Churchill Knight & Boox clients being investigated as Managed Service Companies

[GregRickshaw]

Letters are currently being sent out from Churchill Knight around an HMRC investigation into CK clients being MSC for the year 2017/18 (the last year they can grab right now)

Anyone else in this boat? CK are disputing and fighting the investigation and have created a portal for appeals etc.,

Will try to post more as more information comes to light but all i can say is FFS!!!! it never sodding rains does it?

[eek]

Letters are currently being sent out from Churchill Knight around an HMRC investigation into CK clients being MSC for the year 2017/18 (the last year they can grab right now)

Anyone else in this boat? CK are disputing and fighting the investigation and have created a portal for appeals etc.,

Will try to post more as more information comes to light but all i can say is FFS!!!! it never sodding rains does it?

Were you using them as an umbrella or as accountants for your limited company?

[Fred Bloggs]

It was always on the cards, nobody should be surprised. Those of us who have been around the block a few times will remember the composite company providers who overnight became accountancy practises. The only thing that surprises me is how long it's taken to happen.

[malvolio]

Yes possibly not a surprise, though still a shock. What will be intriguing though is the next stage, I suspect an IR35 determination of PSC during those periods. I am confident of any of my determinations being way outside of IR35 but simply no way of telling what rules 'they' may interpret.

Doubt that Chapter 8 IR35 will apply. However it may well be worse than that. Since they long ago (2006 I believe) outlawed using a shadow company to run your affairs without you needing to make any input (other than the money...) to take advantage of corporate taxation options (which is all an MSC was) they may well decide the arrangement was a sham and treat all such income as taxable. So interest and possibly penalties will apply.

[malvolio]

Ok not sure the latter applies in this case then as CK never managed my income, they stopped doing any income management around 2012, which is later than 2006 but probably as part of the law change you mention.

There was a time when they (CK) advised on how much to pay dividends/salary etc., sent out advice statements but that came to an abrupt end around 2012 and they changed the model to 'you take care of your own money'.

So for over 10 years all they (CK) did was file company returns, VAT returns and had a paid SA service, everything else invoicing/expenses etc., was left to us.

I just really wondered if this was going on elsewhere or just CK really.

OK, you may be right. I wouldn't bet the house on it personally; GAAR may be applied and I wouldn't trust HMRC to get it right anyway...

Can't remember the precise dates, but MSCs were outlawed fairly early on, with a provision in the legislation that previous arrangements would be able to be investigated after the enactment date. If you had drawn any income based purely on their advice (including regular dividend payments) there may still be an issue.

Early days of course, we will have to wait and see how this pans out.

[northernladuk]

Is this a case where old heads will have pointed it out back in the day and warned about what is to come and Ensignia posts saying the 'usual' lot being all doom and gloom again?

[eek]

I've paused to think about this thread twice now and both times I come back to the same thought.

HMRC seems to have got the idea that any accountant that is providing a self built portal to manage accountants affairs is running things as an MSC.

Now the idea is utterly insane (because the fix when MSCs disappeared was to stop offering advice) but it's easy to see how HMRC have got an idea into their head and are running with it.

My advice would be use an accountant who uses FreeAgent and for any accountants reading this (InnoAccounts I'm thinking of you) you should save yourself your developer costs and do the same..

[Fred Bloggs]

Amazed it took this long. Quite a few companies were taking the pi55 with what amounted to sham incorporation. Some of the companies, one in particular, running composite companies basically publicly made fun of HMRC, daring them to act. Which of course they eventually did with the MSC legislation. Many of us back then thought it about time something was done about it. I daren't mention the name of the one very prominent company that single handedly brought it all about by pi55 taking.

[northernladuk]

Sadly if the advice was indeed given back in 2006 that was quite a bit before my contracting career started, so little use to us all now.

Sorry Greg, it was a bit flippant of me. We've a poster called Ensignia that pops up on the threads where we discuss potential impacts if people are flirting close to the line with IR35, amongst other topics, and when we point out what could happen and he always has a go at us all saying we are doom and gloom merchants and it will never happen etc.

[ChurchillKnight]

Churchill Knight & Associates Ltd believe HMRC has made a mistake, and MSC legislation does not apply. Working closely with specialist lawyers, we have submitted a thorough technical response to HMRC explaining why we believe they have misinterpreted the legislation.

We're actively working with our impacted clients to help them appeal against HMRC's initial determination and have built an informative portal to assist them throughout the appeals process. We will continue to fully support them throughout this investigation.

If any Churchill Knight & Associates Ltd clients require any information, please use the portal to contact us, and we will get back to you shortly.