MSC test cases: Feb 2026 spells certainty for Boox/CK contractors

After several years of Boox and Churchill Knight (CK) contractors waiting patiently, there is finally some positive news in the shape of their test cases under the Managed Service Company legislation now being set for February 2026, writes Tyra Ali, tax consultancy manager at Markel Tax.

The MSC enquiry into Boox/Churchill Knight? Participation requires a neck brace

For those contractors reading this who are not accused of being Managed Service Companies relating to their usage of the contractor accountancy firms Churchill Knight (CK) and Boox (owned by The App Accounting Group or AAG), you are on the outside looking in at an HMRC investigation with an extraordinary amount of twists and turns.  

In a sense, that bumpy ride continues despite the February 2026 hearing date for the CK and Boox test cases.

Uncertainty is only the certainty for these ‘MSC contractors’

No one party can give any guarantees (or has been able to give guarantees to date), or provide 100% certainty on what happens next -- procedurally and otherwise.

For example, who foresaw HMRC issuing MSC appeal letters (which I will come to), requesting actual income figures after the tax department had issued assessments?

The light at the end of this potentially only just beginning tunnel is that the outcome from the First-tier Tribunal (FTT) six months from now will leave at least a few thousand contractors certain of their position for the very first time, since this MSC investigation was launched by HMRC in April 2022. 

In HMRC v Boox/AAG and CK, HMRC picked on the few -- to gauge its chance against the many

Since then, the fact that only a few Boox and CK contractors were directly investigated seems to have been mirrored, in oddity and confusion, by HMRC issuing in July Managed Service Company (MSC) appeal letters to only a few contractors.

These MSC appeal letters are part of a so-called “pilot exercise” from HMRC, whereby tax officials write to affected taxpayers, requesting “actual income figures” including salary, expenses, dividends, and pension contributions.

Origin story: Where did these HMRC MSC appeal letters come from?

Back in 2022, HMRC issued the unexpected determinations under the MSC legislation to contractors using figures based on its “best judgement,” following its investigation into Boox and CK, both of which it accused of being Managed Service Company Providers (MSCPs).

At the time, many contractors queried the basis of the figures, covering a period over seven years ago, which HMRC could not provide. Instead, HMRC offered contractors a “deemed calculation” of the figures (to those contractors who requested them) to illustrate, roughly, how much they would be liable to pay should the courts agree that the MSC legislation applied. 

Contractor responses to ‘deemed calculations’ under Managed Service Company rules

Unimpressed, some contractors requested HMRC to carry out an independent review of the facts of their cases and then subsequently appealed to the tribunal when no fact-finding was carried out.

Other contractors provided additional information about their working practices (while they were on the books of CK and Boox/the AAP), and subsequently, some cases were dropped by HMRC.

In other cases, certain years were dropped where it was brought to light that the contractors earned less than 50% of the turnover and could not be deemed a Managed Service Company (MSC). It later transpired that some contractors failed to even appeal the determinations -- despite our recommendation for all Boox/CK contractors to individually appeal -- which created further issues to consider. 

‘Your appeal – please send us your actual income figures’

In a potential attempt to bring order where there had been chaos, HMRC has now issued letters entitled “Your appeal – please send us your actual income figures.”

However, these MSC appeal letters have caused further confusion and concern for contractors, because they came with very little warning, and even less clarity other than HMRC claiming that the income data is needed to revise their calculation of what is (allegedly) owed.  

To specialists like us, and on behalf of contractors in the Revenue’s crosshairs, the fundamental question that arises is:

If HMRC was confident enough to issue determinations three years ago, why is it now asking for the actual financial data?  

Proof that HMRC issues assessments based on assumptions? It’s here…

According to our calculations, the implications here about HMRC are worrying, as it appears clear that the original assessments from the tax authority were based on assumptions, rather than any factual evidence.

For those contractors already under the stress of the appeal proceedings, these MSC appeal letters feel unhelpful and more like retrospective ‘due diligence.’

As mentioned, HMRC has issued these “Please send us your actual income figures” letters to only a small pilot group. And that has created further uncertainty.

HMRC’s selective approach undermines consistency and fairness

While some contractors may feel relieved at not being contacted by the Revenue, others have been left wondering if they have been overlooked, or worse, if they’re next. HMRC’s selective approach undermines consistency and the fairness approach expected in taxation, especially when there are such significant tax liabilities at stake.

The MSC appeal letters request a detailed breakdown of company turnover, ask questions on expense legitimacy and payments to directors or associates.

Contractors were given 4 weeks to find info from over 7 years ago

Contractors were given just four weeks to respond, with HMRC expecting recipients to gather and provide detailed records from over seven years ago. And all under the threat of revised liabilities.

For full context, HMRC has long used estimated assessments to protect its position. However, revisiting MSC determinations mid-appeal to request the actual income data is unprecedented.

In past MSC cases, and IR35 cases too, HMRC has typically relied on available data at the time of assessment and defended its position. But in the Boox and CK cases under the MSC legislation, it seems the fact-finding is happening after HMRC reached its view rather than part of the original investigation.

HMRC’s IR35 assurances aren’t being accepted

One concern when the MSC investigation started was that HMRC may have been collating information under the MSC legislation to later open up IR35 investigations.

HMRC has insisted otherwise -- but that has only increased anxiety for those contractors trying to remain tax compliant. Furthermore, not all contractors seem to accept HMRC’s assurances here.

Received an HMRC MSC appeal letter? Three must-dos

For those contractor-taxpayers who have received these MSC appeal letters from HMRC, our advice is clear:

1. Get your case reviewed;
2. Seek professional advice to ensure all figures are accurate, and;
3. Use the opportunity to reinforce your defence.

As some Boox/CK cases show, substantiated rebuttals can lead to HMRC dropping a case entirely.

But care should be taken.

Non-recipients of HMRC appeal letters ought to avoid doing nothing

If you’re reading this and are not on the outside looking in because you were a Boox/CK contractor, then don’t get complacent while you’re on the sidelines.

In fact, to those contractors who have not received an MSC appeal letter, we say -- use this time to prepare.

Get your MSC position reviewed and understand your exposure.

Finally, questions still outnumber the answers despite February’s certainty

While this pilot exercise might appear as a step towards some resolution, to us it raises more questions than answers about HMRC’s approach under the Managed Service Company legislation. Why now? Why only a few? Why issued just after the Feb 2026 test case date emerged? Until these questions are answered, contractors and advisers alike must remain vigilant because in tax law, the legal process matters just as much as the outcome -- even though it’s the outcome in February that 2,000 contractors and at least two accountancy firms, in particular, are now waiting on.