What happens to business assets when closing company by MVL?

[n1234]

I’m looking for a bit of information about what happens to my business assets if I want to close my limited company by a MVL (as I’ve stopped contracting). I have also asked my accountant but they have been useless with response times of late, so I thought people here might have some advice.

In a nutshell: if my company has purchased assets which I personally might like to keep after it is closed (e.g. computer, bike), I understand that I personally would need to purchase these from my company? How is a fair price decided if so, I assume the age of the item affects this? Obviously I’d like to pay as little as possible, but I’m not looking to do anything I couldn’t reasonably defend if someone looked into it!

Does the fact that VAT was claimed back on some assets affect this - that is, do I also need to pay back the VAT?

If there are assets that I don’t want to keep, do I have to sell them? Or can I give them away? Selling some items is probably more hassle than it’s worth! Is there an age threshold beyond which items have no value or some other option to “write them off”?

Any input or links appreciated!

Thanks

[eek]

You look on eBay to get current market value - print out the evidence and pay the company.

this really isn’t difficult

[Maslins]

I have also asked my accountant but they have been useless with response times of late, so I thought people here might have some advice.

It amazes me how often we see comments like this on the forum. If this is the case, your company doesn't have an accountant. You're giving money to a third party for no reason, and having to figure out your own accounting stuff. Give them grief, don't just accept this as ok/normal, it's not.

Otherwise, what eek said. Assuming your company's still VAT registered, it will charge you VAT on the sale price of any items you buy from it. It will also most likely suffer CT on the net amount (I say this as it's more than likely you got full CT relief in year of purchase).

[n1234]

It amazes me how often we see comments like this on the forum. If this is the case, your company doesn't have an accountant. You're giving money to a third party for no reason, and having to figure out your own accounting stuff. Give them grief, don't just accept this as ok/normal, it's not.

You're absolute right of course – if I weren't looking at winding up my company soon, I'd definitely be looking to change accountant, but there doesn't seem to be much point for a few more months. As it is I all I can do is keep chasing, and perhaps escalate. They (one of the big ones) were alright up until recently, seems like the staff are recently really over-stretched. Not ideal!

Otherwise, what eek said. Assuming your company's still VAT registered, it will charge you VAT on the sale price of any items you buy from it. It will also most likely suffer CT on the net amount (I say this as it's more than likely you got full CT relief in year of purchase).

Got it, thanks. Is there therefore an advantage to deregistering from VAT before selling the items, as I wouldn't have to pay VAT, or does it not work like that?

You look on eBay to get current market value - print out the evidence and pay the company.

Makes sense! Apologies if it was a stupid question – a lot of stuff which seems obvious with running a company isn't always so...

[jamesbrown]

Depends. For example, if any of those assets benefited from the super-deduction, you’ll need to account for that with a balancing charge for any disposal that takes place before 1 April 2023. Regarding VAT, you would normally charge VAT at the appropriate rate on the sale of an asset unless the business is a going concern (it isn’t). Best to let your accountant handle it; that’s what you’re paying them for.

[northernladuk]

You're absolute right of course – if I weren't looking at winding up my company soon, I'd definitely be looking to change accountant, but there doesn't seem to be much point for a few more months. As it is I all I can do is keep chasing, and perhaps escalate. They (one of the big ones) were alright up until recently, seems like the staff are recently really over-stretched. Not ideal!

SJD? If it is go in very hard from the start. They've a very long history on here of making a mess of shutting down or even moving away from them. Plenty of threads about them not doing final accounts or handing stuff over. If you know they've got form for it then at least you know you've got extra work to do.
Even if it's not them it could be one of the others the same venture guys own so will be the same situation. Keep on top of it, they won't do it if you just sit back and wait.

Got it, thanks. Is there therefore an advantage to deregistering from VAT before selling the items, as I wouldn't have to pay VAT, or does it not work like that?

Don't be dicking around at this point. You are struggling to get this sorted already before trying any wheezes.

Makes sense! Apologies if it was a stupid question – a lot of stuff which seems obvious with running a company isn't always so...

