Churchill Knight & Boox clients being investigated as Managed Service Companies

[ExLuninKiwi]

But on the other hand. I am repeatedly shocked here at how company directors are frequently blissfully unaware that it's their responsibility to make sure everything concerning their company is done correctly and in a timely manner. Delegating that activity to another organisation to carry out doesn't mean you can forget about it. Director remains responsible. Why on earth would anyone not know their company hadn't been stuck off from Companies House? It's the director responsibility to know everything that happens to their company. Far too easy to moan and whinge it's all somebody else's fault. When really, it just isn't.

I’m sorry but that’s really just semantics. If you pay an expert to provide a service, you expect it to be undertaken in a timely manner. Boox should have notified their clients, but I’m not sure they made aware of the company being kept open themselves. Yes it was the directors responsibility to check companies house, but I can see how this may have been an afterthought. Not all company directors are meticulous A types personalities and some rely on ‘experts’ to help with the admin.

Personally (as I’m paranoid about this kind of thing) fortunately I checked companies house and found my company was not closed, and enquired as to why. However, as I have since moved overseas and started another business, I could have easily been in the same boat as I’m sure many others could have.

I think there’s some empathy and lenience needed for people in this position. Not everyone is interested in the various tax legislations. This is exactly what we paid good money to our accountants for-to work within the law, and provide us with information regarding our companies finances and (if you pay for it), administrative services (such as closing your business), which free up your time to focus on other business matters.

[jamesbrown]

I think there’s some empathy and lenience needed for people in this position. Not everyone is interested in the various tax legislations. This is exactly what we paid good money to our accountants for-to work within the law, and provide us with information regarding our companies finances and (if you pay for it), administrative services (such as closing your business), which free up your time to focus on other business matters.

Some empathy, yes, but also some critical self-reflection (I'm not singling out you or anyone, I mean all of us).

No one could've reasonably foreseen the MSC issue as it relates to apparently vanilla accountancy, but there are a ton of examples in this thread where individuals have made things worse for themselves or have reminded us why HMRC are so interested in this and other areas, including IR35.

There's a very low bar for creating a company. That encourages a false sense of security. It is false, though. As a director, you have a bunch of responsibilities and overlooking them is, sadly, not without consequences. Nowadays, you simply cannot afford to be "not interested in various tax legislations". Remember, accountants are not tax specialists either and, actually, you don't need any special qualifications to practice accountancy.

[ExLuninKiwi]

Personally I think the treatment of people by HMRC is disgusting. I used to be proud of my UK ancestry, but the govt allowing this kind of crazy nonsense has made me rethink how I feel. I know they have a lot of holes to plug ('scuse the pun), but they're just having a go at the low hanging fruit with no care whatsoever of the implications to hard working peoples lives, families etc. Personally, I have to deal with it from the other side of the world in a a different time zone, in a much weaker currency, with a new business and three dependants. It does make you want to throw it all in.

Clearly most people did not think they were doing anything wrong, and probably weren't. Yet they've decided to literally ruin peoples lives and go back six years in retrospect and put the onus on them to prove their innocence (even though this was none of their own faults). PSC's have been run in exactly the same way for decades - if they wanted to make a change, why couldn't they have told the accountants to clean up their act and demand they make a change immediately? Because then they couldn't trap you in their complex net or vague rules and definitions? I'm sorry but the ones who should be self reflecting are the ones making these decisions-not us.

I run a business overseas and can tell you my accounting situation is almost identical. The only differences is that I use Xero for my 'portal', to input expenses, invoice and reconcile, and I run reports instead of having a 'graph' within view. It's a joke HMRC are going after this in my opinion. Boox just created an easier and more modern way to view and control payments. Apparently it was also audited by HMRC themselves.

Also, while in the UK I was steadily growing my business. I would have no doubt grown it into a larger, more structured operation given the chance. As a small business you run things lean, so don't always have the ability to splash out on all the things make you a 'real' business in HMRC's eyes i.e. regular payments, staffing, offices, a legal team, etc. You do what you can to get a broad understanding of everything and hire 'experts' in for their help and advice where you need to. You be as diligent as you can without becoming an expert yourself. You pay experts (chartered accountants in our case) good money for financial advice. They know the rules and utilise them in accordance with HMRC guidelines etc to allow small businesses to take advantage of the same laws that larger more established businesses also do. It's just beyond belief that they've gone this direction and are chasing small fries, rather than tacking the vast range of complex entities offered to big business and the rich.

[jamesbrown]

Apparently it was also audited by HMRC themselves.

