Reply to: Issue with MVL and insolvency practicioner

[BarbaraW]

Sadly this is also fairly normal atm, and FWIW if you'd have been a client of our sister company MVL Online whilst I hope you might not have had some of the other issues, you'd likely still be having this significantly long wait now. The HMRC MVL clearance team has seemingly been hit badly by a combination of Covid-19 (most of their staff removed to assist other departments deemed more urgent in the circumstances, like those dealing with furlough claims), and more recently an IT "upgrade" that's seemingly caused havoc. It sucks, as there's no competition for HMRC, to some extent they can be as slow as they like and not much anyone can do about it.

So from your perspective, whilst this is no doubt annoying, if it provides any comfort there's a good chance your liquidator isn't at fault for this delay.

There is an issue with my Corporation Tax and liquidator is not doing much to resolve it. For a start they don't read my emails and explanation of an issue with undrstanding. Unfortunately, they are the only ones who can dicuss that with HMRC, myself and my accountant don't have authority to do so.


The issue is, my CT payment for 2019 was duplicated. HMRC sent me a checque for this duplicated amount, however I was not able to collect and clear it, as I already moved out of that property and had no access to mail.

My accountant told me not to worry, and advised me to keep it as it is. My account should be in credit and I was told I will just pay the difference between that amount and CT for 2020. In fact, CT for 2020 was lower that 2019, so I did not have to pay any additional money.
The problem is, HMRC are saying I have not paid CT for 2020, but clearly they should see my account being in credit, the liquidator is not doing much to sort this out.

So HMRC won't give me a clearance because they say I still need to pay CT, liquidator is not helping, I am not able to discuss that with HMRC. I have no idea what I can do now ...

[Maslins]

Apologies for the delay, did not see this question.
I received my first distribution end of August

I'm still struggling to get the remaining money though

Sadly this is also fairly normal atm, and FWIW if you'd have been a client of our sister company MVL Online whilst I hope you might not have had some of the other issues, you'd likely still be having this significantly long wait now. The HMRC MVL clearance team has seemingly been hit badly by a combination of Covid-19 (most of their staff removed to assist other departments deemed more urgent in the circumstances, like those dealing with furlough claims), and more recently an IT "upgrade" that's seemingly caused havoc. It sucks, as there's no competition for HMRC, to some extent they can be as slow as they like and not much anyone can do about it.

So from your perspective, whilst this is no doubt annoying, if it provides any comfort there's a good chance your liquidator isn't at fault for this delay.

[BarbaraW]

Do you mind my asking how long it took between submitting your last accounts to getting the first distribution?

Apologies for the delay, did not see this question.
I received my first distribution end of August

I'm still struggling to get the remaining money though

[heyya99]

Thanks again!
yes, I was always paying on time, except that one last payment when they froze my accounts before I managed to pay VAT. Everything has been paid now.
They started distributions no so I have money to live. What a relief.

Do you mind my asking how long it took between submitting your last accounts to getting the first distribution?

[Jeremy @ Silva Insolvency]

Delighted to hear that! Glad you worked it out.

[BarbaraW]

It depends what issues there are with your MVL. They may want to sort out every issue before distributing the entire balance. However I'm assuming there are no issues or you'd know about it. That leaves only HMRC clearance.

HMRC will normally provide clearance when they've received all the returns up to liquidation for CT, VAT, PAYE and any other schemes as well as payment for these. It normally takes 6 months or so to get clearance through.

Thanks again!
yes, I was always paying on time, except that one last payment when they froze my accounts before I managed to pay VAT. Everything has been paid now.
They started distributions no so I have money to live. What a relief.

[Jeremy @ Silva Insolvency]

One more question please, when should I receive the rest of the money? is there anything else they are waiting for?

It depends what issues there are with your MVL. They may want to sort out every issue before distributing the entire balance. However I'm assuming there are no issues or you'd know about it. That leaves only HMRC clearance.

