Churchill Knight & Boox clients being investigated as Managed Service Companies

[coolparty]

Hi all,

Has anyone recently received a 'variation of Section 8 Notice Decision' letter? I received one but checked against original determination and there is no variance to value...

Recieved mine today too. It’s almost identical to the original, but it now specifies the periods covered by their decision. Not sure why it’s taken them 10 months to update this detail. It looks like our original appeals still stand I don’t think there’s any further action required?

[Snooky]

Hi all,
Maybe this has been covered already and I have missed it but does 'payment on account' mean the whole amount HMRC are chasing or can it be any value to simply stop any further interest accrual?

I suspect you can pay any amount you want towards their claimed debt and from that point interest would only be accrued on the remaining balance.

[ritwolf]

As this thread seems to be cooling down and losing momentum, I wanted to raise this issue and ask for any suggestions on how to help/guide each other going forward. Understandibly, there is a private forum by Churchill Knight and they don't want their content to be shared here.

I'd like to ask for ideas going forward. In my case, it's a bit concerning that I don't know when the case will be heard in court, or any other relevant news for that matter. Is anyone signing up or has already signed up to the Churchill Knight portal? Do you recommend it?

Any ideas are very welcome.

[phonic22]

As this thread seems to be cooling down and losing momentum, I wanted to raise this issue and ask for any suggestions on how to help/guide each other going forward. Understandibly, there is a private forum by Churchill Knight and they don't want their content to be shared here.

I'd like to ask for ideas going forward. In my case, it's a bit concerning that I don't know when the case will be heard in court, or any other relevant news for that matter. Is anyone signing up or has already signed up to the Churchill Knight portal? Do you recommend it?

Any ideas are very welcome.

I would say sign up with CK as they do provide regular updates when there is news wrt HMRC. Not sure how much its costs as I was already with CK during the time periods the issue covers. Maybe a telegram or discord group would have potential?

[jimmyoyang]

Dear Everyone,

It's been a while, and it's been surprisingly quiet. I hope this is due to a reduction in developments related to the case rather than everyone closing shop. I have a question that I hope some of you, with your expertise, could assist me with. After working diligently this year to clear the outstanding payment (on-account), it has finally been settled until further notice... years I am told! My plan now is to make the company dormant and establish a new one. My question is, am I being overly cautious in taking this step?

My rationale is that the more I continue trading in the current 'tainted' company, the more HMRC could potentially have access to it in the future. Therefore, by starting fresh, I can mitigate this concern. The only drawback would be the annual cost of around £500 to my current accountant for year-end accounts on company made dormant. I would appreciate your thoughts on this matter.

Thank you for your insights.

Sincerely,
JOY

[jamesbrown]

Dear Everyone,

It's been a while, and it's been surprisingly quiet. I hope this is due to a reduction in developments related to the case rather than everyone closing shop. I have a question that I hope some of you, with your expertise, could assist me with. After working diligently this year to clear the outstanding payment (on-account), it has finally been settled until further notice... years I am told! My plan now is to make the company dormant and establish a new one. My question is, am I being overly cautious in taking this step?

My rationale is that the more I continue trading in the current 'tainted' company, the more HMRC could potentially have access to it in the future. Therefore, by starting fresh, I can mitigate this concern. The only drawback would be the annual cost of around £500 to my current accountant for year-end accounts on company made dormant. I would appreciate your thoughts on this matter.

Thank you for your insights.

Sincerely,
JOY

It seems like a sensible precaution to me. Afterall, the Reg 80 determination is a company liability. The only case law I'm aware of concerning two or more companies being treated as the same trade, retrospectively, is w/r to VAT avoidance, but the case law there isn't clearcut. At worst, it won't increase your risk (there is no convoluted avoidance arrangement here) and, at best, it may seem like a very sensible precaution, with hindsight.

[WTFH]

Why make it dormant and not fully close it down?

If you close it down (without any objections) and then they decide that money is due, they can still come after the directors of the company for that money, but they can't charge any additional interest after the company has closed.

[jamesbrown]

Why make it dormant and not fully close it down?

If you close it down (without any objections) and then they decide that money is due, they can still come after the directors of the company for that money, but they can't charge any additional interest after the company has closed.

You can't close a company with a Reg 80 outstanding. In short, HMRC will contest and there's a vanishingly small chance it will slip through.

[PurelyBlue]

Reading this article just posted on ContractorUK: https://www.contractoruk.com/news/00...agreement.html

It says:

MSC legislation leads by default to a failure to pay the correct amount of PAYE (tax and NICs) which is automatically deemed to be a ‘deliberate error.’

This sounds incorrect, and seems to completely undermine the concept of 'deliberate'. The article then uses that logic to conclude that 70% penalties could apply.

As far as I know, there's likely no penalty in the event that MSC applies, as nobody thought their companies were MSCs (and actually I expect we'll find that they weren't MSCs). Does this sound right?

Another quote:

Where a taxpayer was an agency worker in the relevant tax year, or where HMRC considers that IR35 applied in the relevant tax year, HMRC considers the use of an MSC provider to be a deliberate action, knowingly undertaken to avoid paying PAYE, either as an agency worker or under IR35.

Aren't these completely separate parts of the legislation? I thought that either one applies or the other (and MSC has precedence).

[WTFH]

You can't close a company with a Reg 80 outstanding. In short, HMRC will contest and there's a vanishingly small chance it will slip through.

Good point, well made.