Reply to: MVL / Claiming ER / Company Year End

[Maslins]

So the information from MVLOnline is that it will be "distribution in specie", but I really dont understand what this means... Its seems when I close my company business bank account the funds will be in my personal account. 50% of the loan will be distributed immediately following our appointment. The remaining 50% will be distributed right at the end of the process, which might be 6+ months after our appointment.

Exactly that. Think of it like getting an advance on a salary payment. You get the cash now, but you "earn" it later.

From a personal tax perspective each distribution will be a separate CGT event (so yes, if they straddle two tax years it's a bit annoying in that you'd have to declare on two separate yearly personal tax returns, but you'd typically get the benefit of two years worth of annual exemption). MVLO can't guarantee any particular tax treatment, largely because they won't know exactly what you've done prior to liquidating (hence whether you'd meet the criteria for BADR for example), nor what you'll do next (hence whether you might breach the TAAR). The personal tax side of things would tend to be one for your accountant.

[Lance]

They dont provide information on personal tax affairs.

no but you could ask them if this counts as one or two distributions for the calculation of CGT.
I *think* that this will just be one. But I'm not an MVL specialist.

[Sonicboom]

Have you asked your MVL specialist?

They dont provide information on personal tax affairs.

[Sonicboom]

Yes. BADR is just a relief on CGT. If it's valid then it's valid.
If you funds are released over two years then so be it.

Although are you sure the capital distribution is actually done twice, or is there a distribution in specie going on? Why not, err I dunno, ask MVLOnline?

So the information from MVLOnline is that it will be "distribution in specie", but I really dont understand what this means... Its seems when I close my company business bank account the funds will be in my personal account. 50% of the loan will be distributed immediately following our appointment. The remaining 50% will be distributed right at the end of the process, which might be 6+ months after our appointment.

[northernladuk]

MVLOnline has informed me the process takes around 6/8 months for HRMC to get final sign off. So if my funds distribution occurs over 2 tax years? (21/22 and 22/23) can I claim the BDAR tax rate of 10% on across BOTH tax years???

Have you asked your MVL specialist?

[Lance]

So before I provide an update, I just wanted to apologise to Maslins, there was confusion on my part and you were 100% MVLOnline is the company :-)


So I have asked Crunch to start my CLOSING ACCOUNTS, but I had question around claiming BDAR (ER 10% tax rate)


MVLOnline has informed me the process takes around 6/8 months for HRMC to get final sign off. So if my funds distribution occurs over 2 tax years? (21/22 and 22/23) can I claim the BDAR tax rate of 10% on across BOTH tax years???

Yes. BADR is just a relief on CGT. If it's valid then it's valid.
If you funds are released over two years then so be it.

Although are you sure the capital distribution is actually done twice, or is there a distribution in specie going on? Why not, err I dunno, ask MVLOnline?

[Sonicboom]

So before I provide an update, I just wanted to apologise to Maslins, there was confusion on my part and you were 100% MVLOnline is the company :-)


So I have asked Crunch to start my CLOSING ACCOUNTS, but I had question around claiming BDAR (ER 10% tax rate)


MVLOnline has informed me the process takes around 6/8 months for HRMC to get final sign off. So if my funds distribution occurs over 2 tax years? (21/22 and 22/23) can I claim the BDAR tax rate of 10% on across BOTH tax years???

[Lance]

How do you think that works?

Circumstances for everyone are different and, for instance, if you had an excellent rate inside IR35, the prospect of a long term contract, the chance to get all the money out of your company at very low tax rates and permanently kill any risk of IR35 investigations for several previous years you might consider shutting down for a couple of years.

Doesn't mean you're going to benefit from any less competition.

au contraire.
There's plenty of clients that want a genuine B2B relationship. The pool of available contracting resource to fulfil that is getting smaller as they all become employees. Granted that they might choose to start another LTD., but not for 2 years they're not. The herd is thinned.

[Smartie]

thin out the herd

How do you think that works?

Circumstances for everyone are different and, for instance, if you had an excellent rate inside IR35, the prospect of a long term contract, the chance to get all the money out of your company at very low tax rates and permanently kill any risk of IR35 investigations for several previous years you might consider shutting down for a couple of years.

Doesn't mean you're going to benefit from any less competition.

[crack_ho]

Next year as in 6+ months from now?! Frankly that's pathetic.

Yes it is. I've posted previously about their turnaround of end of year accounts taking 9 months. Only just made the deadline this year.

then they're unlikely to have a lot of time to provide a helpful handover to any new accountant.

I was also concerned about that. My book keeping is up to date in Free Agent so assume that helps. I guess the treatment of assets/depreciation would be the only thing I don't have great visibility of. Not sure if this is easily discernable from the end of year accounts.

[Maslins]

I'm in a very similar position. Needing my final accounts to be prepared before liquidation.
My accountant is not able to do them until next year.
So are there any recommendations for a liquidator that offers a fuller service that would encompass the final accounts and CT calcs.

Next year as in 6+ months from now?! Frankly that's pathetic.

I doubt many liquidators will want to do much in the way of accounting/corporation tax work. Often where they have to as part of their role they'll subcontract it out to accountants (and the company being liquidated, ie the client, will be paying for it).

Realistically if you want/need them done earlier than that, I'd suggest your first port of call would be to more aggressively prod your existing accountant. It will be less effort for them to do it than anyone else, as they'll already have all the data, everything set up, know your situation etc. If that doesn't work, then worth looking at other accountants who may be happy doing this as a one off. Downside of this is the "new" accountant will have to do a lot of stuff that you won't feel adds much value to you (ie gather info, do AML checks, learn your situation etc) before then being ablel to do the tasks you want. Hence expect a non trivial fee. The size will at least partly depend on how savvy you are, how good your bookkeeping data is etc. Realistically if your existing accountant says it'll be 6+ months before they can do accounts/CT return for you, then they're unlikely to have a lot of time to provide a helpful handover to any new accountant.

[Lance]

thin out the herd

[northernladuk]

I'm in a very similar position. Needing my final accounts to be prepared before liquidation.
My accountant is not able to do them until next year.
So are there any recommendations for a liquidator that offers a fuller service that would encompass the final accounts and CT calcs.

Try the company one post above yours?

[crack_ho]

I'm in a very similar position. Needing my final accounts to be prepared before liquidation.
My accountant is not able to do them until next year.
So are there any recommendations for a liquidator that offers a fuller service that would encompass the final accounts and CT calcs.

[Maslins]

Just to mention as of about a month ago MVLO have changed how they deal with client funds. New clients do get 100% of the company's cash at the start of the process.