HMRC will normally provide clearance when they've received all the returns up to liquidation for CT, VAT, PAYE and any other schemes as well as payment for these. It normally takes 6 months or so to get clearance through.

[BarbaraW]

The IP has responsibility so it's up to him/her how much of a buffer should be retained. It will depend on the circumstances, the figures and the IP's perception of the risk of claims. Because it's about personal judgement it's difficult to criticise and if the IP doesn't want to distribute the money it won't be possible to make him/her do so.

In practice, IPs know that shareholders want their money as soon as possible. So long as they don't see any risk IPs will normally start making substantial distributions as soon as possible.

Staff should know their complaints procedure. It's often on the website or in engagement letters too. I don't see how failing the explain the complaints procedure and who has responsibility should act as a shield!

Ultimately the IP is responsible for the case even though other people may be doing a lot of the administration (which is perfectly normal).

I hope, now that you've pinned down the IP (whose name should have been on a lot of your original liquidation paperwork), you'll get some action.

Hello again and apologies for the delay.

I believe the staff know the complaint procedure, most likely they were hoping that if they won't tell me, I won't complain, very unprofessional. You are right, there was a name I was not familiar with on the initial papers, and this was the name of IP.

There is a small progress. After all my calls and emails, they finally paid my outstanding VAT, therefore my accountant was able to issue a confirmation letter, that I do not have any outstanding debts. IP said, that after receiving the letter I will receive 50% of my cash. I checked my account and I noticed they paid, but 5% of my funds, I sent them email requesting explanation (no response), but upon checking my account, I noticed they paid additional 10%. Still far from agreed 50%.

One more question please, when should I receive the rest of the money? is there anything else they are waiting for?

Kind regards,

[Jeremy @ Silva Insolvency]

The IP has responsibility so it's up to him/her how much of a buffer should be retained. It will depend on the circumstances, the figures and the IP's perception of the risk of claims. Because it's about personal judgement it's difficult to criticise and if the IP doesn't want to distribute the money it won't be possible to make him/her do so.

In practice, IPs know that shareholders want their money as soon as possible. So long as they don't see any risk IPs will normally start making substantial distributions as soon as possible.

Staff should know their complaints procedure. It's often on the website or in engagement letters too. I don't see how failing the explain the complaints procedure and who has responsibility should act as a shield!

Ultimately the IP is responsible for the case even though other people may be doing a lot of the administration (which is perfectly normal).

I hope, now that you've pinned down the IP (whose name should have been on a lot of your original liquidation paperwork), you'll get some action.

[BarbaraW]

I'm on holiday at the moment, so wouldn't be around to take a call on Monday, however thought I'd put a few comments here which may provide some comfort.

Re Lance's/GhostofTarbera's comments, appointing a liquidator is very different to appointing an accountant. An accountant just helps you deal with your tax/accounting obligations. The company is still yours, the accountant has no ownership or control over it.

If you appoint a liquidator, you are signing over control of the company to that liquidator. So it's totally normal that as soon as your company's bank are aware of the appointment, they'll freeze out your access. Typically the liquidator would request the bank transfers funds to an estate account the liquidator controls, from there they can then make payments (potentially for VAT or other company liabilities, but equally distributions to the shareholders).

It's also normal that there will be one individual who is the licensed insolvency practitioner behind the firm. Their name will appear on all the important paperwork, but it's also normal that you might not speak to them much/at all. Eg for MVL Online, that individual is David Thorniley, but in practice he only steps into customer queries when things get really problematic. 99% of things can be dealt with by other staff.

It's obviously not good at all that the firm is seemingly ignoring your calls/emails, and they deserve grief for that. However, aside from that significant issue, what you've described sounds like reasonably standard practice. They don't want to be in a position where they pay out a large chunk of the company's funds to you personally, and then HMRC advise there's a big VAT liability due, so they then need to chase funds back from you to settle it, hence they're asking your accountant to confirm the position with regards to company liabilities.

