Churchill Knight & Boox clients being investigated as Managed Service Companies

[DealorNoDeal]

What I find really frustrating is that I wouldn’t have minded paying it at the time as it would of not have made a lot of difference when there was funds in / coming into my company, and I could’ve planned around it accordingly. If HMRC had come out and said, ‘we think there’s an issue here, this is what we believe you should be doing’ I would’ve done it, as I always took a conservative approach to things and as far as I’m concerned was operating legitimately, and used a regulated accountant to ensure I remained compliant as easily as possible. It wasn’t like I was part of some sort of questionable scheme.

Now my company hasn’t traded for 3 years so has no assets, and any liabilities will fall to me.

HMRC are rarely proactive and when they do act it's invariably at a snail's pace.

And financially they're protected because they get to charge above base rate interest for every year that passes.

Take the Actinium scheme mentioned here in the last few weeks. Someone said they had an enquiry opened in 2007 and then nothing since, and it's only now, 15 years later, that HMRC seem to be gearing up to do anything. HMRC are covered because they can charge 15 years of interest.

[eek]

HMRC are rarely proactive and when they do act it's invariably at a snail's pace.

And financially they're protected because they get to charge above base rate interest for every year that passes.

Take the Actinium scheme mentioned here in the last few weeks. Someone said they had an enquiry opened in 2007 and then nothing since, and it's only now, 15 years later, that HMRC seem to be gearing up to do anything. HMRC are covered because they can charge 15 years of interest.

I think (for reasons I don't want to say yet) that HMRC have a deadline of 2025 or so to get this set of cases finished so they won't be throwing things into a cabinet for 15 years. But that doesn't mean things will run much quicker than that - time is always on HMRC's side.

[GregRickshaw]

HMRC are rarely proactive and when they do act it's invariably at a snail's pace.

And financially they're protected because they get to charge above base rate interest for every year that passes.

Take the Actinium scheme mentioned here in the last few weeks. Someone said they had an enquiry opened in 2007 and then nothing since, and it's only now, 15 years later, that HMRC seem to be gearing up to do anything. HMRC are covered because they can charge 15 years of interest.

TLDR; On non open TA enquiries how far can they (HMRC) go back now

Going off topic slightly with this but relevant I guess to timescales. The above case I know very little about but I suspect it's a Tax Avoidance/Loan Charge/EBT candidate, I know if there is an Open enquiry then HMRC can go back as far as they like but I just wondered if there is a timescale on how far they can go back if it's a not open enquiry, as yet undiscovered scheme or missed etc.,

Time in years and year (I believe 2009 was mentioned way back when).

[DealorNoDeal]

TLDR; On non open TA enquiries how far can they (HMRC) go back now

Going off topic slightly with this but relevant I guess to timescales. The above case I know very little about but I suspect it's a Tax Avoidance/Loan Charge/EBT candidate, I know if there is an Open enquiry then HMRC can go back as far as they like but I just wondered if there is a timescale on how far they can go back if it's a not open enquiry, as yet undiscovered scheme or missed etc.,

Time in years and year (I believe 2009 was mentioned way back when).

They can normally only go back 4 years.

https://www.pinsentmasons.com/out-la...ry-assessments

"The normal time limit for a discovery assessment is four years after the end of the year of assessment or six years in the case of carelessness. However, if the taxpayer's behaviour is deliberate, HMRC can go back 20 years."

[eek]

TLDR; On non open TA enquiries how far can they (HMRC) go back now

Going off topic slightly with this but relevant I guess to timescales. The above case I know very little about but I suspect it's a Tax Avoidance/Loan Charge/EBT candidate, I know if there is an Open enquiry then HMRC can go back as far as they like but I just wondered if there is a timescale on how far they can go back if it's a not open enquiry, as yet undiscovered scheme or missed etc.,

Time in years and year (I believe 2009 was mentioned way back when).

12 months from date of return for a full enquiry
4 years from end of tax year for discovery
6 years from end of tax year if careless
20 years from end of tax year if dishonest

What is the Time Limit for a HMRC Investigations? | HMRC Investigations (patrickcannon.net)

That 4 years is why I suspect everything here will be wrapped up by the end of 2025...

[mogga71]

What I find really frustrating is that I wouldn’t have minded paying it at the time as it would of not have made a lot of difference when there was funds in / coming into my company, and I could’ve planned around it accordingly. If HMRC had come out and said, ‘we think there’s an issue here, this is what we believe you should be doing’ I would’ve done it, as I always took a conservative approach to things and as far as I’m concerned was operating legitimately, and used a regulated accountant to ensure I remained compliant as easily as possible. It wasn’t like I was part of some sort of questionable scheme.

Now my company hasn’t traded for 3 years so has no assets, and any liabilities will fall to me.

Did you close your Company down or make it dormant? If you closed it down then there is a fair chance you won't be included anyway when push comes to shove ... as Paul Mason (Tax Consultant) is still of the belief that closed companies will be ok .... however, as can be read on earlier pages, we are by no means certain of this being the case and HMRC may be open to re-instating the closed companies by going to the law courts.

If I were in your shoes I would certainly sleep better (but not soundly) if the Company was closed.

[eek]

Did you close your Company down or make it dormant? If you closed it down then there is a fair chance you won't be included anyway when push comes to shove ... as Paul Mason (Tax Consultant) is still of the belief that closed companies will be ok .... however, as can be read on earlier pages, we are by no means certain of this being the case and HMRC may be open to re-instating the closed companies by going to the law courts.

If I were in your shoes I would certainly sleep better (but not soundly) if the Company was closed.

I think both jamesbrown and myself have commented in the past that closing your company probably isn't in MSC investigations the high bar it is in IR35 investigations. The debt transfer clauses are far wider ranging and easier to hit.

[Hareforthebear]

Did you close your Company down or make it dormant?

Afraid not. As with another poster on here I was in the process of having it struck off, which HMRC objected to.

One consolation to myself tho due to this is I have less than the full 4 years exposure here which is probably not the case for most people affected.

[mogga71]

I think both jamesbrown and myself have commented in the past that closing your company probably isn't in MSC investigations the high bar it is in IR35 investigations. The debt transfer clauses are far wider ranging and easier to hit.

Yip eek and I fully respect both of your opinions as you both know what you are talking about. However, I also respect Paul's view and he is still of the belief that closed companies will be exempt. Also, if I were HMRC and I had 1000 cases to look at and 100 involved closed companies I think I would be inclined to target the other 900 due to the hassle and expense of getting them reopened. On the other hand, if some of those 100 cases were for larger amounts I may go after them.

[jamesbrown]

Yip eek and I fully respect both of your opinions as you both know what you are talking about. However, I also respect Paul's view and he is still of the belief that closed companies will be exempt. Also, if I were HMRC and I had 1000 cases to look at and 100 involved closed companies I think I would be inclined to target the other 900 due to the hassle and expense of getting them reopened. On the other hand, if some of those 100 cases were for larger amounts I may go after them.

From what I recall, Paul's main point was that they cannot issue a Reg 80 determination to an entity that doesn't exist (statement of fact), although I believe he did also express an opinion that this would be the end of it. I don't agree on the latter - they introduced these aggressive transfer of debt clauses into the MSC legislation for good reason. For example, imagine the situation where CK and/or Boox lost. If you think that clients of other accountants could, at that stage, close their companies to eliminate risk, I have a bridge to sell you. It's nothing more than my opinion, though.

Insofar as there is an "obvious" way around the MSC legislation, the only one I see is that > 50% of the invoiced amounts are distributed to the user, which will not be met in quite a few cases.