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Accountant Pre Liquidation Closure Fee

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    Accountant Pre Liquidation Closure Fee

    Good Morning

    Interested to hear about anyone else experience of this. I wrote to my accountant about closing MyCo and I've been quoted a closure fee of £695+VAT which I queried as other than closing down PAYE and VAT schemes I do not see what extra work is required of them since I pay them a monthly fee to prepare my CT returns and so on anyway.

    The response back was "Your final liquidation accounts need to be completed of which there is more work involved than a standard set of accounts."

    Is there something I'm missing here?

    #2
    Plenty of useful threads discussing this on the boards.

    Try the google search method by typing something like the following in google. Try changing the keywords a bit if you can't find what you are looking for. They are definitely there. Might find some other useful information while you are reading as well.

    close company charge site:forums.contractoruk.com

    close company charge site:forums.contractoruk.com - Google Search
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Originally posted by kookachoo View Post
      Is there something I'm missing here?
      Not really. There will be a trivial amount of extra work, like you suggest VAT/PAYE de-registrations, and perhaps a small amount of discussion re balance sheet tidy up, how/when to best take final funds. I'd anticipate if you've been with an accounting firm a while, most would do those for no extra fee...but an additional fee of (say) £100-200+VAT wouldn't seem unreasonable.

      You'll see many of the big firms harp on about how they'll incorporate/register your company for VAT/PAYE etc for free. Anything that's done at the outset, when you're choosing who to go with. A shame they have a very different view on tasks at the end of a company's life when you're already tied.

      Legally I'd anticipate the accountancy firm is doing nothing wrong. There are some tasks that aren't part of the agreed work for agreed monthly fee. So even if the extra work is trivial, I'm sure their terms will allow them to charge extra. Sadly it seems some firms now see this as a great opportunity to milk clients. As more demonstration of how unethical it is, some will waive this closing fee if you go with their preferred liquidator. Reason being their preferred liquidator will be giving them a hefty kick back from the liquidation fee (which will no doubt be higher than other firms offering similar liquidations, due at least in part to having to pay this big commission to the accountant).

      The unfortunate reality is you're in a weak position. It's unlikely a new accountant would be keen to take you on just to do these final tasks given all the admin hassle/checks involved in client take on. You attempting to DIY them could be a false economy if you make a hash of it.

      I'm nervous this could become a growing problem. It's basically an exit/leaving fee. Normally I'm not a fan of naming and shaming, but part of me wonders if it may be the only way this "problem" can be resolved over time. Ie on the basis potentially those looking for an accountant will read horror stories about how expensive it is to leave certain accountants, hence avoid signing up with them in the first place. Maybe that might lead the firms in question to decide it's a false economy to sting clients with extra fees this way.

      Comment


        #4
        Originally posted by kookachoo View Post
        Good Morning

        Interested to hear about anyone else experience of this. I wrote to my accountant about closing MyCo and I've been quoted a closure fee of £695+VAT which I queried as other than closing down PAYE and VAT schemes I do not see what extra work is required of them since I pay them a monthly fee to prepare my CT returns and so on anyway.

        The response back was "Your final liquidation accounts need to be completed of which there is more work involved than a standard set of accounts."

        Is there something I'm missing here?
        How many months through the year are you? The monthly fee is really an annual fee in 12 installments, with a lot of the work at the end of the year. If you are near the start of the year, the fee seems reasonable. If very near, or at the end, it seems excessive.

        Comment


          #5
          Thanks Maslins... hopefully will be engaging you soon!

          I'm extending the company year end from January to June and have continued to pay monthly whilst starting perm role.

          I agree with your sentiments Maslins... it seems very much the way. They have been in touch since this post and reduced the quoted fee down to £250+VAT for the 'extra' work required and I'll speak to them later.

          One for people to definitely challenge if you find yourself in the same boat.

          Comment


            #6
            Originally posted by kookachoo View Post
            I agree with your sentiments Maslins... it seems very much the way. They have been in touch since this post and reduced the quoted fee down to £250+VAT for the 'extra' work required and I'll speak to them later.
            That sounds a pretty good result TBH. It's a big reduction, that they didn't have to offer. Certainly in your shoes I wouldn't recommend either DIYing or trying to get another accountant involved at this late stage.

