Member Voluntary Liquidation Costs and Timescale

[ChimpMaster]

Disclosure - I own 50% of MVL Online Ltd.

Cost all in (inc VAT) will be more like £1,600-1,800 through us, exact amount depends upon net assets.

Timescale we tend to quote an estimate of 1 month until you get 75% of your funds, then another 2-3 months (ie 3-4 months total) until we have all we need from HMRC to close down and pay out the balance. Unfortunately these timescales are both heavily outside our control, the first depending upon your bank, the second upon HMRC.

<snip>

I typed in haste and should have qualified that the 9 months is to company having been dissolved officially on the Companies House register. The OP had asked for a 'start to finish' timescale.

But to get the funds, yes it is much quicker, especially the 75%.

[Maslins]

I typed in haste and should have qualified that the 9 months is to company having been dissolved officially on the Companies House register. The OP had asked for a 'start to finish' timescale.

True, there's typically another 4-5 months after the final distribution before the company's status changes from "In liquidation" to "dissolved". A final "meeting" (which nobody needs to attend) needs to be held ~5 weeks after the final distribution, details of that submitted to Companies House, then they wait another 3 months before changing the status.

From the company owner's perspective they're typically not that interested in this, as they've already got all their cash.

Cheers ST0001

[swebb]

Thanks for all the replies, they were very useful I've just been chatting with my accountant and he basically agreed with most of the responses. In short he said around 6-8 weeks to get the money out and then a longer time for the company to finally close. Maybe up to 6 months.

He advised about opening a similar company why the process was taking place and for a short time after. I mentioned that if some work did come along that using an umbrella company might be a possibility and he agreed this was an option.

He also mentioned that as I was planning on taking an extended break that it would be a good time to liquidate the company if that is what I wanted to do.

[JB3000]

They made the process straightforward, emails were always answered promptly with detail responses.

I can second this point. However MVL online are not for everyone, for example they did not want any debtors or creditors on the balance sheet.

[Maslins]

I can second this point. However MVL online are not for everyone, for example they did not want any debtors or creditors on the balance sheet.

Yeah it's an affordable option for simple situations only. Typically not a big task for contractor type companies to get themselves ready though, normally just means the director buying any company laptops etc (or scrapping them) and paying final corporation tax/VAT bills early.

[mariof]

Could anyone give an example of voluntary liquidation?

Lets assume it's a simple ltd for an IT developer charging 10k a month + vat. After a year he has 120k + vat at his business account.

What will he get after going to MVL?

[TheCyclingProgrammer]

Could anyone give an example of voluntary liquidation?

Lets assume it's a simple ltd for an IT developer charging 10k a month + vat. After a year he has 120k + vat at his business account.

What will he get after going to MVL?

Does this IT developer have problems with basic maths?

Back of a fag packet calculation, assuming on flat-rate VAT scheme, 14.5% rate, with rounded figures...

* Turnover: £144k
* VAT liability: just under £21k
* Salary up to personal allowance: £10k
* Other expenses, inc. travel, admin, accountancy fees etc. - maybe anywhere from £5-10k, I'll use the upper figure.
* Gross profit: £103k
* Corporation tax: just under £21k
* Net profit: approx. £82k
* Dividends taken up to higher rate, £31k
* Retained profit: £51k
* MVL costs + plus possible accountancy fees in assisting with closing down, final accounts etc.: £2k
* Distributable proceeds: £49k
* Proceeds less CGT allowance: £38k
* CGT @ 10% assuming entrepreneurs relief available: £3.8k
* Proceeds: £45.2k
* Total post-tax income: £45.2k gains + £10k salary + £30k dividends = £85.2k

Obviously if ER is not applicable then the CGT will be higher.

Have I missed anything?

[ASB]

Does the cgt allowance of 10k odd not reduce the charegeable gain??

It would if it was a normal gain.

[jamesbrown]

Does the cgt allowance of 10k odd not reduce the charegeable gain??

It would if it was a normal gain.

Yes, the annual exempt amount applies, currently just shy of 11k.

Edit: worked example here.

[TheCyclingProgrammer]

Does the cgt allowance of 10k odd not reduce the charegeable gain??

It would if it was a normal gain.

Yes, thanks for pointing it out. Updated my post.