Ask your accountant to write the letter, stating that at the point of liquidation the company should have had £X in the bank account, £Y of creditors, leaving retained funds expected to go to the shareholder of £Z. Whilst you may well have already provided it, get the letter to include full details of the company tax payment(s) needing to be made, with amounts/references etc. The liquidator should then settle those, and make a distribution to you fro1m the remainder.

It is normal that they may wish to temporarily retain a buffer of funds, just in case an unexpected creditor creeps out of the woodwork. At the end of the process, once the liquidator has got HMRC clearance and the period for other creditors to object has passed, they'll then pay out the balance and move to close the case.

Hello,

thank you for your response and enjoy your holidays!

I do understand they don't want to distribute the money until they have a clearance from HMRC, however in this case it is a visious circle. They have conrirmed that they will pay Q1 VAT on my behalf (the only thing outstanding). After many emails, calls then never answered etc, they confirmed they will pay VAT on 24th June. I have chased them regading that, no response, but instead, they told me they won't distribute the money until everything has been paid.
It would be so much easier if someone would return my call and we could discuss that.

In desperation, I borrowed the money and I was thinking to pay it myslef, form the personal bank account, but I wasn't sure if I am allowed, and again, since they are ignoring me, I can't even discuss that.

you mentioned a buffer to retain which would be perfectly understandable, but so far they distributed ... £100 out of few years worth retained income.

I sent the letter to my accountatnt, and I willl keep calling this company as well.

Thanks for advice!

Kind regards,

[Maslins]

I'm on holiday at the moment, so wouldn't be around to take a call on Monday, however thought I'd put a few comments here which may provide some comfort.

Re Lance's/GhostofTarbera's comments, appointing a liquidator is very different to appointing an accountant. An accountant just helps you deal with your tax/accounting obligations. The company is still yours, the accountant has no ownership or control over it.

If you appoint a liquidator, you are signing over control of the company to that liquidator. So it's totally normal that as soon as your company's bank are aware of the appointment, they'll freeze out your access. Typically the liquidator would request the bank transfers funds to an estate account the liquidator controls, from there they can then make payments (potentially for VAT or other company liabilities, but equally distributions to the shareholders).

It's also normal that there will be one individual who is the licensed insolvency practitioner behind the firm. Their name will appear on all the important paperwork, but it's also normal that you might not speak to them much/at all. Eg for MVL Online, that individual is David Thorniley, but in practice he only steps into customer queries when things get really problematic. 99% of things can be dealt with by other staff.

It's obviously not good at all that the firm is seemingly ignoring your calls/emails, and they deserve grief for that. However, aside from that significant issue, what you've described sounds like reasonably standard practice. They don't want to be in a position where they pay out a large chunk of the company's funds to you personally, and then HMRC advise there's a big VAT liability due, so they then need to chase funds back from you to settle it, hence they're asking your accountant to confirm the position with regards to company liabilities.

Ask your accountant to write the letter, stating that at the point of liquidation the company should have had £X in the bank account, £Y of creditors, leaving retained funds expected to go to the shareholder of £Z. Whilst you may well have already provided it, get the letter to include full details of the company tax payment(s) needing to be made, with amounts/references etc. The liquidator should then settle those, and make a distribution to you from the remainder.

It is normal that they may wish to temporarily retain a buffer of funds, just in case an unexpected creditor creeps out of the woodwork. At the end of the process, once the liquidator has got HMRC clearance and the period for other creditors to object has passed, they'll then pay out the balance and move to close the case.

[Lance]

Issue with MVL and insolvency practicioner

Sorry to hear about his.

Is it normal practise to handover control of the bank to the insolvency people?
I’d never do that for an accountant or any other professional. If o has no choice about doing it for an IP I’d be very cautious in my due diligence.

[BarbaraW]

i'm really sorry to hear about this.

