Churchill Knight & Boox clients being investigated as Managed Service Companies

[jamesbrown]

The MSCP is NOT the party liable for the debt.

Not quite. It is not at the top of the tree, but the transfer of debt provisions are draconian and can reach the MSCP and even its directors, ultimately. The difference is that the MSCP is in the firing line for all clients deemed to be MSCs. Given the number of cases, there will be plenty where the MSC and its directors cannot pay, so the debt could be transferred down the chain to the MSCP.

[rdw1970]

They are already out of business (except for providing email support) and have moved the accounts of existing clients to another accountancy firm (which, if I'm not mistaken, is part of the same parent group). One could think the parent group has not lost all of the revenue previously coming from Boox.

Boox is owned by the App Accounting Group which moved their Boox clients to Limelight Accountancy which is owned by DNS Accountants, so no it's not the same parent company. The App Accounting Group also owns Square Accounting and VAT Works Ltd which (afaia) are not part of this investigation.

[ritwolf]

I put together a very detailed appeal in the hope of having my case dropped.

I wish I had not as I was still stood over and now they have time to pay expensive lawyers to find a small chink in my armour and f$%k me over.

I've just read this. Do you mean you'd have preferred to submit a less detailed and more generic appeal?

[ritwolf]

I went with WTT for my initial appeal. Their fee was higher, but I thought a detailed appeal would help to change HMRC mind. Well, it didn't work like that and I also got a standard response that my appeal is valid and it stood over. Last week I have asked WTT that, would my initial payment cover the appeal required for new Reg 80 and NIC letters. They said I would need to pay £450 again. I don't think it's worth that amount as I don't think our appeal is even read by HMRC. I had joined DK after the initial appeal and probably will continue with him.

Sorry for my ignorance but, why do you need a second appeal? I thought one appeal against the determination of the company being deemed as MSC was enough...

[antuk]

Sorry for my ignorance but, why do you need a second appeal? I thought one appeal against the determination of the company being deemed as MSC was enough...

I think you need to appeal each tax year separately as they are being sent as separate determinations

[Guy Incognito]

Another edge case is the following. For the period under investigation, the MSC may pay out less than 50% of the fees to the worker(s). However, the goal, presumably, is that the remaining amounts are paid out eventually. At that point, the PSC may become an MSC if all other conditions are met because there is no particular timeframe in the legislation over which the qualifying conditions must be met. Thus, any payment made later on, including a payment made on winding up, would potentially trigger the legislation if 61B(1)(b) was the only condition not met previously.

I've just read this. Do you mean you'd have preferred to submit a less detailed and more generic appeal?

Probably.

[ritwolf]

I have received REg 80 determination letter for 17/18 in March 22 and i let Boox appeal which was probably another bad decision. HMRC in May 22 confirmed appeal and in December 22 i received another mail from HMRC saying appeal was unsuccessful and that i can expect more determination letters for 18/19 and 19/20. Now i am waiting for these new letters but this time i will have to appeal myself and i have no idea where to look for help with this.

Do you know why was your appeal rejected and not stood over like many others are posting here? I guess the template shared by Boox is the same they'd have used to submit your appeal as well...

[gikap]

Do you know why was your appeal rejected and not stood over like many others are posting here? I guess the template shared by Boox is the same they'd have used to submit your appeal as well...

HMRC argument regarding appeal rejection was very generic quoting generic reasons and listing points on which they believe my company qualified is an MSC. i believe it was rejected because it was just another generic appeal submitted over email by Boox with not additional proof or anything. just words, no substance.

i really wish someone at Boox was to be legally prosecuted if they are indeed found to be MSCP for at least a number of clients. even the clients who were deceived should take legal actions against Boox. too many individuals and families will be suffering because of Boox's actions.

[ritwolf]

The first thing to note is that the MSC legislation does not apply when you've paid out less than or equal to 50% of the amounts invoiced ex VAT (including salary, dividends and expenses) over an extended period. You should check your figures, but if you're comfortably below 50%, then you should be in the clear.

Regarding whether you should attempt to close your company, no, HMRC will block this.

jamesbrown - is this still valid? if so, do you know what period would you have to apply it for (e.g. 2018-2019 tax year or natural year...). I checked for the period 2018-2019 and the payments are just below half (around 48-49% of the amounts invoiced ex VAT.

Basically wanted to know if I can appeal based on this?

[jamesbrown]

jamesbrown - is this still valid? if so, do you know what period would you have to apply it for (e.g. 2018-2019 tax year or natural year...). I checked for the period 2018-2019 and the payments are just below half (around 48-49% of the amounts invoiced ex VAT.

Basically wanted to know if I can appeal based on this?

It's what the legislation says so, yes, it is valid - 61(B)(1)(b):

(1) A company is a “managed service company” if—
.
.
.
(b) payments are made (directly or indirectly) to the individual (or associates of the individual) of an amount equal to the greater part or all of the consideration for the provision of the services

Some of these words have a technical meaning within the scope of the legislation, such as "payment".

That said, you're unlikely to gain any traction at this stage. Certainly, you could include it in your appeal and it should work in due course, although 48-49% is obviously very close. Either way, you should seek professional help.