Formal Liquidation Procedures

[Maslins]

If Experian themselves can't tell you whether something will have an impact on your credit rating, hopefully you'll understand why none of the insolvency practitioners you've spoken to have been able to confirm one way or the other.

If you're really bothered about this, call Experian again and try to speak to someone senior there, or get them to look into it properly and get back to you. Also might be worth calling Companies House re the director point - people can normally get away with "phoenixing" (ie CVL, leaving unpaid debts) quite a few times before they're banned from being a director, so I can't see doing one MVL would cause any issues.

I'd hope any solicitor you spoke to would confirm that providing there is a licensed insolvency practitioner overseeing the liquidation (which legally there has to be, a liquidation can't be signed off by anyone else) you needn't be concerned about your funds.

[centurian]

Also might be worth calling Companies House re the director point - people can normally get away with "phoenixing" (ie CVL, leaving unpaid debts) quite a few times before they're banned from being a director, so I can't see doing one MVL would cause any issues.

With the official authorities, no there wouldn't be any issues.

What he's asking is whether it leaves any imprint on your credit file, because a bank's screening department can (and very often do) take a negative view on anything out of the ordinary that shows up, regardless of whether anyone else thinks its an issue. Many banks will reject you for just a single CCJ, even if it was for a small amount and settled 5 years back.

[PorkPie]

A liquidator (insolvency practioner) can do the job for around the £2k mark as mentiond by Puma above. Anything about £3k is too much for a straightforward winding up of a Ltd Co.

I'm in a similar position, probably looking to close down the Ltd later this year once my contract runs out. Like the OP, paying even £5k would be worth it but my accountant says it'll cost circa £2k.

I have a question though: does a formal liquidation circumvent the kind of permission that is needed from HMRC for ESC16? i.e. is it a dead cert?

Yes - all disbursements are treated as capital gains. that's all ESC C16 was doing; allowing you to treat the disbursement as a capital gain. Entrepreneurs relief then applies to the gain undisputably.

[ELBBUBKUNPS]

Yes - all disbursements are treated as capital gains. that's all ESC C16 was doing; allowing you to treat the disbursement as a capital gain. Entrepreneurs relief then applies to the gain undisputably.

But can't HMRC question it when you submit your SA ? My understanding is that in the new world you will only know if HMRC are happy about you claiming ER once you sent in your SA. So you could end up forking out for the MVL only to find HMRC challenge the ER part of when you submit your SA, if they challenge it and they win its 28% capital gain + the MVL fees you paid vs 25% if you take as divs.

[PorkPie]

But can't HMRC question it when you submit your SA ? My understanding is that in the new world you will only know if HMRC are happy about you claiming ER once you sent in your SA. So you could end up forking out for the MVL only to find HMRC challenge the ER part of when you submit your SA, if they challenge it and they win its 28% capital gain + the MVL fees you paid vs 25% if you take as divs.

Conditions are here. If you meet them, you can claim the relief
http://www.hmrc.gov.uk/helpsheets/hs275.pdf

[Maslins]

Conditions are here. If you meet them, you can claim the relief
http://www.hmrc.gov.uk/helpsheets/hs275.pdf

The potential grey area is whether HMRC can argue the company isn't a trading company, but an investment one. Possible line of argument being the bank balance being disproportionately high compared to other assets, and not really required for the day to day running of the business.

NB ELBBUBKUNPS - remember divis only suffer effective 25% in the normal higher rate bracket. Once you get above £100k you start to lose your personal allowance, and at £150k you're into 36.1% effective rate. So if you've got a coupla hundred k war chest to clear out, even 28% CGT without ER would likely end up lower than the total tax on the same amount as dividend.

[PorkPie]

The potential grey area is whether HMRC can argue the company isn't a trading company, but an investment one. Possible line of argument being the bank balance being disproportionately high compared to other assets, and not really required for the day to day running of the business.

I doubt that would be a problem if you can prove that "trading" - working/invoicing - arrived at the total of the assets rather than investment income (asset acquisition and sale at a higher price).

But then IANHRMC and IANAA

[Maslins]

I doubt that would be a problem if you can prove that "trading" - working/invoicing - arrived at the total of the assets rather than investment income (asset acquisition and sale at a higher price).

My thoughts too, some people aren't as confident though.

Errr, IANHMRC but IAAA...not that the latter means my opinion is any better than anyone elses.

[PorkPie]

My thoughts too, some people aren't as confident though.

Errr, IANHMRC but IAAA...not that the latter means my opinion is any better than anyone elses.

Yeah would think it depends on the origin of the funds. In my case it's all "trading" activity as my business bank account gives me 0.0000000000001% interest

I don't suppose you happen to have the name of a decent, reliable and reasonable insolvency practitioner do you? 2.5k plus disbursements is the cheapest I've seen so far and this is still (IMHO) above the odds for what actually needs to be done to wind down a one man band contractorco.

[Maslins]

Yeah would think it depends on the origin of the funds. In my case it's all "trading" activity as my business bank account gives me 0.0000000000001% interest

I don't suppose you happen to have the name of a decent, reliable and reasonable insolvency practitioner do you? 2.5k plus disbursements is the cheapest I've seen so far and this is still (IMHO) above the odds for what actually needs to be done to wind down a one man band contractorco.

Ha! Either you haven't read many of my recent posts or I've been far too subtle... I can recommend one, but I'm admittedly biased.

I'm 50% of MVL Online, quick google search will find. £995+VAT+disbursements, tho you/your accountant will need to simplify balance sheet down to just cash at bank (ie sell off any assets and pay any liabilities).