Churchill Knight & Boox clients being investigated as Managed Service Companies

[geekergosum]

This is very strange to me, especially the Pay now or CCJ. Sign away rights? Is the stayed letters/solution HMRC came up with so HMRC could effectively waive the 6 year rule?

That was the letter, the one where they basically said "oops we took too long so we need to either have you waive the 6 year rule or pay us right now...and if you can't we'll go the CCJ route.

Do you mind telling us when you got this letter.?

This latest letter, Saturday 30th May (dated 28th May).

Seems quite strange these are coming now unless you appealed via your own route or even had an independent review. The benefits of going with lawyers and people who know what they are doing, they will prompt you the answers to give (the correct ones) in these type of cases so you don't throw yourself even deeper in the hole you are in.

I used the draft that requested it be held pending the full investigation. I've never asked for an independent review, because all I can see is Admiral Ackbar screaming at me.

It's total plausible HMRC are trying to determine whether you are actually liable, there are many reasons why you can't be a MSC (50/50 rule, more than one person band etc..) but I suspect they are just asking for figures as they always do because, in your case, they don't know.

I've previously provided them with the documents that show:

• My business was setup pre-Boox
• My business account was setup pre-Boox
• The amounts I took as dividends were not the calculated amounts from Boox but my own figures (the only reason I used Boox's calculations was to make sure I paid the correct amount of tax, because you know HMRC wanted to have digital tax - the irony!)
• Did I pay them, yes. Because my understanding is that you pay for a service and I used them for convenience and to make sure I paid tax. When I ceased being a contractor and went back PAYE (because of this stress - so HMRC win!) I stopped paying them when I had no need for them.

Get help as soon as possible.

I agree on the glacial pace

I shall.

[phonic22]

I just today received the same letter today.

The case ref and personal ref are not the same as all other correspondence so likely there has been a **** up on their side?

[woody1]

I just today received the same letter today.

The case ref and personal ref are not the same as all other correspondence so likely there has been a **** up on their side?

Yes, might even be someone else's refs. Wouldn't be the first time they'd cocked up a mail merge.

[phonic22]

Yeah it’s got to be that given the standstill agreements that are now in place u til test cases are heard

[ritwolf]

Or it could be something else:

- Boox is now down, not serving customers
- I'm not sure if old customers can access their accounts in the Boox app
- If affected clients can't access their accounts, they may not be able to provide the information HMRC is demanding
- HMRC can use this as a point: without access to Boox app, customers don't know their accounts

Is this a something they'd use for their case?

[Lotok]

Or it could be something else:

- Boox is now down, not serving customers
- I'm not sure if old customers can access their accounts in the Boox app
- If affected clients can't access their accounts, they may not be able to provide the information HMRC is demanding
- HMRC can use this as a point: without access to Boox app, customers don't know their accounts

Is this a something they'd use for their case?

Nah when Boox was moving from their own software to Xero, I didnt want to use Xero so was closing my account with them. That was right before this all kicked off. Anyway, They gave me downloads of all my data before I left. I would imagine others got the same. So we were never tied to their software.

[geekergosum]

I have my response from the lovely people at HMRC.

Firstly, I acknowledge that you have said in your email of 1 June 2025 about the impact that the enquiry is having. Although HMRC have a legal duty to collect the correct taxes, it is not our intention to cause any distress.

If there is anything about your health or personal circumstances that may make it difficult for you to deal with this matter, please contact us atesimscteam@hmrc.gov.uk so that we may help you in the most appropriate way and put in place any reasonable adjustments to support you.  I’ve included the following link with information on extra support that’s available.

I'm sure they said that to the people involved in the loan charge scheme as well:
https://hansard.parliament.uk/Common...3E0/LoanCharge

Clarification on Information Request and Calculations
The Tax determinations and National Insurance Contributions decision were calculated using ‘best judgement’ on information that HMRC held at the time.

The letter you received dated 28 May 2025 is a request for information to now calculate the liabilities based on actual information provided by [My PSC].

For the calculations using the actual figures provided, the tax and NIC liabilities are based off the Deemed Employment Payment (DEP), which utilises the sum of the payments received by you from [My PSC] not already paid as salary e.g dividends and reimbursed expenses, within each tax year under enquiry.

The requested figures will also allow us to check if the legislation at S61B(1)(b) and S61B(1)(c) is met based on your information.