            Comment


              #7
              Originally posted by Maslins View Post
              Not really. There will be a trivial amount of extra work, like you suggest VAT/PAYE de-registrations, and perhaps a small amount of discussion re balance sheet tidy up, how/when to best take final funds. I'd anticipate if you've been with an accounting firm a while, most would do those for no extra fee...but an additional fee of (say) £100-200+VAT wouldn't seem unreasonable.

              You'll see many of the big firms harp on about how they'll incorporate/register your company for VAT/PAYE etc for free. Anything that's done at the outset, when you're choosing who to go with. A shame they have a very different view on tasks at the end of a company's life when you're already tied.

              Legally I'd anticipate the accountancy firm is doing nothing wrong. There are some tasks that aren't part of the agreed work for agreed monthly fee. So even if the extra work is trivial, I'm sure their terms will allow them to charge extra. Sadly it seems some firms now see this as a great opportunity to milk clients. As more demonstration of how unethical it is, some will waive this closing fee if you go with their preferred liquidator. Reason being their preferred liquidator will be giving them a hefty kick back from the liquidation fee (which will no doubt be higher than other firms offering similar liquidations, due at least in part to having to pay this big commission to the accountant).

              The unfortunate reality is you're in a weak position. It's unlikely a new accountant would be keen to take you on just to do these final tasks given all the admin hassle/checks involved in client take on. You attempting to DIY them could be a false economy if you make a hash of it.

              I'm nervous this could become a growing problem. It's basically an exit/leaving fee. Normally I'm not a fan of naming and shaming, but part of me wonders if it may be the only way this "problem" can be resolved over time. Ie on the basis potentially those looking for an accountant will read horror stories about how expensive it is to leave certain accountants, hence avoid signing up with them in the first place. Maybe that might lead the firms in question to decide it's a false economy to sting clients with extra fees this way.
              As always, I agree with you - although this time only to an extent.

              What about a charge for tax planning involved at closure? You mention there is 'trivial' extra work, but a lot of the time our clients like bespoke tax planning advice in terms of looking at the reserves left, looking at pension contributions, dividends, bonuses and using their spouse where possible.

              All of this work justifies an additional fee in my opinion. Different story of course if its just close, no thinking, MVL.

              Comment


                #8
                Originally posted by craigy1874 View Post
                What about a charge for tax planning involved at closure? You mention there is 'trivial' extra work, but a lot of the time our clients like bespoke tax planning advice in terms of looking at the reserves left, looking at pension contributions, dividends, bonuses and using their spouse where possible.

                All of this work justifies an additional fee in my opinion. Different story of course if its just close, no thinking, MVL.
                Hmmm...yes it's an extra discussion to be had, but negligibly different to what accountants would expect to do, for no extra fee, around the time of incorporation. Ie salary/dividend/pension conversations, as well as a spouse's possible involvement, would be something most contractor accountants would be happy to discuss as part of their normal fee. Personally I don't see this as significantly different.

                Comment


                  #9
                  There is a stricter process involved to ensure everything is done in the correct order and the relevant authorities informed at the appropriate times. We've heard very recently one poster losing over £3k to the crown because the closure process wasn't followed and completed correctly. It's not unreasonable to charge a separate fee for this work. From a commercial point of view, a separate terms of engagement should be issued and agreed as the work does differ from the usual monthly service that you've signed terms of engagement with. There's limited liability to consider from the accountant's perspective too. Agreed with the previous posters that there is additional advice to be give in terms of strategic tax planning. Some cases are easier than others depending on their personal income from other sources.

                  IMO, I would charge a separate fee for the closure of a company if it's not going down the MVL route. Wrt to the fee you've been quoted, it's down to the professional tbh. Some charge more, some charge less. What you've batted them down to is very reasonable. If it was me, I'd have stop the monthly fee and charge the closure fee as a final one off. The whole closure process could take up to and over 6 months so it should be appreciated than there are certain controls that need to be monitored throughout.

                  Comment


                    #10
                    Closing My co is lengthy process, Mine took 6 months but hey ho, you know best so why dont you save yourself the money and do it yourself.

                    After all what could possibly go wrong.

                    Polishing a turd near you!!

                    Comment

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