Anyone used mvlonline

[Maslins]

once the funds have been transferred to the liquidation account. how long before you can transfer the balance to my personal account.

I can send you my accounts worksheet and all returns to date to proof that all liabilities have been settled. Also what percentage of the sums would you need to retain if any.

In most cases we'd be happy to make an initial distribution of part of the funds immediately. Exact amount will be decided on a case by case basis.

We will hold onto the remainder of the funds until clearance has been received from HMRC, and the deadline for any creditors to object to the liquidation has passed. This is what can often take ~3 months.

PS Cheers to AlmostGone, still in the early stages of the process, but he said he'd heard about us through contractoruk so I asked him to put a comment.

[sbakoola]

One question, you say that you don't get involved in the Entrepreneurs Relief part but doesn't qualifying or not qualifying for ER determine whether or not you pay 28% CGT hence doesn't that have an impact on what chunk of money I get back from MVL initially and what is retained by yourselves at MVL online ?

[minstrel]

One question, you say that you don't get involved in the Entrepreneurs Relief part but doesn't qualifying or not qualifying for ER determine whether or not you pay 28% CGT hence doesn't that have an impact on what chunk of money I get back from MVL initially and what is retained by yourselves at MVL online ?

No - because CGT is a personal tax and nothing to do with the company.

As I understand it, MVL will pay you the full amount (no CGT withheld) as a capital distribution. You then have to declare the capital gain on your personal self assessment tax return and pay the CGT, claiming Entrepreneurs Relief as appropriate.

[sbakoola]

No - because CGT is a personal tax and nothing to do with the company.

As I understand it, MVL will pay you the full amount (no CGT withheld) as a capital distribution. You then have to declare the capital gain on your personal self assessment tax return and pay the CGT, claiming Entrepreneurs Relief as appropriate.

ah, ok thanks, not familiar with CGT payment procedures.

[Maslins]

As I understand it, MVL will pay you the full amount (no CGT withheld) as a capital distribution. You then have to declare the capital gain on your personal self assessment tax return and pay the CGT, claiming Entrepreneurs Relief as appropriate.

^^exactly right.

[Neenor]

Like I say we could normally pay out a large chunk of the cash within a few days of us receiving it. The main reason for holding onto the remainder is exactly like you suggest at the end, in case HMRC decide they're not happy with something.

Ignoring possible accounting/tax issues (ie 4% interest to avoid BIK, S.419/S.455/whatever it's called these days where there's a 25% temporary tax on director loans) there's no reason why you can't take some/all of the funds out prior to the liquidation starting, so leaving them as a director loan. We don't recommend this generally, because:
1) the potential tax complications outlined above, 2) HMRC may argue the initial "loan" you took which was then cleared by a deemed distribution upon liquidation was actually a dividend, and hence you lose all the benefits of CGT over divis,
3) if an unexpected liability does creep out of the woodwork, and we've got no company funds to pay it, we need to chase the director for the funds. Not a nice position for us to be in, or for you.

Re your worst case scenario, yes, that's a possibility. At that point we would likely control the majority of the company funds...but otherwise no different to if you still had control of them. It'd still be down to you/your accountant/adviser to argue the case with HMRC, come to a conclusion, and then the company would have to pay any possible additional tax due. The only difference would be whether you or we would write that cheque.

Perhaps worth reading this Contractor Weekly thread which sort of discusses this issue.

Whilst I understand the discomfort of not controlling the funds, perhaps worth stressing we get no benefit from having control of the funds. There's no benefit to us of stringing things along whilst we sit on big client bank balances. We want the liquidation done and dusted as quickly as you do.

Hi Maslins

My company has a large cash balance consisting of retained profit from several years of trading. I need to pursue a route whereby, I retain control of the majority of the funds in my company throughout the liquidation process.

How does the below seem?

Two months prior to the start of the liquidation, I would like to take a directors loan for the value of the retained profit minus the only outstanding liability (CT due 30/01/2013). Interest will be payable, by myself to my company, on a monthly basis at the "official rate (currently 4%)".

