Issue with MVL and insolvency practicioner

[Lance]

Issue with MVL and insolvency practicioner

Sorry to hear about his.

Is it normal practise to handover control of the bank to the insolvency people?
I’d never do that for an accountant or any other professional. If o has no choice about doing it for an IP I’d be very cautious in my due diligence.

[Maslins]

I'm on holiday at the moment, so wouldn't be around to take a call on Monday, however thought I'd put a few comments here which may provide some comfort.

Re Lance's/GhostofTarbera's comments, appointing a liquidator is very different to appointing an accountant. An accountant just helps you deal with your tax/accounting obligations. The company is still yours, the accountant has no ownership or control over it.

If you appoint a liquidator, you are signing over control of the company to that liquidator. So it's totally normal that as soon as your company's bank are aware of the appointment, they'll freeze out your access. Typically the liquidator would request the bank transfers funds to an estate account the liquidator controls, from there they can then make payments (potentially for VAT or other company liabilities, but equally distributions to the shareholders).

It's also normal that there will be one individual who is the licensed insolvency practitioner behind the firm. Their name will appear on all the important paperwork, but it's also normal that you might not speak to them much/at all. Eg for MVL Online, that individual is David Thorniley, but in practice he only steps into customer queries when things get really problematic. 99% of things can be dealt with by other staff.

It's obviously not good at all that the firm is seemingly ignoring your calls/emails, and they deserve grief for that. However, aside from that significant issue, what you've described sounds like reasonably standard practice. They don't want to be in a position where they pay out a large chunk of the company's funds to you personally, and then HMRC advise there's a big VAT liability due, so they then need to chase funds back from you to settle it, hence they're asking your accountant to confirm the position with regards to company liabilities.

Ask your accountant to write the letter, stating that at the point of liquidation the company should have had £X in the bank account, £Y of creditors, leaving retained funds expected to go to the shareholder of £Z. Whilst you may well have already provided it, get the letter to include full details of the company tax payment(s) needing to be made, with amounts/references etc. The liquidator should then settle those, and make a distribution to you from the remainder.

It is normal that they may wish to temporarily retain a buffer of funds, just in case an unexpected creditor creeps out of the woodwork. At the end of the process, once the liquidator has got HMRC clearance and the period for other creditors to object has passed, they'll then pay out the balance and move to close the case.

[BarbaraW]

I'm on holiday at the moment, so wouldn't be around to take a call on Monday, however thought I'd put a few comments here which may provide some comfort.

Re Lance's/GhostofTarbera's comments, appointing a liquidator is very different to appointing an accountant. An accountant just helps you deal with your tax/accounting obligations. The company is still yours, the accountant has no ownership or control over it.

If you appoint a liquidator, you are signing over control of the company to that liquidator. So it's totally normal that as soon as your company's bank are aware of the appointment, they'll freeze out your access. Typically the liquidator would request the bank transfers funds to an estate account the liquidator controls, from there they can then make payments (potentially for VAT or other company liabilities, but equally distributions to the shareholders).

It's also normal that there will be one individual who is the licensed insolvency practitioner behind the firm. Their name will appear on all the important paperwork, but it's also normal that you might not speak to them much/at all. Eg for MVL Online, that individual is David Thorniley, but in practice he only steps into customer queries when things get really problematic. 99% of things can be dealt with by other staff.

It's obviously not good at all that the firm is seemingly ignoring your calls/emails, and they deserve grief for that. However, aside from that significant issue, what you've described sounds like reasonably standard practice. They don't want to be in a position where they pay out a large chunk of the company's funds to you personally, and then HMRC advise there's a big VAT liability due, so they then need to chase funds back from you to settle it, hence they're asking your accountant to confirm the position with regards to company liabilities.

Ask your accountant to write the letter, stating that at the point of liquidation the company should have had £X in the bank account, £Y of creditors, leaving retained funds expected to go to the shareholder of £Z. Whilst you may well have already provided it, get the letter to include full details of the company tax payment(s) needing to be made, with amounts/references etc. The liquidator should then settle those, and make a distribution to you fro1m the remainder.

It is normal that they may wish to temporarily retain a buffer of funds, just in case an unexpected creditor creeps out of the woodwork. At the end of the process, once the liquidator has got HMRC clearance and the period for other creditors to object has passed, they'll then pay out the balance and move to close the case.

Hello,

thank you for your response and enjoy your holidays!