Based on their last line I assume this is so they can try and calculate the 50% level. As this was the sole way of earning money I did pay myself in full (I have bills to pay and was on low hundreds per day).

Overpayment Relief

Any PAYE & NIC that was paid by you in relation to the engagement with [My PSC] would be taken into account for the calculations.

For Corporation tax and Dividend tax, there may be potential overpayment relief which the company can claim.

We’ve not received any overpayment relief claims yet from you, but you can send these to us at esimscteam@hmrc.gov.uk and we’ll hold these on file. I’ve attached further information on making overpayment relief claims.

But they did...and I love the "potential"...but more on that:

With regards to when overpayment relief, if due, would be taken into account, please note that double taxation can’t exist until the liabilities are final i.e the case is settled.

For clarity, this means the liabilities and associated interest amounts are raised before overpayment relief amounts are taken into account.

In relation to the information request/liability calculations stated above, we can provide an estimate of potential reliefs due and provide an illustrative ‘net position’, which takes into account the relief amounts.

Please note that VAT is not taken into account for relief purposes.

You can't be double taxed until you pay double tax. But we can't tell if you will be double taxed until we tax you double...and then...then you can 'potentially' claim for double taxation.

Turnover Amount

For the purposes of the legislation at S61B(1)(b), VAT amounts are included in the turnover figures.

And I guess that PAYE and NIC are based on Inc Vat, because I can be both a business and not a business at the same time.

Expenses Information Request
In order to recalculate the Deemed Employment Payment and tax and NICs due based on your actual figures, we would need to consider if expenses reimbursed to the worker are deductible from the DEP.
An expense met by the worker is deductible from the DEP if it could have been claimed as expenses against income tax if the worker had been an employee of the client and had paid for the expenses themself.

So basically HMRC want to invalidate all expenses?

Company Records
With regards to company regards, we advise that it is your responsibility to ensure that you hold your records for your company for 6 years from the end of the last financial year they relate to – or longer if HMRC has started a compliance check into your company tax return.

You can find this information at the following link on Gov.UK
https://www.gov.uk/running-a-limited...unting-records

The link talks about compliance checks...but isn't this a check. This was a Determination as a check is defined by their page as:

Enquiry Query

Due to data protection, we can only discuss the case in relation to [My PSC].

So if this is about My PSC...why am I being asked for details...I have a stand over agreement.

It feels like. they are definitely trying to push the pay NIC and PAYE now or else angle. Which I can't pay, so I guess it's either bankruptcy or make my family homeless.

[GregRickshaw]

Thanks geekergosum for a detailed breakdown.

Does anyone else get a feeling Hector is on a phishing trip and this one may actually benefit us?

I wonder if they are trying 'to be arsed' whether to bother with this case? Such a strange gathering of data so 'late' in the day. I used to think they were sharpening knives (actually I still do think that mainly) but I am beginning to think this may be a 'how many cases can we actually win' trip now.

Sure they want the legislation sharpening up but they have already achieved their main objective of driving contractors inside or even PAYE.

Is there a little bit of light at the end of a very long dark tunnel, maybe it's an approaching freight train going to mow us down but something is off here and possibly in a good way?

[woody1]

Jeez, what a can of worms.

I'm not sure I'd trust them to calculate any of that correctly.

[geekergosum]

Thanks geekergosum for a detailed breakdown.

Does anyone else get a feeling Hector is on a phishing trip and this one may actually benefit us?

I wonder if they are trying 'to be arsed' whether to bother with this case? Such a strange gathering of data so 'late' in the day. I used to think they were sharpening knives (actually I still do think that mainly) but I am beginning to think this may be a 'how many cases can we actually win' trip now.

Sure they want the legislation sharpening up but they have already achieved their main objective of driving contractors inside or even PAYE.

Is there a little bit of light at the end of a very long dark tunnel, maybe it's an approaching freight train going to mow us down but something is off here and possibly in a good way?

So it's not just me thinking this is very odd?

Because I am completely baffled by what they are asking for.

Plus I have sent multiple communication about overpayment relief from the start...because I didn't want to run into their "You get 4 years we get eternity" rules.

I've stopped reading tax codes and on to the Kafka (love you can't be double taxed until be double tax you - and then never return your money)

And calculating turnover on VAT...is this tax on tax?