Churchill Knight & Boox clients being investigated as Managed Service Companies

[eek]

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.

Cost of recreating a company £5000 - probably less if done in bulk.
Typical claim (at a guess) £15000

[Peoplesoft bloke]

Otherwise, hairdressers, plasterers, self employed mechanics, gardeners etc would all be MSC as well if they happened to pay monthly for accountants. It isn't going to happen.

Unfortunately it already has - in Christianuyi v HMRC at least one of the co-defendants was a physiotherapist - a profession hardly known as a hotbed of permitractor tax dodgers.

[Fred Bloggs]

Unfortunately it already has - in Christianuyi v HMRC at least one of the co-defendants was a physiotherapist - a profession hardly known as a hotbed of permitractor tax dodgers.

Indeed. Perhaps the agenda has widened a lot more than I had recognised. Self employment was always seen as a good and aspirational thing to be encouraged by Conservative governments. But we no longer seem to have a Conservative government. I suppose that explains it all. Silly me

[isaaaaaaaaccc]

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...

To be explicitly clear does this mean IF they win then they can only make companies pay back taxes for that timeframe? Or is this just how far back they can investigate and IF they win can they can then make companies pay even further back than this?

Also what are the parameters for each? What determines here if Boox/CK were careless or dare I say dishonest?

[cojak]

No, there is no dishonesty here. HMRC are interpreting MSC legislation in a way that no-one forsaw.

[DealorNoDeal]

Unfortunately it already has - in Christianuyi v HMRC at least one of the co-defendants was a physiotherapist - a profession hardly known as a hotbed of permitractor tax dodgers.

In recent years, many self-employed workers in the medical, health and social care professions have been lured into tax avoidance schemes like the CBS one in the Christianuyi case. I suspect it's become harder to find as many naive punters in the traditional recruiting grounds of IT and O&G, which is why the schemes have been targeting other sectors.

https://www.accountancyage.com/2016/...ibunal-victory

"The managed service company provided tax avoidance services to individual clients, including social workers, doctors and NHS professionals. Many of the scheme’s users had been steered towards the avoidance product through their recruiter."

[isaaaaaaaaccc]

This seems quite a comolex topic in terms of guidance published:
https://www.gov.uk/hmrc-internal-man...ndbook/ch50000

If they win and only go back 4 years could this simply be cheaper to make early settlement (even if people think HMRC are wrong).

This could mean you get tax refunds in on time, avoid interest charges (I read this can be 50 percent of a bill) and from what people have written about the cost of tax advisor and legal representation...

What people are ultimately worried about is the unknowns if this lands. Potentially how much and by when could be liable. Looking at this from a cost vs risk over time could this (begrudgingly) be better to settle sooner than later.

[eek]

This seems quite a comolex topic in terms of guidance published:
https://www.gov.uk/hmrc-internal-man...ndbook/ch50000

If they win and only go back 4 years could this simply be cheaper to make early settlement (even if people think HMRC are wrong).

You have misunderstood what I meant.

Because this tax case is about a discovery HMRC made at some point between 2018 and now HMRC have 4 years to start an inquiry - which is why HMRC were sending letters out in March to cover the 2017-18 tax year because they needed to be sent before the 4 years expired. Now the inquiry has started the years will remain open.

Some point during this year HMRC will start inquiries for the 2018-19 tax year because they need to be kicked off (i.e. the tax payers informed) by April 5th 2023.

This could mean you get tax refunds in on time, avoid interest charges (I read this can be 50 percent of a bill) and from what people have written about the cost of tax advisor and legal representation...

What people are ultimately worried about is the unknowns if this lands. Potentially how much and by when could be liable. Looking at this from a cost vs risk over time could this (begrudgingly) be better to settle sooner than later.

That 50% comes from open tax inquiries that started in 2007 for the 2005/6 tax year. Unless interest rates go sky high again you won't see that scale of interest charges in these cases

[isaaaaaaaaccc]

And if HMRC win can they only claim back taxes for the years of inquiry? So if they won and it stays with 4 years due to not being deemed careless they would only claim 4 years if back taxes even if a company had likely been trading with offence longer?

What I'm leading towards is that this could be cheaper to settle sooner with tax refunds within deadlines rather than other costs mentioned.

[DealorNoDeal]

And if HMRC win can they only claim back taxes for the years of inquiry? So if they won and it stays with 4 years due to not being deemed careless they would only claim 4 years if back taxes even if a company had likely been trading with offence longer?

What I'm leading towards is that this could be cheaper to settle sooner with tax refunds within deadlines rather than other costs mentioned.

HMRC can only go after 2017/18 onwards. I wouldn't be surprised if they assess 2018/19, 2019/20 and 2020/21 this year.

eek is right about the interest, it won't be anywhere near 50%. (At a guess, currently about 13% for 2017/18.) You can roughly work it out from this. It will keep accruing every year unless you make payments on account.

https://www.gov.uk/government/public...interest-rates