its always been the same. We know that closing your Company helps against investigation but it's by no means a silver bullet.

[jamesbrown]

TBH its always been the same. We know that closing your Company helps against investigation but it's by no means a silver bullet.

It doesn't help in this case because the MSC legislation has seriously draconian transfer of debt provisions. This isn't like IR35 where the bar to transferring debt to the individual is very high. Here, it is very low. In my view, it is really nothing more than an inconvenience for HMRC, but they don't care about that.

[Guy Incognito]

Thanks for sharing this. A recording of their previous webinar was available to view after.

Can someone please share the link for the previous webinar?

[mogga71]

It doesn't help in this case because the MSC legislation has seriously draconian transfer of debt provisions. This isn't like IR35 where the bar to transferring debt to the individual is very high. Here, it is very low. In my view, it is really nothing more than an inconvenience for HMRC, but they don't care about that.

It was mentioned earlier that in the webinar it was said that closed companies would not be investigated. IPSE do also state on their MSCP page (https://www.ipse.co.uk/member-benefi...sc-advice.html) this :

I’ve closed my company, can HMRC still come after me?


No – if you have applied for your company to be dissolved and you have had it confirmed by HMRC that your company has been officially struck off from the Companies Register, HMRC cannot come after you for unpaid employment income tax and National Insurance under the MSC legislation.

However, limited companies in the process of being dissolved can still be contacted by HMRC for unpaid employment income tax and National Insurance.

...So it was mentioned in the webinar and their website. They seem pretty sure by the look of things....so what makes people think they are wrong? It would be a pretty bad mistake by them..surely?

[eek]

...So it was mentioned in the webinar and their website. They seem pretty sure by the look of things....so what makes people think they are wrong? It would be a pretty bad mistake by them..surely?

There is very little point resurrecting a company for an IR35 issue because the debt sits with the company (which won't have any assets) and can't be moved elsewhere.

There is a lot of point resurrecting a company for an MSC issue because the company needs to exist just long enough for the debt provision to be moved from the company to the director's of the company.

As for

No – if you have applied for your company to be dissolved and you have had it confirmed by HMRC that your company has been officially struck off from the Companies Register, HMRC cannot come after you for unpaid employment income tax and National Insurance under the MSC legislation.

I would say that's a very brave thing to say and may not reflect what actually happens...

[jamesbrown]

I don’t know about a “very bad” mistake. Yes, I think they’re mistaken. Companies can be restored, that much is certain. An MSC debt can be transferred to an individual involved with the MSC, that much is certain too. I’m unclear about what nuance they are relying upon to advise that these two dots cannot be connected, since they don’t explain it. To be clear, this advice is coming from Paul Mason at Markel Tax whom IPSE rely upon, not IPSE themselves, and I attended the seminar where Paul made the same claim.

Indeed, the main reason these transfer of debt provisions were introduced was to mitigate against those involved with or benefiting from asset poor MSCs simply walking away. There was some concern about their breadth and severity when the draft legislation was introduced in Parliament.

[Guy Incognito]

I would be very grateful if someone could post a link to the recording of the IPSE forum for 26 May please.