Churchill Knight & Boox clients being investigated as Managed Service Companies

[GregRickshaw]

From what I understand, in legal terms, HMRC is not (yet) in dispute with Boox. HMRC are still reviewing test appeals from Boox's clients so they are still some way off taking these sample cases to a FTT.

HMRC are in dispute with Boox and visa versa. CK are still some way off taking examples to FTT too.

[InformationDesigner]

So because I'm one of life's happy little pedants, I responded to the response I got from CK to point out that I did not understand why contributions were not voluntary and whether they understood that their communication on this so far was causing concern because of the lack of detail, as plenty of people are happy to contribute to a fighting fund but they need to know exactly what they're getting.

Here's a pertinent part of the response I got back:

"We understand that not all clients are going to be in a position to contribute but please note that the amount specified on the email is just a suggestion so that all clients were provided with relative figures, they were not meant to be a demand or an all or nothing."

Went back and checked the email. As far as I'm concerned, that email does not represent the above statement (and I've told them that). Don't see the word 'suggested', don't see the word 'voluntary', just the word 'recommended' doing a lot of heavy lifting. I communicate for a living and this email is just a masterclass in how not to do it.

"You clearly feel that you cannot commit or make a decision until you have more information and I completely respect that and will be updating the portal with more information. Whilst we are doing that contributions are being made by people who are already happy to contribute and so we will continue to receive funds and also provide more information and for everyone's sake reach the target."

Wild to me that people are apparently contributing without getting clear clarifications on a few points first and I love the implied guilt tripping here ('other people are doing as we asked but here you are asking for facts'), but OK.

[rdw1970]

As far as I am aware BOOX have their head in the sand in the entire issue as have heard nothing from them post appeals deadline.

There are a whole lot more parties than just CK clients that have a vested interest in fighting this, BOOX clients affected and any accountancy firm that deals with contractors for a start.

There has to be a more co-ordinated effort on this across the board when the time is right, no-one is even aware of any impending tribunals at this stage as far as we can tell.

I've not heard anything from Boox since the initial couple of emails in April. They're not the ones in the dock.

Someone made an excellent post a few months ago saying the other accountancy firms who operate in a similar way to Boox and CK should not be leaving them to fight this alone as a HMRC win could cause them similar problems further down the line.

There should definitely be a coordinated effort to resolve this and the webinairs back in May said it should be done poitically with a media campaign too (flag this case to the Treasury Select Committee and the Public Accounts Committee)

[rdw1970]

HMRC are in dispute with Boox and visa versa.

Could you please explain why then? It's not Boox who could be going to an FTT but their clients. The determination letter said HMRC continue to correspond with Boox as they disagree the legislation applies but we now know being charted accountants does not make them exempt from the legislation. After their bullish emails in April there's been nothing. I don't know if this will change once HMRC finally finishes reviewing the test appeals.

[Fred Bloggs]

So because I'm one of life's happy little pedants, I responded to the response I got from CK to point out that I did not understand why contributions were not voluntary and whether they understood that their communication on this so far was causing concern because of the lack of detail, as plenty of people are happy to contribute to a fighting fund but they need to know exactly what they're getting.

Here's a pertinent part of the response I got back:

"We understand that not all clients are going to be in a position to contribute but please note that the amount specified on the email is just a suggestion so that all clients were provided with relative figures, they were not meant to be a demand or an all or nothing."

Went back and checked the email. As far as I'm concerned, that email does not represent the above statement (and I've told them that). Don't see the word 'suggested', don't see the word 'voluntary', just the word 'recommended' doing a lot of heavy lifting. I communicate for a living and this email is just a masterclass in how not to do it.

"You clearly feel that you cannot commit or make a decision until you have more information and I completely respect that and will be updating the portal with more information. Whilst we are doing that contributions are being made by people who are already happy to contribute and so we will continue to receive funds and also provide more information and for everyone's sake reach the target."

Wild to me that people are apparently contributing without getting clear clarifications on a few points first and I love the implied guilt tripping here ('other people are doing as we asked but here you are asking for facts'), but OK.

Hmmm. CK would be telling the truth as written if just one person sent them a fiver. Myself, I would want absolutely nothing to do with CK on this, especially not sending them any money.

[jamesbrown]

Could you please explain why then? It's not Boox who could be going to an FTT but their clients. The determination letter said HMRC continue to correspond with Boox as they disagree the legislation applies but we now know being charted accountants does not make them exempt from the legislation. After their bullish emails in April there's been nothing. I don't know if this will change once HMRC finally finishes reviewing the test appeals.

Because HMRC has accused them of being an MSCP. A prerequisite of a client company being an MSC is that they are managed by an MSCP.

[Fred Bloggs]

Just a thought. What are the various people doing who (say that they) provide tax dispute cover to contractors? Have any of the various tax dispute cover providers initiated cover for these HMRC investigations? Or are they saying it's not covered? I haven't seen anything about that here since the very early days.

If ever the tax dispute cover was needed, now is the time?

[rdw1970]

Because HMRC has accused them of being an MSCP. A prerequisite of a client company being an MSC is that they are managed by an MSCP.

Yes as someone who is affected by this, I'm fully aware why I'm in this mess as a result of Boox being accused of being an MSCP.
I don't believe HMRC are in legal dispute with Boox else it's them who would be in the dock fighting this first, not their clients.

[jamesbrown]

Yes as someone who is affected by this, I'm fully aware why I'm in this mess as a result of Boox being accused of being an MSCP.
I don't believe HMRC are in legal dispute with Boox else it's them who would be in the dock fighting this first, not their clients.

There's an investigation and there's a debt, subject to the outcome of the investigation and legal due process. The debt falls on the MSC (or the owners of the MSC), in the first instance, but the MSCP and even their owners in some instances (the transfer of debt provisions are extremely draconian). I suppose it depends what you mean by "in dispute with". The Reg 80 determinations were received by their clients, yes. But HMRC are investigating these accountancy companies as possible MSCPs (and their clients as MSCs) - it is hard to separate the two things w/r to the investigation because one depends on the other.

[GregRickshaw]

Yes as someone who is affected by this, I'm fully aware why I'm in this mess as a result of Boox being accused of being an MSCP.
I don't believe HMRC are in legal dispute with Boox else it's them who would be in the dock fighting this first, not their clients.

Although it would appear CK and Boox are the perpetrators of this dreadful alleged wrong, it is not them who is up in front of the judge, it's you and your company who HMRC are after.

CK and Boox are attempting to prevent being the P in all of this as it harms their whole business model, their livelihood and ultimately their income (if HMRC haven't hurt them enough already just by suggesting they are the P) but make no mistake it is our companies in HMRC sights and the fight is with the MSCs.

If CK can convince HMRC there is no P in their business model, then we stop being MSCs immediately. This is the problem I have with CK and their appeal, they are asking us to fund it NOW not when it gets to court. So I suspect CK are trying to prove their innocence however beneficial to us it could be it is not our fight.