Churchill Knight & Boox clients being investigated as Managed Service Companies

[DealorNoDeal]

Why do you think they chose CBS first?

Probably because it was on their radar as a dodgy Isle of Man tax avoidance scheme.

Everything about CBS had the hallmarks of marketed tax avoidance. No way was this ever genuine accountancy.

[jamesbrown]

Probably because it was on their radar as a dodgy Isle of Man tax avoidance scheme.

Everything about CBS had the hallmarks of marketed tax avoidance. No way was this ever genuine accountancy.

They always go for the best cases from their POV. There is a better chance of the targets folding or (when it goes sufficiently far) establishing precedent that will stick with other cases. They have continued this with CBS and from what we can see of CK and Boox, they were pretty good next targets and they will continue that trend when selecting their clients as possible MSCs.

[Andy Hallett]

At risk of spamming (I also posted in Business section). I talk to Kingsbridge who have confirmed their legal cover is activated by an MSC investigation.

https://www.linkedin.com/posts/andyh...402518528-kx2K

[DealorNoDeal]

They always go for the best cases from their POV. There is a better chance of the targets folding or (when it goes sufficiently far) establishing precedent that will stick with other cases. They have continued this with CBS and from what we can see of CK and Boox, they were pretty good next targets and they will continue that trend when selecting their clients as possible MSCs.

You may be giving HMRC too much Machiavellian credit here. There's an alternative reading of the situation:

1) they went after CBS because it was obviously dodgy IoM avoidance (CBS even waved a red rag at HMRC by modifying their original scheme in April 2007 to try and circumvent the MSC legislation)
2) an external tax barrister probably advised HMRC they had a good chance of defeating the new arrangement at tribunal
3) they won at FTT then UTT
4) then they sat down and thought, who else can we use this case law against?

[eek]

4 - is more how far can we push this given what the courts said and the amount of leeway they’ve been given within the judgement when it comes to determining salary levels

[GregRickshaw]

Can you refuse to be chosen?

CK seemed to think (in their annoucement) you could.

"HMRC are looking to take 5 test cases to tribunal. It will be argued that they cannot apply the result of those 5 to all clients. However, it will be impractical for them to take each one to tribunal. In the event of HMRC losing, they would most probably look to drop the case for everyone. In the event of them winning, the decision on whether it could be applied to everyone would be up to the tax tribunal judge.

At the moment we are analysing the potential sample companies and we may allow HMRC to select who they wish and intervene should we see an issue. However, the directors of the selected would still need to agree to go to tribunal so it is not as simple as HMRC just selecting."

[DealorNoDeal]

Can you refused to be chosen?

CK seemed to think (in their annoucement) you could.

That's not what I would have thought.

At the end of the day, HMRC can force anyone's hand by issuing a notice to either settle within 30 days or appeal to the FTT.

[eek]

However, the directors of the selected would still need to agree to go to tribunal so it is not as simple as HMRC just selecting."

To continue the appeal you need to go to court. If HMRC really wish for you to be a test case they will expect you to either turn up or withdraw your appeal and pay the tax HMRC claim is owed.

[GregRickshaw]

To continue the appeal you need to go to court. If HMRC really wish for you to be a test case they will expect you to either turn up or withdraw your appeal and pay the tax HMRC claim is owed. [/QUOTE]

I wonder what CK mean then... mmmm

So many pieces of advice floating around. My head is ready to explode

[jamesbrown]

You may be giving HMRC too much Machiavellian credit here. There's an alternative reading of the situation:

1) they went after CBS because it was obviously dodgy IoM avoidance (CBS even waved a red rag at HMRC by modifying their original scheme in April 2007 to try and circumvent the MSC legislation)
2) an external tax barrister probably advised HMRC they had a good chance of defeating the new arrangement at tribunal
3) they won at FTT then UTT
4) then they sat down and thought, who else can we use this case law against?

Both of these things can be true, actually. I think you're right about (4) in terms of their thinking "what next" and "how far can we push it", but when they go through that process of "pushing" they do it in a logical way, looking for low-hanging fruit. There is perhaps a tendency to think that HMRC are idiots. This is an easy assumption to make when you see the debacle with the details of the Reg 80 determinations, for example. However, you'd be wrong about that - they do the minimum amount necessary to protect what they think is due and then they have a very low bar for pursuing cases.