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MVL with physical assets

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    #11
    So reading up on this some more it seems that assets can be distributed in specie instead of being sold back to me, however:

    * There’s no avoiding the corporation tax charge as it still counts as a disposal and a balancing charge needs to be calculated.
    * I should be able to just deregister for VAT (as I will need to do this anyway) and because the total VAT due on the market value wouldn’t exceed £1000 I wouldn’t need to account for VAT on deregistration, so I would at least save there.

    So with that in mind the tax position is similar to me raising an invoice and selling them to myself, assuming I deregister for VAT before selling them, is that right?

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      #12
      Originally posted by TheCyclingProgrammer View Post
      So with that in mind the tax position is similar to me raising an invoice and selling them to myself, assuming I deregister for VAT before selling them, is that right?
      Yes. As you've found out there's not really any need for physical cash to change hands, but there isn't scope to avoid CT/VAT by distributing things in specie instead of selling. VAT you may be able to sidestep by virtue of being below the de minimis when you de-register.

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        #13
        Originally posted by TheCyclingProgrammer View Post
        Can anyone recommend an MVL company that doesn't cost a fortune that can deal with liquidations that involve cash + capital assets? I wanted to use MVL Online but they only deal with cash.

        MyCo has a number of capital assets on its books that still have some market value - possibly around £5k in total. I want to keep these and my accountant is telling me that I would need to sell them to myself and that it should be a cash transaction rather than a paper one as I can't leave a balance on the director's loan account.

        It seems pretty ridiculous to me that I would need to raise an invoice and sell these things to myself - meaning I'd need to account for VAT on the sales and also balancing charges for capital allowances purposes, when I could just take ownership of them as part of the overall capital distribution and just pay 10% CGT on their value instead.
        Speak with Frost - Julie or Jeremy frost.. they do Distribution In Specie

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          #14
          Originally posted by Lance View Post

          what if they *cough* broke? They would be worth nothing, and you could dispose of them for no monetary transaction.
          Exactly this. Unfortunately the macbook and rest of stuff kicked the bucket after 1 year and are no longer covered by the manufacturer's warranty. So they have to be written off.

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            #15
            Originally posted by michaelC View Post

            Exactly this. Unfortunately the macbook and rest of stuff kicked the bucket after 1 year and are no longer covered by the manufacturer's warranty. So they have to be written off.
            my suggestion was tongue in cheek.
            And you can't simply write off an asset like that. I'll buy your 1 year old Macbook off you. So it isn't worth nothing.
            See You Next Tuesday

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              #16
              Originally posted by Lance View Post

              my suggestion was tongue in cheek.
              And you can't simply write off an asset like that. I'll buy your 1 year old Macbook off you. So it isn't worth nothing.
              How about leaving the assets in the company at closure so that they become bona vacantia and pass to the crown. What happens after? Will the Queen come to take the old laptop?

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                #17
                Originally posted by michaelC View Post

                How about leaving the assets in the company at closure so that they become bona vacantia and pass to the crown. What happens after? Will the Queen come to take the old laptop?
                if she turns up at your door, tell her she's currently not allowed in to pick it up, but that you'll meet her down the park (she can bring 4 friends) and you can hand it over there.

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                  #18
                  Originally posted by michaelC View Post

                  How about leaving the assets in the company at closure so that they become bona vacantia and pass to the crown. What happens after? Will the Queen come to take the old laptop?
                  Presumably you'd need to find an MVL practitioner willing to leave such a mess behind - unlikely.

                  In reality the idea of writing off the assets and treating them as scrapped would probably be fine in practice, but it also leaves you vulnerable to a challenge by HMRC and I'd like to leave things neat and tidy when I close my business down.
                  Last edited by TheCyclingProgrammer; 31 March 2021, 13:50.

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