MVL - VAT Reclaim

[Crossroads]

A quick question for Maslins or anyone else in the know...

I'm about to appoint a practitioner to do an MVL for me, and the ones recommended by my accountant are more expensive than MVLOnline or Wilson Field (no experience of these guys).

I'm told however that the recommended IP will "reclaim the VAT on their fee from HMRC". Is this correct, and does it apply for all IP's?

If they can and for example MVLOnline can't it makes the price difference negligible when I also factor in ongoing support from my accountant.

So anyone who has used MVL, were the fees you paid 995 or 995+20%

TIA

[Scratch It]

I really dont understand why people take recommendations from their accountant. Reciprocal 'introductions' are rife in that industry. Save yourself some money and go with cheapest. MVL online well established and Wilson Field big player in corporate insolvency. Both have a good reputation.

I believe vat is chargeable on all ip fees - with exception of IVAs.

[Craig at Nixon Williams]

VAT is charged by the IP, but they are also able to reclaim this for your company after VAT de-registration so effectively you do not pay VAT.

Hope this helps!
Craig

[Martin at NixonWilliams]

I'm told however that the recommended IP will "reclaim the VAT on their fee from HMRC". Is this correct, and does it apply for all IP's?

That is correct and all IP's should do the same.

I really dont understand why people take recommendations from their accountant. Reciprocal 'introductions' are rife in that industry. Save yourself some money and go with cheapest. MVL online well established and Wilson Field big player in corporate insolvency. Both have a good reputation.

Not sure I agree that the cheapest is always the better option, you want a company with a good reputation if you are going to trust them with large sums of your company's money. Having said that, the two you mention seem to be in that bracket.

[Maslins]

VAT will be chargeable on MVLs if the firm is VAT registered...which will be all but the absolute smallest of liquidation firms.

Whether it can be reclaimed or not is another matter, along with whether doing so is worthwhile. A lot of our clients being (ex) contractors are on the flat rate scheme. It also adds an additional hassle and delay, for what's typically ~£250. We appreciate that's hardly loose change, but when you're looking at often £100k+ balance being paid out, it's relatively small fry in the grand scheme of things. MVL Online therefore don't attempt to reclaim.

A few clients do ask us to invoice in advance, so they can reclaim the VAT on our invoice on their final VAT return before de-registering (if not on FRS). We have no issue with doing that, but understand it involves more trust from the client entering the agreement.

I'd suggest if your accountant's recommended liquidator is in the same ball park fees as MVLO, and you have no reason to be suspicious, go with them. Often from what we hear the linked liquidators look to charge £3k-5k, so with or without VAT reclaim there's a huge difference.

[Craig at Nixon Williams]

The IP that we recommend reclaims the VAT on their fee after de-registration has taken place via form VAT 427.

Whether or not you use the Flat Rate Scheme makes no difference as when you de-register from VAT, you will leave the Flat Rate Scheme on the day before the VAT de-registration date (see VAT 733 – paragraph 12.4). Therefore any supplies with a tax point on (or in this case after) the date of de-registration will be able to have the VAT reclaimed.

[Crossroads]

Thanks for the replies. I hear what you are saying Scratch It, and indeed I don't want to spend unnecessarily.

My accountant is NW, and the IP they recommend is Marshall Peters. I've been quoted £1495+VAT, however they will reclaim the VAT.

This is still £300 - £500 - ish more than MVLO or WF assuming they don't reclaim VAT. The attraction of using MP is that NW will handle any queries that arise, so this should be the least hassle solution. Perhaps worth £300, but if WF will reclaim the VAT and no other fees crop up, the difference is £700 which I feel is quite significant.

My company wasn't on the FRS, so the VAT should be reclaimable.

[Maslins]

Your call. There shouldn't be much that crops up which requires assistance of the accountant.

Being honest if I were in your shoes, I'd probably go with NW...presumably you've been with them a while on the accounting side, and therefore know and trust them. Same way £250 VAT is reasonably trivial in the grand scheme of things, another ~£300 fees for what may seem a lower risk might seem a small price to pay.

On the flip side, like I said, if you're happy to, we (MVLO) can invoice in advance, you reclaim VAT on final VAT return before de-registering, then you'd have our fee with VAT reclaimed. Hopefully you've seen a fair few decent testimonials from users of this site as well as elsewhere, we don't provide a "cheap" service.

[Scratch It]

Is there really any risk of going cheaper? The OP either gets an MVL from the uk number 1 mvl provider or a top 5 national ip firm. I suspect he'll be in good hands either way! Of course your accountant may not get a fee from the ip this way...

[Martin at NixonWilliams]

Is there really any risk of going cheaper? The OP either gets an MVL from the uk number 1 mvl provider or a top 5 national ip firm. I suspect he'll be in good hands either way! Of course your accountant may not get a fee from the ip this way...

My point was that you should not just follow the cheapest option, I would go with somebody I can trust even if it is a little bit more expensive - though I agree there are probably cheaper and also trustworthy options out there.

Given that the process involves a third party handling your money, I think trust is more important than price for a service such as this. See the link below, just one of many examples out there. Though you should be protected by the bond that you pay.

Former IP jailed for three years