I hope Boox weren't telling you that because it's precisely the sort of language that avoidance schemes use. HMRC do not approve of, or audit as safe, any particular company or product. There are professional accountancy bodies, but you don't need to be a member of one, or have any particular qualifications, to practice accountancy. Putting aside the MSC legislation, there are plenty of horror stories around here about why you cannot "subcontract out" any aspect of your business, including the accounts. Accountants make bad mistakes all the time and you need to keep a close eye on them.

That said, I do agree that you and others involved have been very unlucky with HMRC's approach, as well as your choice of accountants. Even post CBS, I don't think anyone had fully joined the dots about what might happen next. Still, having been tax resident in a few jurisdictions, I'd say most tax authorities are at least as bad or worse than HMRC in terms of their level of aggression and disregard.

For what it's worth, I've always thought HMRC are overreaching here and will ultimately lose, even if the CK/Boox cases increment things to their benefit in the same way that CBS incremented things. If they don't lose, the implications for contracting more generally will be absolutely profound. Best of luck to you, honestly.

[ExLuninKiwi]

I believe I heard it from another ex-member a long time ago (could be mistaken though). It may have been an accounting body, or similar - I can't remember.

I'm not saying you can subcontract out any part of your directorial responsibilities, but to grow your business you obviously have to delegate to other specialist contractors or companies. Not to conflate this with your responsibilities as a director to check the work over. As you say though, even the specialists could never have seen this coming, nor could anyone else.

Having worked in the USA, Australia, NZ, and the UK. I've had dealings with the IRS, IRD, and ATO and HMRC and I can assure you HMRC and the UK govt are the absolute worst by a long shot. I have no problem with the concept of HMRC, but in more recent cases they have acted as power hungry extortionists under the guise of equity, and fairness.

I'm sure you can hear my blood boiling.

Ultimately, I'm sure this will only cause a few early deaths, broken homes, heart attacks, and divorces but guess it's worth it for a few bucks hey!

[jamesbrown]

Ultimately, I'm sure this will only cause a few early deaths, broken homes, heart attacks, and divorces but guess it's worth it for a few bucks hey!

These are the tools of trade among tax authorities everywhere. The problems in the UK are less about HMRC and more about the quality of legislation surrounding employment and tax and how they interact, which are then exaggerated by our common law system. This subforum is in no small part a reflection of the state of the ITEPA and related legislation and case law.

[eek]

These are the tools of trade among tax authorities everywhere. The problems in the UK are less about HMRC and more about the quality of legislation surrounding employment and tax and how they interact, which are then exaggerated by our common law system. This subforum is in no small part a reflection of the state of the ITEPA and related legislation and case law.

That and the fact we have hidden employment costs (Employer NI) within our tax system

And when HMRC and Customs and Excise merged many of the powers and workers within Customs and Excise moved into (what was) HMRC and HMRC love the abuse those extra powers give them.

[ExLuninKiwi]

In this case the ‘tools of trade’ are being used scrupulously by HMRC against people who have gone out of their way to go by the book. HMRC are trying to bend reality to fit their narrative, without a care for the damage they are causing in the process.
I get what you’re saying about the widely drafted legislation being an issue, but it’s HMRC that is choosing to pursue this in an aggressive and punitive way.

[Lotok]

As I said in a previous post I think Boox are winding down. Their website no longer works other than the home page and they no longer reply. I do not think they can be trusted to pass on information anymore. I checked with companies house and they have also not submitted my DS01.

My registered address was their address and they forwarded correspondence on to me. I am guessing a lot of others had that set up. Now you have a problem that you cannot get the authentication code for companies house to change your registered address, because the code will be sent there and you likely wont get it before it expires if at all.

I spoke to companies house and they have said use the paper AD01 form to change address to get around this.
https://assets.publishing.service.go.../AD01_v5_7.pdf

[Fred Bloggs]

As I said in a previous post I think Boox are winding down. Their website no longer works other than the home page and they no longer reply. I do not think they can be trusted to pass on information anymore. I checked with companies house and they have also not submitted my DS01.

My registered address was their address and they forwarded correspondence on to me. I am guessing a lot of others had that set up. Now you have a problem that you cannot get the authentication code for companies house to change your registered address, because the code will be sent there and you likely wont get it before it expires if at all.

I spoke to companies house and they have said use the paper AD01 form to change address to get around this.
https://assets.publishing.service.go.../AD01_v5_7.pdf

Once you sort out the authentication code, a DS01 can be done entirely on line and takes about 6 mouse clicks. It's now extremely simple to do. Hope that helps.