This should mitigate any BIK liability, point 1 in your previous post, and should also counter the risk of point 2 as there will be a trail of interest payments which indicate/prove the existence of a loan rather than a dividend. My company year end is March 31st so there will be plenty of time to pay the entire loan off before my year end+9 Months.

point 3) from your post is not a problem for me as if some unexpected liability showed up, I would of course be happy to pay it.

I am sure this sort of solution would work for most contractors, as it leaves us in control of our hard earned cash throughout the liquidation process, what do you think?

[Maslins]

Hi Maslins

My company has a large cash balance consisting of retained profit from several years of trading. I need to pursue a route whereby, I retain control of the majority of the funds in my company throughout the liquidation process.

How does the below seem?

Two months prior to the start of the liquidation, I would like to take a directors loan for the value of the retained profit minus the only outstanding liability (CT due 30/01/2013). Interest will be payable, by myself to my company, on a monthly basis at the "official rate (currently 4%)".

This should mitigate any BIK liability, point 1 in your previous post, and should also counter the risk of point 2 as there will be a trail of interest payments which indicate/prove the existence of a loan rather than a dividend. My company year end is March 31st so there will be plenty of time to pay the entire loan off before my year end+9 Months.

point 3) from your post is not a problem for me as if some unexpected liability showed up, I would of course be happy to pay it.

I am sure this sort of solution would work for most contractors, as it leaves us in control of our hard earned cash throughout the liquidation process, what do you think?

Afraid we wouldn't be prepared to work on that basis. You may find a liquidator somewhere who will.

The hassle involved in chasing a director for funds should an unexpected liability crop up makes it not viable at our low fee.

Whilst I do understand the concern about handing over large sums of cash to be controlled by someone else, this is the way liquidations have worked for years. There are plenty of safeguards in place to protect your funds.

[sbakoola]

Regarding your quote above "In most cases we'd be happy to make an initial distribution of part of the funds immediately. Exact amount will be decided on a case by case basis."

Under which set of circumstances would you NOT transfer 75%-80% of the money back to the director of the company being liquidated immediately ?

Note that I am assuming that you transfer 75%-80% of the money immediately, is this your normal range ?

Also what do you mean exactly by 'immediately' ? is that within 3-5 working days of yourselves having receiving the liquidated limited company money when the transfer is complete to your estate (bank) account ?

Many contractors on here could not afford to be have 100% of their limited company money retained by a liquidator in their estate account for 3+ months particularly when their company is being closed and they are probably out of contact so this is why I'm asking about the conditions (exceptional circumstances ?) which would have to be true for yourselves to retain 70%-100% of the money for a prolonged period of time (3 months +) until HMRC approve all liabilities paid.

What proof would you require from the company accountant (of the company being liquidated) to assure you that all liabilities have been paid so that say 75% of the money is returned to the liquidating company director say within 3-5 days of your estate account receiving the liquidating company money ?

[Maslins]

We won't seek any proof from your accountant re liabilities. One of the very first things you (as director of the company...remember you're responsible, not your accountant) need to do for the liquidation is to sign a declaration of solvency in front of a solicitor. This basically says "my company has assets of £X, liabilities of £nil". You should obviously only sign that if you're confident it's true.

Provided we don't get the feeling there are any lies being told, we would normally pay out 50-75% of the funds straight away. By straight away I mean within a few days of funds being received into our estate account...which in turn would normally be 1-2 weeks from you starting the process with us, depending upon how swift you are at turning things around.

[contracted]

Do I need an insolvency practitioner?

I have a ltd co that I would like to wind up when my current contract ends at the end of the month. MVL seems to be the most tax efficient way to extract the funds.

My accountant (after countenancing against liquidating, lest HMRC fine me £3k) tells me that I don't need to use a licenced insolvency practitioner to liquidate the company, as it is solvent. He says that he can do the liquidation. This is contrary to everything I've read on the internet.

Is he giving me bad advice?