Member Voluntary Liquidation Costs and Timescale

[Contractormvls]

It may also be worth hedging your bets and instead of taking dividends take the cash during the year as a loan which can be distributed in specie at the end if you proceed with an MVL. If not proceeding then they can be offset by a dividend. This will create a small beneficial loan but the tax benefit of getting the capital treatment at the end should outweigh that.

I would also warn against using an MVL as a regular mechanism to release capital. In the example cited it is fine to consider an MVL after only one year if moving to a staff position, retiring etc but not if you are continuing contracting and intend doing that every year.

[Maslins]

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?

If it's someone who's just started a Ltd Co, I'd suggest an MVL isn't in their mind at all at this stage.

If they/you want to consider tax related things, think about IR35, dividends/salary, if/how much pension. If not overly keen on maximising pension contributions and don't want to take that much in dividends, a war chest will start to build up. A few years down the line an MVL might be an option worth considering.

Sure, you may think it's clever to plan ahead, and to some extent I'd agree, but you never know what's round the corner, either in terms of your own life, or tax changes. MVLs weren't a viable tax solution 3 years ago, chances are they won't be again sometime soon when the next bit of legislation tinkering comes in.

[mvlnoob]

Incidental costs of disposal

can these costs (fee/bond/advertising/witnessing) be included as incidental costs of disposal when the company disposal is declared as part of the contractors self assesment capital gains?

[Scratch It]

can these costs (fee/bond/advertising/witnessing) be included as incidental costs of disposal when the company disposal is declared as part of the contractors self assesment capital gains?

Wowsa, one for your insolvency practitioner I'd say.

[Maslins]

can these costs (fee/bond/advertising/witnessing) be included as incidental costs of disposal when the company disposal is declared as part of the contractors self assesment capital gains?

Check what actually happened.

Typically the above fees would be paid from company funds before any distributions...therefore the distributions will already be net of those costs. In that case independently putting them in as costs would in effect be illegally claiming relief for them twice.

If possibly you paid the costs out of your own pocket then it would be different.

[mvlnoob]

Thank you, yes, it appears they were deducted prior to distribution.