Churchill Knight & Boox clients being investigated as Managed Service Companies

[Bruce88]

HMRC can interpret the legislation in any way they like. If we don't like it we have to go through the courts.

I understand that HMRC will attempt to apply their own interpretation of the rules but ultimately if this is not realistic they will lose the case. I think clause 61B(1)(b) is quite specific in saying 'payments made to the individual' this can't include employer pension contributions as these are made to a pension scheme. The individual does not receive these contributions. Referring to ESM3510, the HMRC guidance given on this clause is 'The individual receives payments (or an aggregate of payments and benefits).' But employer pension contributions are not reportable to HMRC as benefits (therefore not classed as such). I would be interested to hear other opinions on the matter.

[NickLeeson2]

You should have received a reference number in your correspondence with HMRC.

You need to use that reference number to pay on account. If you have, as it sounds, started a dialogue with HMRC then ask them for a reference number to allow you to pay on account. Once you have the number payments can begin.

As is well documented here I had my first two years thrown out, however despite paying HMRC in March 2022 I still haven't received the PoA amounts back

They seemed to have stopped issuing reference numbers for paying on account. It is as if they don't care.

[Bruce88]

https://www.ft.com/content/cc180503-...6-4bcb9ba3b3c0

New article in the FT regarding the HMRC MSC investigation. Basically calling out the HMRC for lack of progress and failing to deal with the specifics of each case.

[Lotok]

gota non paywall version?

[eek]

gota non paywall version?

Search for the headline HMRC criticised over year-long tax probe delay on Google, click the link and you will see the article.

The FT paywall is how things should be done - a little hassle to get to the article but accessible if you need it.

[jamesbrown]

Search for the headline HMRC criticised over year-long tax probe delay on Google, click the link and you will see the article.

The FT paywall is how things should be done - a little hassle to get to the article but accessible if you need it.

And if it doesn’t work with Google, try Bing.

[Snooky]

gota non paywall version?

archive dot md is your friend

[ritwolf]

Where thhe article says:

When HMRC categorises a firm as an MSC provider it deems all its clients as users of an MSC and levies PAYE and national insurance on any income earned by the contractors’ businesses.

I think this is the only wrong bit I see in the article. My understanding (also from previous posts in this thread) is that the PAYE and NIC is levied on income earned by the contractor, not by the business.

Unless I'm missing something of course, but I really hope I'm right here.

[Lotok]

Where thhe article says:



I think this is the only wrong bit I see in the article. My understanding (also from previous posts in this thread) is that the PAYE and NIC is levied on income earned by the contractor, not by the business.

Unless I'm missing something of course, but I really hope I'm right here.

Sorry you are wrong. They are including everything and expecting you to claim back corporation tax paid. DK was doing conditional requests because I believe there is a cut off period and if this is drawn out people risk being double taxed.

[jamesbrown]

Sorry you are wrong. They are including everything and expecting you to claim back corporation tax paid. DK was doing conditional requests because I believe there is a cut off period and if this is drawn out people risk being double taxed.

That may be HMRC's position, but it isn't what the legislation says, notably:

61E Calculation of deemed employment payment


(1)The amount of the deemed employment payment is the amount resulting from the following steps—

Step 1

Find (applying section 61F) the amount of the payment or benefit mentioned in section 61D(1)(b).

And:

61D Worker treated as receiving earnings from employment


(1)This section applies if—

(a)the services of an individual (“the worker”) are provided (directly or indirectly) by a managed service company (“the MSC”),

(b)the worker, or an associate of the worker, receives (from any person) a payment or benefit which can reasonably be taken to be in respect of the services, and

And:

61F Sections 61D and 61E: application of rules relating to earnings from employment


(1)The following provisions apply for the purposes of sections 61D and 61E.

(2)A “payment or benefit” means anything that, if received by an employee for performing the duties of an employment, would be general earnings from the employment.

(3)The amount of a payment or benefit is taken to be—

(a)in the case of a payment or cash benefit, the amount received, and

(b)in the case of a non-cash benefit, the cash equivalent of the benefit.