You can complain about an insolvency practitioner on the UK gov website at 'complain-about-insolvency-practitioner'. I'm not sure how quickly they will act though so might might not help too much for a pressing matter like yours. You could also try the ICAEW though I think they will pass you on to the Insolvency Service.

Hopefully the IP is honest. If not, each case should be insured with a 'statutory bond' so the assets should be protected.

Clearly the service is unacceptable. The IP should be working with you so you fully understand the situation and what can be done about it.

The root cause of the issue is probably that the IP is concerned about his/her own risk. If an IP distributes funds to the shareholders and then it later turns out HMRC are owed money the IP will have much to answer for. Hence s/he wants reassurance from the accountant that there are no outstanding amounts owed before making any distributions. I don't see why the IP hasn't paid the VAT and CT if they know the amount owing. They can't really be criticized for paying creditors (and, indeed, interest accrues on those while they are unpaid). Maybe the IP will be satisfied with a letter from the accountant spelling out the amounts owed and how to pay them along with an assurance that there is nothing else to pay.

If necessary I think you can pay both the CT and the VAT online direct to HMRC. You'd need the right account and period references. Once you did that YOU would become a creditor of the company instead of HMRC. Your IP should repay you as a creditor as well as making the shareholder distributions. [Don't let the IP roll them together as distributions otherwise you'll pay more tax on the extra distributions.] It might be better to tell the IP you're going to do that before doing so to check it will resolve the situation for you.

Good luck with all this.

Hi Jeremy,

thank you for your response.
I already complained on that gov website, attached all the correspondence, however they closed the case saying they can't see the formal complaint I made to the insolvency practicioner. This was true, but why.
My accounatnt was approched by the member of this company, offering MLV services, since I knew I want to do that, I contacted them. The person I spoken with was very professional, explained the process etc, so I agreed to signed the contract with them. Then two other people were dealing with my case, at the beginning, all great, sending documents to sign, responing to my emails. Until they froze my money. That was it.
I was complaining to them, I was also asking receptionist (the only person who was taking my calls), who can I complain to, withing the company, and she did not tell me!
When I had enough and started filling in that online form on 'complain-about-insolvency-practitioner', tI used: "you can find the name of all insolvency practitioners, including the name of their authorising body here and their contact details at http://www.insolvencydirect.bis.gov.uk/fip1/", I found out, there is only one authorised person in the whole company, and it is none of the person I was dealing with.
But because I never sent a formal complaint to him (obviously, I did no know about him and his name is not on a website), the compaint has been closed or suspended.
I managed to find his details and now I complained, but I need to give him 14 working days before I start another complaints.

Luckily, I don't have any outstanding corporation tax to pay, last year I paid it, and 2 months later I received a warning that If I won't pay it, I will get fined, I thought I made misteke/it was returned and I didn't notice, and paid it again immediately. It was a mistake not on my side, CT was paid, and I ended up paying twice, but my accountant said we can leave it there and I will only have to pay a difference in 2020. CT for 2020 is lower than 2019 so actually HMRC needs to return part of it.

IP are fully aware how much I owe HMRC, they confirmed they will pay that VAT on my behalf, and they received everything to make this payment.(reference, amounts, account number). My accountant told me they never paid it, I started chasing them, asking, no response.
I was very clear, that when they pay VAT on my behalf, my accountant will be able to sign a document confirming nothing is outstanding.

The main problem is noone is taking mine or my accountant calls, sometimes they will respond to email (clearly not reading them, or not understanding them)

I might ask one of my friends to call them, saying they are a potential clients and see if they will answer ...

Again, thanks for help and detailed explanation

Even

[northernladuk]

name and shame ? (so others don't suffer the same fate)

That's not the smartest move while they are holding a good chunk of your money and being tits about it. Might as well kiss it goodbye there and then.

[adubya]

name and shame ? (so others don't suffer the same fate)