Churchill Knight & Boox clients being investigated as Managed Service Companies

[Fred Bloggs]

I do not think Boox will survive the investigation. I decided to close my company and went full time with a client I had. Feels like letting HMRC win but as a single parent with enough to deal with, I couldn't risk more liability.

Anyway, trying sort my final accounts with Boox has been a nightmare. Since April I have been trying to sort it. I chase them constantly, they promise to do it, then don't. They never answer emails either.

I've noticed they went from a switch board redirecting calls to accountants handling calls themselves, then now the phone line just tells you to email (which they always ignore).

I think dwindling staff, likely a loss of clients etc is a good sign they are not in a position to fight this case. They can't even do their day to day stuff now, so no chance they are going to be any use sorting out this mess.

Oh dear. Now if that's not an absolutely massive red flag to existing clients, I don't know what is.

There tends to be inertia against clients moving accountants. But history shows it's far better to get out at the first hint of problems. Here, the issues appear to be off the scale.

Leave now, if you already haven't. Like today.

[jamesbrown]

The CBS case was very, very much more clear cut than this. They had clients who didn't know what dividends were! CBS made the payments to HMRC!

Unfortunately, while the CBS case was egregious, the MSC legislation leaves a lot of room for subjectivity around an MSCP being "involved with" the MSC, so it's hard to know how far the bar has been lowered until we see these cases at tribunal. But it was probably lowered more than the lay person looking at the CBS case might think. There are quite a few hints in the judgement that the CBS case was not only a "slam-dunk" but that it exceeded the bar very significantly, which means that the bar is much lower than CBS. How much lower? TBD.

[jamesbrown]

The MSC bar didn't need any lowering to catch this. It was exactly what the legislation was designed to prevent.

Right, but the judgement is clear that the bar is much lower than CBS and much lower than we'd thought pre-CBS.

[GregRickshaw]

Reading through the CBS court case , I was surprised to read the directors of Costello were providing support (financially) at the appeal. CK have, from the off said this won't be happening on their cases (and they are correct to do so) for fear of being seen to be further involved.

The Costello case also seems a mixed bag of IoM avoidance schemes and MSC, MSC and paid through an avoidance/EBT loan scheme.

I do think this is a whole new start and attack for HMRC at MSC legislation, whatever bars were set during that win are not so relevant in the CK/Boox cases. The only real similarities between the two cases are the words M S C

[GregRickshaw]

I do not think Boox will survive the investigation. I decided to close my company and went full time with a client I had. Feels like letting HMRC win but as a single parent with enough to deal with, I couldn't risk more liability.

Anyway, trying sort my final accounts with Boox has been a nightmare. Since April I have been trying to sort it. I chase them constantly, they promise to do it, then don't. They never answer emails either.

I've noticed they went from a switch board redirecting calls to accountants handling calls themselves, then now the phone line just tells you to email (which they always ignore).

I think dwindling staff, likely a loss of clients etc is a good sign they are not in a position to fight this case. They can't even do their day to day stuff now, so no chance they are going to be any use sorting out this mess.

Sorry to hear this my friend. This is just one example to illustrate some of the things I have wondered.

This whole exercise has already been a success by driving people to Brollies/PAYE roles, even if it fails to land the big fish in court, the attack will have scooped up hundreds of smaller fish already.

As to Boox's position to fight they won't be fighting the case at the tribunal so they have no real expense there, I suspect they are stretched financially by losing clients and their fee structure! ooops

To be fair to CK they genuinely do appear to be fighting things through with their own lawyers and their own accusations, to clear their name of being an MSCP, they are allowed and able to do this.

Good luck in your new role and when the final figures are demanded get your MP and/or tax specialist to work through a good TTP.

[eek]

I beg to differ. CBS was a lame attempt to get around the MSC legislation. The only surprise is that these IoM clowns thought it would succeed.

CBS created all the PSCs (around 1000 companies)
CBS nominated the registered address and company secretary of every PSC
CBS managed all aspects of every PSC, including invoicing the agencies/end-users

The only involvement the CBS clients had in the arrangement was the formality of signing a few bits of paperwork, and getting paid!

The MSC bar didn't need any lowering to catch this. It was exactly what the legislation was designed to prevent.

Go and read the judgments - I'm not talking about what CBS did - rather I'm talking about the tests applied within the judgments - because they took the CBS stupidity and created some very low bars that HMRC are now looking to (ab)use.

Because the points HMRC are using / attacking isn't that Boox / CK managed all the invoices and bank accounts for the workers after creating their limited companies - the attack is on things such as Boox / CK said pay a salary of £x,000 and take the rest as dividends.

[GregRickshaw]

Because the points HMRC are using / attacking isn't that Boox / CK managed all the invoices and bank accounts for the workers after creating their limited companies - the attack is on things such as Boox / CK said pay a salary of £x,000 and take the rest as dividends.

CK stopped doing the 'pay yourself xxx and dividend x amount' around 2013. I still reckon that is when the investigation started... as it happened almost overnight.

They did offer financial planning after this but it the onus was on the directors then to provide their own figures to the accountants. I never used it.

CK 's biggest problem is the sliding scale of fees, and although not dependent on the client (LTD's) income they were different depending on the level of support given, two scales I think active/dormant. HMRC are seeing this as the % value of an income. I thin...

[PurelyBlue]

In terms of the case against Boox, I and presumably most others didn't use the online platform for anything we weren't already doing ourselves. In my own case I had actually been doing all of the accounting myself for over a year, and then started using Boox to save time/effort and ensure compliance, and fortunately this can be demonstrated (e.g. I would front-load dividends to fill the ISA for the new tax year, rather than 12 identical monthly dividends).

So it'd be unfortunate if they do cherry-pick cases. If it comes to it I intend to go to tribunal to at least test my own case, assuming this is allowed (I'm fortunate enough to have plenty of funds); I'm still a bit unclear about the process.

[nekro]

Oh dear. Now if that's not an absolutely massive red flag to existing clients, I don't know what is.

There tends to be inertia against clients moving accountants. But history shows it's far better to get out at the first hint of problems. Here, the issues appear to be off the scale.

Leave now, if you already haven't. Like today.

I've been trying to leave Boox but they've been very awkward about the notice period and have gone completely quiet now since I asked for my data.
I have a new accountant who will change my limited company status to dormant and do the bare minimum filing required for me.

[Fred Bloggs]

I've been trying to leave Boox but they've been very awkward about the notice period and have gone completely quiet now since I asked for my data.
I have a new accountant who will change my limited company status to dormant and do the bare minimum filing required for me.

Sadly, I don't expect anything will improve. Experience shows never does. I hope you are now using FreeAgent so you have your companies full data accessible any time you need it. Good luck.