MVL - HMRC Clearance

[dhauser]

I commenced winding up my company via MVL in Jan 2020 and I'm still waiting for HMRC VAT and PAYE clearance. Is this normal? Has anyone else experienced this?

I understand they had some delays at the back end of last year with covid and also migrating MVL cases to a new online system, but just wondered this was affecting anyone else or just me?

[Maslins]

Unsure if you're one of MVL Online's clients or not, but I can confirm we're currently seeing 6-8 months as average timeframe between appointment and finalisation of the case. My understanding is a combination of the issues you've mentioned, plus the increase in solvent liquidations caused by IR35 changes, is leading to them falling way behind, and struggling to get back on top of things. Most of the cases we're finalising are being done without full HMRC clearance...but hopefully at least something giving us some modest comfort, and if nothing else us having chased HMRC several times over a prolonged period.

[dhauser]

Thanks for the response. I’m going through Clarke Bell. 6-8 months is the kind of delays I would expect but the 16 months I’ve been waiting seems excessive.

[mrswilson1960]

I'm currently approaching 13 months. I've been waiting for the final HMRC clearance since October 2020. I was expecting a 6-9 month process (if you believe the marketing) but this seems incredibly slow.

[Mr.Whippy]

I'm currently approaching 13 months. I've been waiting for the final HMRC clearance since October 2020. I was expecting a 6-9 month process (if you believe the marketing) but this seems incredibly slow.

Speak to your liquidator to see if they are willing to progress it without waiting for HMRC clearance. MVL Online moved mine to the final stage after waiting 6 or 7 months for a response from HMRC.

[crack_ho]

How does the length of time for clearance affect the distributions and self assessment?
If you distribute funds before the clearance is given do you declare them in that financial year for self assessment purposes, or when then final clearance is given.

[Maslins]

How does the length of time for clearance affect the distributions and self assessment?
If you distribute funds before the clearance is given do you declare them in that financial year for self assessment purposes, or when then final clearance is given.

The HMRC clearance liquidators seek purely relates to company tax liabilities. I think sometimes clients get confused thinking it's approval for the distributions to qualify as capital gains, or BADR/similar, it's not. The distributions will be taxable based on date they're declared, irrespective of liquidator HMRC clearance.

Finalising without HMRC clearance basically means paying out final funds to the client without having written confirmation from HMRC that they're happy the client company's affairs are paid up in full. There isn't really a deadline for HMRC to lodge a claim unfortunately. Equally it's best practice to wait for full HMRC clearance before finalising a case.

However...in the current circumstances this simply isn't viable in our opinion. MVL Online currently typically wait 6-9 months (depending upon whether we've got anything partially comforting from HMRC), then are finalising. We don't feel that's particularly aggressive. It gives HMRC a significant window in which to lodge a claim, plus we'll write to them at least a couple of times re each case, independent of the publicly visible adverts that get placed in the Gazette, before finalising. It sounds like Clarke Bell have gone for a more cautious approach, choosing to delay further. No right/wrong answer, and as above we're aware our route goes against best practice...but to use a phrase that's been massively over-used these last ~16 months, we are in unprecedented times!

[dhauser]

The HMRC clearance liquidators seek purely relates to company tax liabilities. I think sometimes clients get confused thinking it's approval for the distributions to qualify as capital gains, or BADR/similar, it's not. The distributions will be taxable based on date they're declared, irrespective of liquidator HMRC clearance.

Finalising without HMRC clearance basically means paying out final funds to the client without having written confirmation from HMRC that they're happy the client company's affairs are paid up in full. There isn't really a deadline for HMRC to lodge a claim unfortunately. Equally it's best practice to wait for full HMRC clearance before finalising a case.

However...in the current circumstances this simply isn't viable in our opinion. MVL Online currently typically wait 6-9 months (depending upon whether we've got anything partially comforting from HMRC), then are finalising. We don't feel that's particularly aggressive. It gives HMRC a significant window in which to lodge a claim, plus we'll write to them at least a couple of times re each case, independent of the publicly visible adverts that get placed in the Gazette, before finalising. It sounds like Clarke Bell have gone for a more cautious approach, choosing to delay further. No right/wrong answer, and as above we're aware our route goes against best practice...but to use a phrase that's been massively over-used these last ~16 months, we are in unprecedented times!

For the avoidance of doubt, Clarke Bell paid me the final funds in full close to the 35 days they advertise, it's just the Company closure has not been finalised yet as they seem to be waiting for final clearance from HMRC to do so which I understand. So from my perspective it's more of a peace of mind thing rather than witing for the final distribution like some others might be, i.e. HMRC clearance will remove the fear of HMRC querying PAYE and that leading on to IR35 investigation etc. Not sure how likely or realistic that would be, but until the Company is closed I still won't sleep quietly

[mrswilson1960]

For the avoidance of doubt, Clarke Bell paid me the final funds in full close to the 35 days they advertise, it's just the Company closure has not been finalised yet as they seem to be waiting for final clearance from HMRC to do so which I understand. So from my perspective it's more of a peace of mind thing rather than witing for the final distribution like some others might be, i.e. HMRC clearance will remove the fear of HMRC querying PAYE and that leading on to IR35 investigation etc. Not sure how likely or realistic that would be, but until the Company is closed I still won't sleep quietly

this was my thinking and concern also.

[Maslins]

For the avoidance of doubt, Clarke Bell paid me the final funds in full close to the 35 days they advertise, it's just the Company closure has not been finalised yet as they seem to be waiting for final clearance from HMRC to do so which I understand. So from my perspective it's more of a peace of mind thing rather than witing for the final distribution like some others might be, i.e. HMRC clearance will remove the fear of HMRC querying PAYE and that leading on to IR35 investigation etc. Not sure how likely or realistic that would be, but until the Company is closed I still won't sleep quietly

Ah, good that you're not waiting on any funds. FWIW in circa 2,000 cases to date we haven't seen a single enquiry (PAYE/IR35 or otherwise) raised whilst we've been appointed as liquidators. It's not that rare there's a minor glitch (eg final payroll or VAT submissions not made), but normally more of an admin mishap between accountant and HMRC than anything deeper.