Reply to: CK/Boox - How HMRC loses

[cojak]

And following on from the last 3 posts - thread closed.

[Lance]

ok.. Thanks for the replies.
Setting IR35 vs MSC to one side, exactly how does just the MSC legislation apply to what CK were doing?
How does the provision of a portal, or any technology/service that streamlines the administrative burden of the running of a ltdco, helping it to meet it's statutory obligations, equate to the contractor not being in business in his/her own account? The premise is woolly...vague. I have read through a lot of the main CK/Boox thread, and the MSC Legislation sticky, but I still haven't read anything specific that illustrates how the MSC legislation applies in this case.

just to be quite clear on what the law is and how it works....

A parliamentary act is not actually law. It is the will of the parliament and sets out how the legal system (courts and judges) should interpret the facts to determine whether the law has been followed or not.

When a unique case is tried in a court, the outcome of that case becomes case law. That is now as close to actual law as it can get (until another case is tried that is slightly different with a different outcome).
Hence a law can be set by case law, and some years later overturned, without parliamentary involvement.

So parliament can make ambiguous acts, that contradict each other, and leave it to the courts to argue.
Also note that the accuser/prosecutor in a case will choose how to approach a set of laws. You might be caught slam dunk by IR35 as well as MSC, but HMRC may decide to pursue just one of them or both. The court doesn't choose that.

The law is complex and almost any answer regarding the law in these forums is wrong. Just some are more wrong than others.

IANAL (therefore I have written this wrong as well but I reckon it's quite close).

[Fred Bloggs]

I don't think you can hope for more than has already been discussed in that thread. Essentially, you'll need to await the outcome(s) of the tribunal/court process as it unfolds. In the mean time, there are plenty of clues in the CBS judgement about the broadening interpretation/understanding of the legislation.

Indeed. Last thing CUK needs is another thread saying all the same things.

[jamesbrown]

ok.. Thanks for the replies.
Setting IR35 vs MSC to one side, exactly how does just the MSC legislation apply to what CK were doing?
How does the provision of a portal, or any technology/service that streamlines the administrative burden of the running of a ltdco, helping it to meet it's statutory obligations, equate to the contractor not being in business in his/her own account? The premise is woolly...vague. I have read through a lot of the main CK/Boox thread, and the MSC Legislation sticky, but I still haven't read anything specific that illustrates how the MSC legislation applies in this case.

I don't think you can hope for more than has already been discussed in that thread. Essentially, you'll need to await the outcome(s) of the tribunal/court process as it unfolds. In the mean time, there are plenty of clues in the CBS judgement about the broadening interpretation/understanding of the legislation.

[hgllgh]

ok.. Thanks for the replies.
Setting IR35 vs MSC to one side, exactly how does just the MSC legislation apply to what CK were doing?
How does the provision of a portal, or any technology/service that streamlines the administrative burden of the running of a ltdco, helping it to meet it's statutory obligations, equate to the contractor not being in business in his/her own account? The premise is woolly...vague. I have read through a lot of the main CK/Boox thread, and the MSC Legislation sticky, but I still haven't read anything specific that illustrates how the MSC legislation applies in this case.

[jamesbrown]

... but this is my point... whatever they choose define as 'handholding' is superseding IR35 law. If the handholding can be shown to be a service provided by a third party to the ltdco that streamlines the accountancy work needed for that ltdco I can't see how that holds more weight in determining/changing the tax position of the worker.

The order of application within ITEPA is IR35 first and then MSC, but that is tangential to anything about tax vs. employment law, since IR35 and MSC are both within ITEPA, which is tax legislation.

Anyway, there's no conflict here, either between Chapter 8/10 and Chapter 9 or between tax and employment law. The interaction of them is confusing - for example, the case law used w/r to IR35 is largely based on employment case law - but there's no hope for you here, just confusion.

[Fred Bloggs]

ok fair enough... leave it at that I guess. I stand by what I say though... I understand (and agree) that these are separate pieces of law. But I don't agree that one does not supercede the other.... it does for the individual who's tax position is altered as a result doesn't it.

You can believe what you like. You're wrong in your belief. Not that it's going to affect any outcome of MSC investigations.

[hgllgh]

they are seperate.
One does not supercede the other.

ok fair enough... leave it at that I guess. I stand by what I say though... I understand (and agree) that these are separate pieces of law. But I don't agree that one does not supercede the other.... it does for the individual who's tax position is altered as a result doesn't it.

[Lance]

If they are separate things then MSC (tax) law supersedes Employment (IR35) law? If these contractors have been determined legally outside IR35, MSC legislation can still be applied to supersede that legal status and change their tax position. It's effectively a form of 'double jeopardy'.

they are seperate.
One does not supercede the other.

Neither might apply. One of them might apply. Both might apply. depending on the circumstances.

[northernladuk]

It’s not got anything to do with ir35. Ir35 is chapter 8 and 10 of the ITEPA, MSC legislation sits alongside it in Chapter 9.

He doesn't seem to be getting it even though every single answer has made it clear so just for the OP's benefit I'll quote it as again.

It’s not got anything to do with ir35.

[Fred Bloggs]

... but this is my point... whatever they choose define as 'handholding' is superseding IR35 law. If the handholding can be shown to be a service provided by a third party to the ltdco that streamlines the accountancy work needed or that ltdco I can't see how that holds more weight in determining/changing the tax position of the worker.

You're grasping at straws. IR35 has nothing to do with the MSC legislation. There's no silver bullet available.

[eek]

... but this is my point... whatever they choose define as 'handholding' is superseding IR35 law. If the handholding can be shown to be a service provided by a third party to the ltdco that streamlines the accountancy work needed or that ltdco I can't see how that holds more weight in determining/changing the tax position of the worker.

It’s not got anything to do with ir35. Ir35 is chapter 8 and 10 of the ITEPA, MSC legislation sits alongside it in Chapter 9.

[hgllgh]

MSC provider (Boox / CK) doing a lot of handholding you would be an employee because you aren't really running the company yourself.

... but this is my point... whatever they choose define as 'handholding' is superseding IR35 law. If the handholding can be shown to be a service provided by a third party to the ltdco that streamlines the accountancy work needed for that ltdco I can't see how that holds more weight in determining/changing the tax position of the worker.

[hgllgh]

Employment law and tax law are separate things. For example, IR35 is based on a hypothetical contract between the worker and the end client, not an actual contract and whatever it asserts about employment status, although that influences the hypothetical contract.

The MSC legislation is tax law (Chapter 9, ITEPA). Employment status has no bearing on it except as it relates to taxes paid or not paid. When an intermediary is used to pay a worker and that payment leads to less tax than would be the case were they an employee for tax purposes, and there is another person or company facilitating that "avoidance", then the facilitator can be an MSCP and the intermediary an MSC, with consequences for the underpaid tax.

If they are separate things then MSC (tax) law supersedes Employment (IR35) law? If these contractors have been determined legally outside IR35, MSC legislation can still be applied to supersede that legal status and change their tax position. It's effectively a form of 'double jeopardy'.

[eek]

fair point... allow me to rephrase...
"the hypothetical contract between the worker and the end client"

Has nothing to do with the MSC legislation.

The point of the MSC legislation is that were it not for MSC provider (Boox / CK) doing a lot of handholding you would be an employee because you aren't really running the company yourself.