Churchill Knight & Boox clients being investigated as Managed Service Companies

[DealorNoDeal]

My final thoughts on this.

IMO, this is a ridiculous case. CBS was a blatant tax avoidance scheme. It met all the standard HMRC hallmarks of a marketed avoidance scheme. To extrapolate this to a run of the mill accountancy service is laughable.

On the other hand, I can totally see why HMRC are doing this. If nothing else, it puts the frighteners on the whole outside-IR35 industry, which they've been trying to nobble for over two decades. And they can drag this case out for years, creating as much FUD as possible.

My prediction: HMRC will lose just like they lost the equally flimsy Arctic Systems case

[eek]

My final thoughts on this.

IMO, this is a ridiculous case. CBS was a blatant tax avoidance scheme. It met all the standard HMRC hallmarks of a marketed avoidance scheme. To extrapolate this to a run of the mill accountancy service is laughable.

On the other hand, I can totally see why HMRC are doing this. If nothing else, it puts the frighteners on the whole outside-IR35 industry, which they've been trying to nobble for over two decades. And they can drag this case out for years, creating as much FUD as possible.

My prediction: HMRC will lose just like they lost the equally flimsy Arctic Systems case

It doesn't do that - it's easy to protect yourself by doing the basics and not using a specialist / packaged accountancy firm

[DealorNoDeal]

It doesn't do that - it's easy to protect yourself by doing the basics and not using a specialist / packaged accountancy firm

You don't think these firms now fear losing business?
You don't think users of these firms now fear a backdated 4-year tax grab like CK/Boox?

I'm sure this has created a ton of FUD, as HMRC would have intended.

[Guy Incognito]

HMRC's argument continues to make no sense to me.

"Condition a - HMRC believes this is met as The App Accounting Group Ltd/TA BOOX's operate two different payment structures, which I refer to as 'pay monthly' or 'pay in advance'. Under 'pay monthly' a customer pays BOOX each month in arrears by Direct Debit as per the terms and conditions and customers must continue to pay regardless of whether they are receiving income. Under 'pay in advance' customers pay the fee for six months at a time and should a customer cancel during the six months no refund will be given. Under both payment methods BOOX receive a financial benefit through the provisions of services of the individual."

So they are saying here that because you must "pay regardless of whether they are receiving income".

Seems like the opposite of the point they should be making?

[jamesbrown]

Personally, I wouldn't read too much into their arguments at this stage. They had to get the protective assessments done, and that is "job done" for now. The arguments will improve (or at least become more consistent) once they get the proper legal people involved.

[ns1]

"Condition a - HMRC believes this is met as The App Accounting Group Ltd/TA BOOX's operate two different payment structures, which I refer to as 'pay monthly' or 'pay in advance'. Under 'pay monthly' a customer pays BOOX each month in arrears by Direct Debit as per the terms and conditions and customers must continue to pay regardless of whether they are receiving income. Under 'pay in advance' customers pay the fee for six months at a time and should a customer cancel during the six months no refund will be given. Under both payment methods BOOX receive a financial benefit through the provisions of services of the individual."

Even for a protective assessment, that's pretty lame.

Of course BOOX receives a financial benefit (gets paid). They're accountants not a bleeding charity.

[Guy Incognito]

Haha - on 7 March 2017 I purchased Company Tax Planning Handbook: 2016/2017 from Amazon.

How can I lose!

[CA100]

It's become confusing because HMRC have refused to accept conditional claims.

Before last week July 9th 2022 we were led to believe by 'experts' that we could claim CT and Div relief at any time and if I remember the CT deadline was early May so many of us got our claims in before the first deadline (which was insane anyway I think HMRC said we could claim on the Friday but the deadline was Monday).

Since then though HMRC have said they are not accepting claims until the case is closed win or lose. By which time their deadline (5 years after 31st Of January following the tax year in which the distribution/determination is made) so for example the 17/18 tax year the deadline is 31st Jan 2024 for submitting CT claims.

All well and good and plenty of time. However as there is virtually zero chance of the cases being closed by 2024, earliest tribunal is late 2023 (so we hear but not confirmed).

Which all means it will then be up to HMRC to decide if they accept late claims when we lose the MSC. If they choose not to allow a late claim you will be double taxed, so you will pay CT and PAYE on the year (so no refund on your CT).

Therefore the amount in your original letter is probably the amount you will be having to pay for that particular year.

The deadline for corporation tax claims is actually 4 years after the end of your company's financial year. That's if HMRC allow them, because the MSC guidance doesn't mention double tax avoidance due to corporation tax at all. For many companies, this means this deadline has passed already.

The 5 years after 31st January deadline relates to dividend tax.

[GregRickshaw]

David Kirk has written this morning and thinks Hector has no legal basis for not accepting conditional claims for CT already paid. He also thinks the method of subtracting CT from turnover before calculating NI and PAYE is also incorrect. This is something I've already flagged to Hector and received a nonsense reply from them. I'm just waiting for them to confirm if they will take self assessment into account, which if they do means they owe me a nice refund.

I'm feeling slightly more positive about things now. The determination letter said the amounts I received were greater than they would have been if the income from my Ltd Company were treated as employment income. This is not the case and I can prove now I actually paid more tax. It's only Hectors 'exotic' accounting methods of calculating the deemed payment has made the determination figure so large. I said this in a previous post, I suspect this is why their calculations were not provided with the determinations as they were trying to spook people into paying up.

He thinks a lot of things. He is the one who claims ten years of experience of fighting MSC and he got the first thing Conditional claims wrong.

He should be pro-actively fighting for his customers not sitting back and waiting for HMRC to come to him. Very poor

[Fred Bloggs]

He thinks a lot of things. He is the one who claims ten years of experience of fighting MSC and he got the first thing Conditional claims wrong.

He should be pro-actively fighting for his customers not sitting back and waiting for HMRC to come to him. Very poor

Really? Fascinating. Hasn't there only been one MSC case recorded? And that one resulted in Hector taking the present stance.

Sounds a lot like someone claiming 20 years experience of Windows 11 to me.