Setting the record straight on Boox Vs HMRC, by The App Accounting Group’s Chris Clark

We have been made aware of rumours and concerns in contractor forums regarding The App Accounting Group Ltd’s (TAAG) currently ongoing dispute with HMRC that TAAG is a Managed Service Company Provider, writes TAAG director Christopher Clark, on behalf of Boox.

Who we are and what our business does

Firstly a bit about TAAG, if I may. The group is a multi-disciplinary chartered accountancy practice, providing a range of accounting and taxation services to SMEs and individuals.

TAAG is regulated by the Institute of Chartered Accountant in England & Wales for the provision of these services and is regularly reviewed for compliance with its various codes and conduct regulations.

Baffled

Given this context, we remain confused -- baffled even -- why HMRC has reached the conclusions it has, and believe that our clients have been incorrectly targeted by HMRC.

We have found numerous areas where we believe HMRC has not applied the legislation correctly, and they are highlighted by the following facts:

• A £90million in turnover business paying significant amounts of PAYE and NI to its employee base of over 2,000 staff, receiving a determination from HMRC for over £34million for the 2017/18 tax year.
• A £10million in turnover payroll business paying significant amounts of PAYE and NI receiving a determination from HMRC for over £4million for the 2017/18 tax year.
• Property rentals businesses which rent out commercial property receiving determinations for the 2017/18 tax year.
• Numerous SMEs that do not provide personal service receiving a determination for the 17/18 tax year.

While the SME clients have raised appeals and have the determinations stood over, we maintain that there remains a clear misunderstanding of our business by HMRC which has caused significant damage to our brands and goodwill in the business.

What the taxman told the FCSA

Interestingly, HMRC presented to the FCSA in August 2022 on the MSC legislation, and stated that the following is not an MSCP:

• A firm of accountants carrying on a business of being accountants (irrespective of the percentage of the client base which is individuals operating through service companies)

Well, TAAG clearly meets this definition, and that’s even though HMRC has continued to pursue its actions against our clients.

TAAG has a number of brands and Boox was one of those trading brands.

Three key clarifications

We have been made aware of various comments that, intentionally or not, are having the effect of confusing the facts around Boox. And so we would like to clarify:

1. It is correct that Boox Limited, which as Companies House shows was a subsidiary of TAAG, has now been dissolved. The Boox business had no clients and was purely to protect the ‘Boox’ brand name.
2. TAAG did transfer the remaining contractor clients to an independent third-party accountant, Limelight Accountancy.
3. HMRC’s actions placed considerable strain on our resources and undue pressure on our staff.
   • This has resulted in senior staff leaving the business due to the effect it has had on their mental well-being;
   • We have been unable to recruit replacement team members;
   • We were unable to maintain appropriate service levels to deal with current clients ongoing requirements, as well as the increase interactions with previous clients being targeted by HMRC,

As a result, it did not seem appropriate to continue to serve these clients as Boox, with such uncertainty around the tax treatment of their income.

We have highlighted above that many of our clients targeted by HMRC are not even PSCs and therefore can’t be caught by the MSC legislation.

What about contractor limited companies who used Boox?

For those clients who are PSCs targeted by HMRC, the key advice we would give is:

• Ensure you respond to any communication from HMRC regarding Regulation 80 or 8 notices within the stated timeframes (30 days from the HMRC letter date), i.e. to appeal the determination.
• Consider appointing an adviser to assist you through this process. We have provided some suggested contacts on our blog.
• We remain in contact with HMRC’s case officers and technical team and have sought to obtain their evidence supporting their decision. We have received this in part and await their full evidence before we can respond appropriately.
• We have been collating a substantial amount of evidence that proves we are not a MSCP; that our clients were in complete control of their companies. We further believe the evidence demonstrates that the PSCs made all their decisions independently, utilising us only as their accountants (as many of our other clients not caught by this legislation do).

Editor's Note: This article is an updated version of the original.