I do understand they don't want to distribute the money until they have a clearance from HMRC, however in this case it is a visious circle. They have conrirmed that they will pay Q1 VAT on my behalf (the only thing outstanding). After many emails, calls then never answered etc, they confirmed they will pay VAT on 24th June. I have chased them regading that, no response, but instead, they told me they won't distribute the money until everything has been paid.
It would be so much easier if someone would return my call and we could discuss that.

In desperation, I borrowed the money and I was thinking to pay it myslef, form the personal bank account, but I wasn't sure if I am allowed, and again, since they are ignoring me, I can't even discuss that.

you mentioned a buffer to retain which would be perfectly understandable, but so far they distributed ... £100 out of few years worth retained income.

I sent the letter to my accountatnt, and I willl keep calling this company as well.

Thanks for advice!

Kind regards,

[Jeremy @ Silva Insolvency]

The IP has responsibility so it's up to him/her how much of a buffer should be retained. It will depend on the circumstances, the figures and the IP's perception of the risk of claims. Because it's about personal judgement it's difficult to criticise and if the IP doesn't want to distribute the money it won't be possible to make him/her do so.

In practice, IPs know that shareholders want their money as soon as possible. So long as they don't see any risk IPs will normally start making substantial distributions as soon as possible.

Staff should know their complaints procedure. It's often on the website or in engagement letters too. I don't see how failing the explain the complaints procedure and who has responsibility should act as a shield!

Ultimately the IP is responsible for the case even though other people may be doing a lot of the administration (which is perfectly normal).

I hope, now that you've pinned down the IP (whose name should have been on a lot of your original liquidation paperwork), you'll get some action.

[BarbaraW]

The IP has responsibility so it's up to him/her how much of a buffer should be retained. It will depend on the circumstances, the figures and the IP's perception of the risk of claims. Because it's about personal judgement it's difficult to criticise and if the IP doesn't want to distribute the money it won't be possible to make him/her do so.

In practice, IPs know that shareholders want their money as soon as possible. So long as they don't see any risk IPs will normally start making substantial distributions as soon as possible.

Staff should know their complaints procedure. It's often on the website or in engagement letters too. I don't see how failing the explain the complaints procedure and who has responsibility should act as a shield!

Ultimately the IP is responsible for the case even though other people may be doing a lot of the administration (which is perfectly normal).

I hope, now that you've pinned down the IP (whose name should have been on a lot of your original liquidation paperwork), you'll get some action.

Hello again and apologies for the delay.

I believe the staff know the complaint procedure, most likely they were hoping that if they won't tell me, I won't complain, very unprofessional. You are right, there was a name I was not familiar with on the initial papers, and this was the name of IP.

There is a small progress. After all my calls and emails, they finally paid my outstanding VAT, therefore my accountant was able to issue a confirmation letter, that I do not have any outstanding debts. IP said, that after receiving the letter I will receive 50% of my cash. I checked my account and I noticed they paid, but 5% of my funds, I sent them email requesting explanation (no response), but upon checking my account, I noticed they paid additional 10%. Still far from agreed 50%.

One more question please, when should I receive the rest of the money? is there anything else they are waiting for?

Kind regards,

[Jeremy @ Silva Insolvency]

One more question please, when should I receive the rest of the money? is there anything else they are waiting for?

It depends what issues there are with your MVL. They may want to sort out every issue before distributing the entire balance. However I'm assuming there are no issues or you'd know about it. That leaves only HMRC clearance.

HMRC will normally provide clearance when they've received all the returns up to liquidation for CT, VAT, PAYE and any other schemes as well as payment for these. It normally takes 6 months or so to get clearance through.

[BarbaraW]

It depends what issues there are with your MVL. They may want to sort out every issue before distributing the entire balance. However I'm assuming there are no issues or you'd know about it. That leaves only HMRC clearance.

HMRC will normally provide clearance when they've received all the returns up to liquidation for CT, VAT, PAYE and any other schemes as well as payment for these. It normally takes 6 months or so to get clearance through.

Thanks again!
yes, I was always paying on time, except that one last payment when they froze my accounts before I managed to pay VAT. Everything has been paid now.
They started distributions no so I have money to live. What a relief.

[Jeremy @ Silva Insolvency]

Delighted to hear that! Glad you worked it out.

[heyya99]

Thanks again!
yes, I was always paying on time, except that one last payment when they froze my accounts before I managed to pay VAT. Everything has been paid now.
They started distributions no so I have money to live. What a relief.

Do you mind my asking how long it took between submitting your last accounts to getting the first distribution?

[BarbaraW]

Do you mind my asking how long it took between submitting your last accounts to getting the first distribution?

Apologies for the delay, did not see this question.
I received my first distribution end of August

I'm still struggling to get the remaining money though