Accountancy fees for Ltd closure

[Chart Accountancy]

I have been told by my accountants, that costs to close my company, as as detailed:

We can complete the closure process once you have decided on the closure date (shorten the 2021 financial year). As your company reserves are above £25k, we will follow the liquidation process which is £2,000+VAT. This fee is collected by the liquidator at the near end stage of the company’s liquidator.

Kindly note that there is also the balancing fee charge for the 2020/21 financial year as we need the complete set of accounting fees to complete the closure accounts. As the June fee will clear from the business account today, the balancing is applied for July 2020 to February 2021 which is £1,232.00 (£154.00*8)

My questions to the forum:

1) Is this level of charging normal?

2) The accountancy knows, by nature of them closing it, it will not be trading. For non trading companies they charge £80+VAT. However, I'm being charged £1,232.00 (£154.00*8). So basically im paying for nothing because they won't be doing any payroll, VAT, book keeping checks etc. Surely this can't be allowed can it? - isn't there any laws against charging for doing nothing i.e. no services provided. (kind of like loss of services for broadband where the ISP pays you back)

3) Any advice to lower this or challenge this? - I've been told, this is what they charge, no real option. It seems if I move, I think they also charge balancing fees.

It seems like the accountant has made the decision on your behalf to go MVL. However, MVL is not an automatic process if you are over £25K in retained profit...you might be better off to take out dividends within basic rate in the final period if this will leave you at £25K retained profit and then you can just go through a voluntary strike off where the capital gain distribution treatment can be applied (£11,300 to be received tax free available to each shareholder).

It appears that you are also charged the monthly fees upfront to February 2021 but if you are not trading until Feb 2021, you should be just quoted for a one-off set of final trading accounts and perhaps a closedown fee to de-register your for VAT, closey our payroll scheme, and might be provide you tax advice on MVL vs a voluntary strike off so it should not be based on the monthly fee where you are perhaps being provided with some additional services within this fee which you will not require after the date you cease trading.

If you go via MVL and you claim ER, you cannot be involved in the same or similar trade within a period of 2 years in order to qualify for the relief. Where you are not restricted to open a new company if you close via a voluntary strike off. Therefore, depending on the amount of retained earnings if the tax saving is not significant (when you factor in the additional cost) to go via an MVL, you might rather consider a voluntary strike off. Your accountant should really discuss the options with you by reviewing your tax position.

[Maslins]

Do be aware that there's two very separate things involved here:
1) liquidation fees. These are nothing to do with the accountant. If your company ends with net assets above £25k, and you want CGT treatment, a Members Voluntary Liquidation (MVL) can be a good option, but do expect to pay at least a grand or more for it once associated disbursements are included.
2) accountancy fees. These will vary significantly. Some firms are of the view that if you've been with them a while (ie 12+ months) there won't be any extra charges to help with closure. Others will levy an additional fee. Reality is there is some additional work involved, but some accountants do seem to milk it on the basis it's more trouble than it's worth for you to move at this late stage.

Key point being if person A paid £100 to get their company closed (£10k final net assets via strike off) and person B paid £2,000 to get their company closed (£50k final net assets via MVL), take care with comparisons.

In my personal opinion sounds like you're paying a bit over the odds for both, but neither are outrageously high. For the liquidation you likely could seek alternative quotes, though if you're with the accounting firm I'm guessing, their accounting arm will likely levy yet another fee if you do so. Part of me feels this is what happens when accountancy firms are told to stop being a stuffy old profession, and start being modern businesses. Ie ethics go out the window and they find sneaky ways to snaffle extra money from clients, based more around what they can get away with than what work is involved.

[Fred Bloggs]

What a rip off racket this seems to have become. I have only closed down two Ltd Companies in my time. Both of them were closed down by the incumbent accountants who charged me precisely nothing. Zero, not a penny for closing the companies down. For clarity, I'll add that both companies had only the cash in the bank required to settle tax liabilities and no more at time of closure. From one of them I got a corporation tax refund which was a nice, unexpected, surprise.

[northernladuk]

Use the Google search method.

Type something like..

Accountant fee close site:contractoruk.com/forums

Mess around with the search terms. You'll find a number of threads discussing prices recently.

[ee00ffk]

I can only comment on my circumstance. I am with Gorilla and was charged £250 +VAT to wind up. Took about 10 weeks to get the CT600 submission ready on their end, had my accounting period brought forward.

Then for liquidation I've gone with MVLOnline (£995 + VAT). Just need to wait for HMRC to update their new year tax rates so my accounts can be submitted and I can finally kick start the liquidation process.

So all in all, £1,494 (£1245 + VAT).

Hope that helps for comparison.

[AltCtrl]

I have been told by my accountants, that costs to close my company, as as detailed:

We can complete the closure process once you have decided on the closure date (shorten the 2021 financial year). As your company reserves are above £25k, we will follow the liquidation process which is £2,000+VAT. This fee is collected by the liquidator at the near end stage of the company’s liquidator.

Kindly note that there is also the balancing fee charge for the 2020/21 financial year as we need the complete set of accounting fees to complete the closure accounts. As the June fee will clear from the business account today, the balancing is applied for July 2020 to February 2021 which is £1,232.00 (£154.00*8)

My questions to the forum:

1) Is this level of charging normal?

2) The accountancy knows, by nature of them closing it, it will not be trading. For non trading companies they charge £80+VAT. However, I'm being charged £1,232.00 (£154.00*8). So basically im paying for nothing because they won't be doing any payroll, VAT, book keeping checks etc. Surely this can't be allowed can it? - isn't there any laws against charging for doing nothing i.e. no services provided. (kind of like loss of services for broadband where the ISP pays you back)

3) Any advice to lower this or challenge this? - I've been told, this is what they charge, no real option. It seems if I move, I think they also charge balancing fees.