This is true but the company owning assets and getting rid of them before they close is as obvious as it comes I would have thought. This is where I try and be pedantic with people about being a business and understanding the clear line between the company and yourself. If you can keep that in your head the ownership and offloading of assets should be clear. Obviously you use the laptop all the time so some people do forget it belongs to the company, not you. Sell it to yourself at a fair market price and move on.

Just be very clear in your head the company and you are completely separate entities. Company money, your money and company assets, your assets and so on. A process needs to be followed to get one over to the other. Keep that in mind and many little things should become a little clear.

[n1234]

SJD? If it is go in very hard from the start.

Nah, Nixon Williams, who I understand are owned by the same parent company. It's a shame as I was quite impressed with them at the start of my contracting. I guess there was a gradual slight decline in response times etc. over the years but it's become really apparent in the last 6 months or so.

Keep on top of it, they won't do it if you just sit back and wait.

Advice appreciated! I'm still a few months off actually wanting to do this (some work to finish up and probation period at perm job to pass), so currently in the research/groundwork stage. I'm assuming it's going to be more of a hassle to change to another accountant just to do this procedure, in terms of handover etc, than to just keep on top of NW?

Don't be dicking around at this point.

That is a good point for some perspective – the key thing here is to shut down the company when the time comes and get the money out, the assets are a tiny thing in comparison. I'm just trying to work out the lie of the land (and slightly being a typical contractor and trying to determine what the most efficient-but-correct way to do things is, I confess).

This is true but the company owning assets and getting rid of them before they close is as obvious as it comes I would have thought.

Fair, I guess I was more curious what happens in non-obvious cases e.g. if there is an asset that it's going to be more trouble to sell than its worth, what the threshold for assets that need accounting for is, etc. Accountant is obviously the right person to ask for this info but I figured there's no harm in getting a second opinion, especially when one's accountant is perhaps not the greatest.

Appreciate the advice, thank you!

[northernladuk]

Yep same problems at NW.

https://forums.contractoruk.com/acco...-williams.html

https://forums.contractoruk.com/acco...-williams.html

Just have to keep banging away at them to make sure they do it in a reasonable timescale.

if there is an asset that it's going to be more trouble to sell than its worth, what the threshold for assets that need accounting for is

Not hassle to sell as you are selling it to yourself. I guess there has to be a sensible level of what's worth it but there is a fine line between common sense to forget it and getting caught fiddling taxes by writing off stuff with a perfectly reasonable sales value. Even if you draw the line at something worth only tens of pounds there could be a lot of them which is different. Your LTD can't own that much stuff though could it? Generally it's the laptop, printer, furniture and some consumables. If you've got the living room TV on the books then that's your own fault lol.

But yes, NW will give you a view on the practicalities of it.

[n1234]

Yep same problems at NW.

Ah, well it's not just me then. Shame when this happens to companies but such is life.

Not hassle to sell as you are selling it to yourself.

Haha fair point. I have a bit more stuff because I worked in mobile app development so have bought various devices for testing etc. over the years, which I have no personal need for. But I guess I should just not be lazy and get them on eBay haha!

[TheCyclingProgrammer]

FWIW, you can deregister for VAT if you’ve stopped trading and before you sell the assets to avoid having to pay VAT on those sales BUT, there is a threshold, over which you would be required to account for VAT on your final return anyway.

Unless you have a lot of expensive assets you should be able to do this. The threshold is £1k of VAT, or standard rated assets with a net value if £5k or less.

https://www.gov.uk/government/public...tion#section-7

When I started my MVL, I made a list of the capital assets (the usual stuff, a PC, expensive office chair, iPhone and also the office air con unit), worked out the fair market value based on second hand values, ran them past my accountant, documented the proposal to sell them to myself at those prices in a minuted company meeting and then once I had deregistered for VAT I raised an invoice.

Because I needed a nil directors loan account before I could start the MVL I actually paid the money to the company bank account - it didn’t take long to get it back after the MVL was started.