Members Voluntary Liquidation questions

**Revslfc** · 4 March 2015, 00:47

Apart from the liquidators fees which are usually pretty high it would be the best bet with such an amount of capital in your business. Also as its a voluntary liquidation it won't effect your personal financial position and won't effect your ability to apply for credit. Hope that helped!

**Forbes Young** · 4 March 2015, 09:30

We've never experienced a downside, why don't you call MVL online and discuss it with them or your Accountant?

**Maslins** · 4 March 2015, 10:04

Originally posted by hillbilly78 View Post

I'm about to take a permanent job after almost 3 years contracting. I'm looking at my options on what to do with my Ltd company (over 50k retained profits) am considering the Members Voluntary Liquidation option.

Are there any downsides I should consider with MVL?

Particularly around personal credit rating / future mortgage applications / opening a LTD company again in the furure and contracting?

We're not aware of any personal credit issues...whilst any liquidation will be public record, MVLs are clearly marked as such, so anyone in the know will be aware the company left no debts unpaid.

Downsides? Well even at MVL Online's relatively low prices it'll cost you something like £1,500-£1,800 all in (inc VAT & disbursements). When comparing that to the typical tax saving CGT vs dividends it still tends to be worthwhile though. Do double check you'll qualify for entrepreneurs relief though, as if you don't the tax savings are much less significant.

You mention "opening a LTD company again in the furure and contracting" - I'm guessing this is just a hypothetical for further down the line? If not and you're actively planning this already, be aware you could come unstuck with the transactions in securities legislation.

**hillbilly78** · 4 March 2015, 10:20

Thanks for the responses

Just to clarify, the 'opening a LTD company again' question is indeed hypothetical as I have no future contracting plans.

**northernladuk** · 4 March 2015, 11:03

Originally posted by Maslins View Post

You mention "opening a LTD company again in the furure and contracting" - I'm guessing this is just a hypothetical for further down the line? If not and you're actively planning this already, be aware you could come unstuck with the transactions in securities legislation.

Interesting one this. I shut my company down as soon as I finished a gig and was going to take 3 months off. I spoke to two accountants about this as well as my own as I wanted to be super clean. They asked me if I was 100% sure I would go contracting again and my honest answer was probably but not 100% sure. If anything else not contracting came up that was better I would consider it. I was told by all three that this was enough justification and would be defendable. I also had some discussion regarding a perm job in that time which also backed this up so no problem. I ended up going contracting again of course but still I believe I was justified.

What's your thoughts on that Maslins?

I did sit opposite a contractor that shut their company down every two years on the dot regardless of contract situation and checking companies house they obviously had a long list of directorships. This is wholly wrong I know but it's done more than I first thought.

**Maslins** · 4 March 2015, 11:39

Originally posted by northernladuk View Post

Interesting one this. I shut my company down as soon as I finished a gig and was going to take 3 months off. I spoke to two accountants about this as well as my own as I wanted to be super clean. They asked me if I was 100% sure I would go contracting again and my honest answer was probably but not 100% sure. If anything else not contracting came up that was better I would consider it. I was told by all three that this was enough justification and would be defendable. I also had some discussion regarding a perm job in that time which also backed this up so no problem. I ended up going contracting again of course but still I believe I was justified.

What's your thoughts on that Maslins?

I did sit opposite a contractor that shut their company down every two years on the dot regardless of contract situation and checking companies house they obviously had a long list of directorships. This is wholly wrong I know but it's done more than I first thought.

There was a fairly long thread on CUK perhaps 6 months ago with quite a few accountants saying what their stance was re this. Problem is there's no case law and the legislation is very vague, so until that changes it really is just people's opinions.

I personally am pretty relaxed about it. We've never come across someone being challenged under the transactions in securities rules...but obv that doesn't mean it'll never happen. HMRC give an example on their site here of something that would be caught...and to my mind that's some way from a contractor who ceases, liquidates, then perhaps starts up again 3 months later with new business name, new client(s), new equipment etc.

**Craig at Nixon Williams** · 4 March 2015, 11:51

Here is the thread to the discussion mentioned: http://forums.contractoruk.com/accou...too-risky.html

It's a long thread but there's quite a range of views on there to form an opinion from.

**TheCyclingProgrammer** · 4 March 2015, 12:38

IIRC from our previous discussion, I raised the point that you can't completely rely on HMRC guidance for this as they have not been updated to account for the more recent changes in legislation.

Notably, the counteraction provisions can only apply if HMRC can show that the main motivation for any TIS was to gain a tax advantage (not merely that a tax advantage was gained). In other words, if you're shutting down your company with the intention of starting up again in order to gain a tax advantage, it would probably be caught. If you're shutting down your company for some other genuine reason (like starting a permanent job) then it should not be caught by the latest rules.

On that basis, even if you were to return to contracting again in the future and start a new company, the argument of whether or not its a continuation of your previous trade is a moot point.

As ever, the main issue here is that there is no 100% definitive answer because this hasn't really been tested. So its a judgement call. On balance, I personally think the risk is minimal if you have a genuine commercial reason to close down your company and not a tax-motivated reason. After all, nobody can ever say for certain what they may or may not do in the future - its about your intentions at the time.

The fact that some people regularly close down and start up new companies (often referred to as "phoenixing") purely to gain a tax advantage and seem to get away with it just demonstrates, IMO, that this kind of behaviour isn't really on HMRCs radar...for now. Which is even more reason not to worry about it if you have genuine reasons, but I suspect those who regularly phoenix might be skating on thin ice if HMRC ever decide to pursue this behaviour more aggressively.

**northernladuk** · 4 March 2015, 13:00

Originally posted by Craig at Nixon Williams View Post

Here is the thread to the discussion mentioned: http://forums.contractoruk.com/accou...too-risky.html

It's a long thread but there's quite a range of views on there to form an opinion from.

Craig!! Where the devil have you been???

Members Voluntary Liquidation questions