Churchill Knight & Boox clients being investigated as Managed Service Companies

[rdw1970]

Come on ... this monthly fee thing is total nonsense. Even before the advent of the 'real' internet in the early 90s I was paying my high street accountant a monthly fee and he had option of a dormant Company rate.

TBH it's nothing but utter and total robbery if the HMRC get through on that one. We are all used to them them doing utterly desperate and despicable things but that would be the worst ever.

Just a reminder to everyone what Hector said re: Test a) Benefits financially on an ongoing basis from the provision of the services of the individual.

"HMRC believes this condition is met as Boox operated 2 different payment structures - pay monthly and pay in advance.
Under pay monthly, a customer pays Boox each month in arrears by DD and as per the T&C must continue to pay regardless of whether they are receiving income.
Under pay in advance, customers pay the fee for 6 months at a time, and should the customer cancel during the 6 months no refund will be given.
Under both payment methods, Boox received a financial benefit through the provision of services of the individual"

I only contracted for 5 years using Boox, can any of the more experienced individuals on here advise if there are any accountants out there that they know of that don't follow the above models Boox offered, in particular pay monthly which is the service I used.

Seems to me the route Hector is taking with this condition is that every accountant who charges a monthly fee regardless of income is an MSCP and all individuals who don't pay full PAYE and NI are MSCs.

This is why I feel some political pressure on Hector is required but I know we are a long way from this atm.

[jamesbrown]

What HMRC says needs to be judged against the legislation, just like anything else. Their interpretation of the legislation is often, er, optimistic. They don't have a point w/r to fees paid for professional services. They might have a point w/r to fees that are linked to service provision, even a dormant company rate, but probably not in the end (the dormant company rate).

[Hareforthebear]

Under both payment methods, Boox received a financial benefit through the provision of services to the individual"[/I]

Think you meant to say ‘provision of services of the individual’.

Well that’s what mine says anyway. Which is of course complete nonsense, they benefitted as I engaged them as an accountant, it did not vary with or was not dependent on the provision of my services.

I think this is the least contentious point that I really can’t see how they could argue for this, given it was specifically called out in the CBS case as having to be tied to services. But then again I think David Kirk was saying this one was the problem in his view.

[eek]

I only contracted for 5 years using Boox, can any of the more experienced individuals on here advise if there are any accountants out there that they know of that don't follow the above models Boox offered, in particular pay monthly which is the service I used.

I believe the firm ladymuck uses charges a annual fee for the work they do.

When I need an accountant to do something (I do most things myself) I also just pay them for the time they spend checking my accounts..

[ladymuck]

I believe the firm ladymuck uses charges a annual fee for the work they do.

When I need an accountant to do something (I do most things myself) I also just pay them for the time they spend checking my accounts..

Yep I pay my accountant annually, on receipt of completed year end accounts and CT calculation. I do all my accounts myself to trial balance and then hand that over to the accountant at year end with supporting closing bank statements. They draw up the submissions to HMRC and CoHo and calculate the CT. I check it, sign it, pay the bill.

[jamesbrown]

Yep I pay my accountant annually, on receipt of completed year end accounts and CT calculation. I do all my accounts myself to trial balance and then hand that over to the accountant at year end with supporting closing bank statements. They draw up the submissions to HMRC and CoHo and calculate the CT. I check it, sign it, pay the bill.

TBH, this is probably the only "watertight" way of doing it if you want to retain the services of an accountant.

That said, all accountants charge an annual fee, it's just that some factor it monthly for convenience. However, I expect the ones that factor it monthly are more likely to handle all the sub-annual submissions too (RTI, VAT) and they are probably more hands-on in general, what with a monthly fee being more "friendly".

[DealorNoDeal]

Just a reminder to everyone what Hector said re: Test a) Benefits financially on an ongoing basis from the provision of the services of the individual.

"HMRC believes this condition is met as Boox operated 2 different payment structures - pay monthly and pay in advance.
Under pay monthly, a customer pays Boox each month in arrears by DD and as per the T&C must continue to pay regardless of whether they are receiving income.
Under pay in advance, customers pay the fee for 6 months at a time, and should the customer cancel during the 6 months no refund will be given.
Under both payment methods, Boox received a financial benefit through the provision of services of the individual"

Jeez, that's clutching at straws. Every Accountant in the country receives a financial benefit (gets paid) by clients who provide services.

[JohnP1977]

Think you meant to say ‘provision of services of the individual’.

I think this is the least contentious point that I really can’t see how they could argue for this, given it was specifically called out in the CBS case as having to be tied to services. But then again I think David Kirk was saying this one was the problem in his view.

First post on this board so be kind I'm caught up in this having used CKA as my accountant for many years and have received a (very confusingly calculated) protective determination . Has David Kirk said why he feels this is the most problematic point? Is it simply because any fees received could be argued as benefiting from the provision of services by the MSC? Or is there some subtlety to this we are missing?

In my case I paid a monthly fee to CKA for accounting services in the months I was trading and invoicing and I paid the same fee in the months I wasn't trading and invoicing. So I would say CKA have benefited from the accountancy services they provide to me, not from the services I provide.

Am I missing something?

[jamesbrown]

Am I missing something?

Perhaps only that there is very limited "expertise" in this area, many opinions, and that many people disagree with David Kirk's opinion on this point. That sub-clause is a side-show in my view, since it is linked to payments that are conditional upon services provided by the MSC in some way (i.e., a dormant company rate may be an issue in that regard, but not a payment unrelated to the services provided by the alleged MSC). A couple of the other sub-clauses are far more worrisome/debatable, and only one needs to be demonstrated for the MSCP to be "involved with" the MSC.

This thread is probably going to contain a lot of noise between now and the next staging post, which could be several years away. I would take much of what you read here with a pinch of salt. No one really knows how this is going to play out; it isn't like IR35 where there is a vast amount of case law. There isn't much beyond CBS and that is arguably apples and pears when compared w/ traditional contractor accountancy, although there are elements of that judgement that give cause for concern. For clients of CK/Boox, it's now a (very long) waiting game, interspersed with annual determinations from HMRC for each new year.

[SP8977]

The tax and accounting institutes, the tax experts and the various contractor and other interest groups really need to organise and lobby their (Tory) MPs as this is exactly the kind of Labour tax law that our PM is likely to get rid of at this precarious point in his career. It's anti business and scandalous that people who chose to use a regulated accountant can be targeted this way by HMRC overreach. We should all write a letter to our MPs explaining why this law is wrong in the first place. If it was big business, do you think they would be sitting there waiting for tribunals and courts? Umm..no. They would be visiting 10 & 11 Downing Street and having meetings with ministers. The way this needs to be presented to politicians is that it is anti small business. In the end everything is political.