Reply to: high accountant fees for closing the company

[Gonzo]

This is a good point. Indeed, you may not need to do a capital liquidation if you are ceasing to be UK resident as there will probably be no UK tax on a dividend once you have ceased to be UK tax resident.

The OP will have to research how the company would be viewed when they move to their new jurisdiction.

In my case, it was more advantageous to pay CGT (with entrepreneurs' relief) in the UK than it would have been to take a dividend once I had moved to my new country.

[THEPUMA]

Just a thought, but if you are going abroad and not coming back, should you not be more worried about the taxes where you will be living.

This is a good point. Indeed, you may not need to do a capital liquidation if you are ceasing to be UK resident as there will probably be no UK tax on a dividend once you have ceased to be UK tax resident.

If you do decide to go ahead with a Members' Voluntary Liquidation, our insolvency practioner is suggesting that a fee of £2,500 + VAT plus disbursements (circa £500) would be what he would seek to charge a typical contractor. Please feel free to PM me for further details.

[Waldorf]

Thanks for all your replies. my company account balance is much more than £60K, so taking dividends is not at all an option for me. my company year-end is in May and the accountant says the company closure takes upto three to four months. so I will have to be in contact with them through even after moving abroad (and probably send documents by post if there are any to sign). I informed about moving plans to my accountant much earlier, but they said I can manage this even from abroad through email and making payments online. and my contract expires next week and I can't close my company before that. if I had known about this high closure charges before, I would have gone to another accountant and saved lot of money. I came to know about this new law (going to insolvency practitioner to get Entrepreneur's relief) only recently and didn't have much time to explore other options.

Just a thought, but if you are going abroad and not coming back, should you not be more worried about the taxes where you will be living.

[ramap]

Thanks for all your replies. my company account balance is much more than £60K, so taking dividends is not at all an option for me. my company year-end is in May and the accountant says the company closure takes upto three to four months. so I will have to be in contact with them through even after moving abroad (and probably send documents by post if there are any to sign). I informed about moving plans to my accountant much earlier, but they said I can manage this even from abroad through email and making payments online. and my contract expires next week and I can't close my company before that. if I had known about this high closure charges before, I would have gone to another accountant and saved lot of money. I came to know about this new law (going to insolvency practitioner to get Entrepreneur's relief) only recently and didn't have much time to explore other options.

[Nixon Williams]

I am closing the company, because I am moving abroad permanently and I got only two weeks left now (I have already booked the tickets). they said I have to use insolvency practitioner if I need to get Entrepreneur relief and pay reduced tax rate (due to the new law came into effect from 01-Mar-2012). what are the options available to me now, since I can't go to another accountant now? the insolvency practitioner says he is actually charging me me less. he says he charges between £7000 and £10000 for his clients. I am not sure what I can do now. Please advise.

You have not left yourself much time to give you many options.

We now have an arrangement with an insolvency practicioner who would charge £3500 and possibly get all the work done within a week, however that would depend on the remaining company accounts etc being in order.

There is not enough time, in my view to do this within 2 weeks if the accounts etc need to be prepared and then a formal insolvency prepared.

Sounds like you may be stuck with paying over the odds.

[theroyale]

I can't comment on the later part of this thread talking about insolvency but just the £126 + VAT plus the £210 + VAT for closing the company down and doing year end accounts seems bloody expensive to me. Also I see that you're charged each time they have to fill out a reference.

I account with a small firm that charges me £60 + VAT a month and have never in 18 months asked for a penny more - even for the considerable work involved with my recent Tier-1 visa extension.

[MrRobin]

How much capital is in the company to distribute? If it's less than £60k you might be better off taking a dividend to reduce this and then using entrepreneurial relief on the remaining £25k which you can then do without the use of an insolvency practitioner.

[cojak]

I am not sure what I can do now. Please advise.

Pay the man his money?

As Waldorf says, you've left it too late to do anything else.

[Waldorf]

You;ve left this all a bit late really.

This is going to be expensive because of your inability to plan properly.

[ramap]

I am closing the company, because I am moving abroad permanently and I got only two weeks left now (I have already booked the tickets). they said I have to use insolvency practitioner if I need to get Entrepreneur relief and pay reduced tax rate (due to the new law came into effect from 01-Mar-2012). what are the options available to me now, since I can't go to another accountant now? the insolvency practitioner says he is actually charging me me less. he says he charges between £7000 and £10000 for his clients. I am not sure what I can do now. Please advise.

[Waldorf]

the cost has gone up a lot now. the accountant is charging me the fee for the full year even though I am closing down the company three months before that. on top of that the insolvency practitioners are charging £6000 plus VAT and extra disbursements cost around £1500 + VAT, to get the Entrepreneur's relief. so the company closure is costing me close to £10000. not sure if this would have been the same if I had chosen a different accountant.

This is way over the top, my accountant is indicating £3500 and I have seen someone on here mention £2000, disbursements should be hardly anything. You could get your accountant to do the final accounts and then source your own liquidator.

[cojak]

Insolvency practitioner??

So this isn't a simple closure because you've decided to go permie?

I guess the question we should have asked is why are you closing the company, because that doesn't sound like it's real to me...

[ramap]

the cost has gone up a lot now. the accountant is charging me the fee for the full year even though I am closing down the company three months before that. on top of that the insolvency practitioners are charging £6000 plus VAT and extra disbursements cost around £1500 + VAT, to get the Entrepreneur's relief. so the company closure is costing me close to £10000. not sure if this would have been the same if I had chosen a different accountant.

[Waldorf]

Thanks. I started my company in May 2007 and I normally pay corporation tax by end of February every year. I haven't paid the corporation tax for this year yet and need to do it by end of this month. my contract is expiring in first week of March and I told them to mark the "cease to trade" date as end of March this year.

So, assuming that your yearend is May, then by March you will have done 10 months of the current year.

If you are paying £105 per month (I assume you use SJD?) then they are wanting to charge you a full years fee for the accounts, being 105 * 2 = 210?

Sounds a bit much but you probably have no choice, as it will not be worth moving. You could try and negotiate?

[ramap]

You need to provide some dates so that we can comment with all the facts.

If you have just had your year-end and are now closing, then there will be extra costs to prepare accounts etc, if you are effectively closing after say 10 months trading then the extra costs do sound puzzling.

If you are paying £105+VAT for the monthly fee, ask them to justify the fee if you are still not happy.

Thanks. I started my company in May 2007 and I normally pay corporation tax by end of February every year. I haven't paid the corporation tax for this year yet and need to do it by end of this month. my contract is expiring in first week of March and I told them to mark the "cease to trade" date as end of March this year.