New support platform launched to help contractors impacted by HMRC’s MSC investigations

Last year, HMRC opened a series of MSC investigations into the clients of some of the UK’s leading contractor accountants.

Despite being introduced with effect from the 6th of April 2007, HMRC has rarely acted upon the Managed Service Company (MSC) legislation.

HMRC launches MSC probes after years of silence

As a result, HMRC’s investigations into the affairs of several contractor accountancy firms, and their clients, took the entire sector by surprise.

Thousands of contractors have received Regulation 80 notices for PAYE and Section 8 notices for National Insurance (2017/18, 2018/19 and 2019/20 tax years) demanding significant payments.

One of the highest-profile contractor accountants targeted by HMRC is Churchill Knight & Associates Ltd – an accountant with over 25 years of experience in providing specialist contractor accountancy and payroll services.

HMRC is investigating Churchill Knight’s clients for the 2017/18, 2018/19 and 2019/20 tax years having labelled Churchill Knight a Managed Service Company Provider (MSCP).

If these clients are considered Managed Services Companies once the investigation reaches its conclusion, they will face significant bills for unpaid taxes and National Insurance Contributions.

From the moment Churchill Knight found out about HMRC’s MSC investigation, they have strongly denied any wrongdoing and have provided comprehensive support to all their impacted clients. In an official response to the investigation, Tom Edwards, a Director at Churchill Knight, said:

We believe that HMRC has entirely misinterpreted the MSC legislation, and we strongly deny being involved with our accountancy clients as a Managed Service Company Provider. Throughout this investigation, we’re offering around the clock support to our impacted clients.

Everyone at Churchill Knight is shocked about this investigation, but I don’t feel like it’s an attack on us. It’s an attack on the industry and on contractors who operate their own limited company.

It’s apparent that many contractors have been left alone, unsupported and rightfully worried about what lies ahead.

However, Churchill Knight has developed an MSC Support Platform to help those who have been deserted.

The online platform contains a variety of helpful information, including updates on the MSC investigation, next steps, FAQs, a forum and a dedicated support channel where users can contact Churchill Knight whenever they want.

At IT Contracting, we asked John Payne, founder and a partner at Churchill Knight, a short series of questions about the new MSC Support Platform and the status of the current investigation:

Please keep reading for the Q&A, which follows below.

What is the current situation with HMRC’s MSC investigation?

Our clients have appealed against notices received for the 2017/18, 2018/19 and 2019/20 tax years, and we are awaiting information from HMRC about the first tier tribunal that is set to take place next year. We have put forward test cases that we believe would be an appropriate representation of the range of services and decisions made by clients to be able to test all elements of the legislation that has been challenged. As things stand, we are awaiting feedback and further instructions from HMRC. As HMRC are still reviewing the test cases, they have asked for an extension of the deadline for the application to tribunal. Meanwhile, Osborne Clarke, a top London law firm, is working hard in the background to defend this group action case.

Have any Churchill Knight clients been removed from the MSC investigation since it commenced?

Since the investigation first came to light, we have been providing comprehensive support to our clients, helping them understand HMRC’s investigation, MSC legislation and how to appeal against notices and prepare them for what lies ahead. I am delighted that we have successfully had clients removed from this investigation on the back of hard work and the updates we have posted on the platform built for clients. For example, we have helped some clients challenge HMRC regarding Section 61B(1) (a) and 61B(1) (b) ITEPA 2003, and more information is available to members of the MSC Support Platform.

I am confident that the MSC Support Platform will provide invaluable information for those who, until now, have been left alone to face these difficult times.

What is the MSC Support Platform?

To put it simply, the MSC Support Platform is a combination of helpful resources to help anyone impacted by HMRC and Managed Service Company legislation. Churchill Knight has built a similar system for our impacted clients and the general feedback has been extremely positive. Therefore, we thought it would be an excellent idea to create a similar platform for those who have been essentially deserted during these challenging times.

Who can join the MSC Support Platform?

The MSC Support Platform has been built with contractors in mind. We wanted to create a platform full of helpful information to support limited company directors who will almost certainly have dozens of unanswered questions about MSC legislation and HMRC’s legislation. However, the platform is open to anyone who wants to keep tabs on the latest developments and understand more about the timeline of this investigation.

I especially want to reach out to the clients of Boox, as sadly, their accountancy practice has ceased operations on the back of HMRC’s MSC investigation (source: https://www.boox.co.uk/).

What is included in the MSC Support Platform?

Understandably, contractors who have not been supported during the MSC investigation will have plenty of valid questions about the investigation, such as how to appeal and the next steps. Therefore, a dedicated contact channel is one of the most valuable features of the MSC Support Platform. Members can contact the Churchill Knight team as often as they like, and we’ll do our best to reply within 48 hours. The MSC Support Platform also contains dozens of FAQs that cover several vital topics, including MSC legislation (general information), the investigation, appealing, next steps, previous HMRC investigations (such as Costelloe), and more.

The platform includes a history of updates that we have provided our clients about the progress of the investigation. These will be extremely helpful for contractors who have not received the support they should have during this difficult time. These updates will make it easy to understand what has happened during the investigation so far. We will also provide ongoing updates to MSC Support Platform members as the investigation progresses.

The platform also features a private forum where members can interact with each other and discuss all things related to the MSC investigation. Churchill Knight will also interact via the forum. The forum’s success will depend on the number of contractors who join the platform. Still, I am confident many will see the value of joining the online community and having the opportunity to interact with contractors in a similar position.

Finally, there is a lot of information on important legislation, including Section 61B(1) (a) and 61B(1) (b) ITEPA 2003. As I mentioned in an earlier question, we have successfully helped contractors get removed from the MSC investigation on the back of challenging Section 61B(1) (a) and 61B(1) (b) ITEPA 2003. Therefore, this information and our ongoing support will be highly beneficial.

We will provide ongoing updates to the platform and take all feedback on board. The FAQs will be updated frequently, new updates will be posted as developments occur, and messages will be replied to quickly.

How much is the MSC Support Platform?

The MSC Support Platform is available for £700 + VAT. This is a one-off cost with no reoccurring subscriptions or fees. A significant amount of work has gone into building the MSC Support Platform and continued investment is required to ensure that it provides members with value for money throughout the entirety of HMRC’s investigation.

Who is behind the MSC Support Platform?

The MSC Support Platform will be managed by several Churchill Knight team members, including accountants, members of the Operations Department and Marketing. Therefore, any members who have questions can be assured that they will be answered by the best Churchill Knight department. For example, if a platform member has a question about HMRC correspondence and legal aspects of the investigation, the Operations Department will happily answer these. Alternatively, if a member wants to ask a technical question about the platform (perhaps a bug has come to light), this will be handled by the Marketing and Development Teams who will ensure the problem is fixed quickly.

If you are a contractor who has been impacted by MSC legislation and you would like to find out more about Churchill Knight’s MSC Support Platform, please click here. The platform is now live and you can register today.