Reply to: MVL - VAT Reclaim

[Maslins]

VAT 427 looks pretty straightforward, so how much hassle / delay does it add? Obviously a significant delay would make it pointless as the amount saved would be lost in interest assuming the form has to be processed before the initial distribution?

VAT 427 seems to refer to taxable "persons" though, rather than a Ltd Company?

I don't think "persons" is relevant, ie companies can get it too.

Our entire offering is built around offering as quick and efficient service for the client as we can, whilst ticking all the legal boxes required for a formal liquidation, at an affordable fee. Many of our testimonials compliment us on how hassle free the whole process was.

Reclaiming VAT is something my business partner and I discussed at length before launching MVLO. We decided (others obviously decided differently) there were enough reasons why it would be a pain for all concerned, that for the sake of ~£250/case it wasn't worthwhile.

As said before, if a potential client's particularly bothered about reclaiming VAT whilst still using us, they can approach us to invoice them early.

[Craig at Nixon Williams]

VAT 427 looks pretty straightforward, so how much hassle / delay does it add? Obviously a significant delay would make it pointless as the amount saved would be lost in interest assuming the form has to be processed before the initial distribution?

VAT 427 seems to refer to taxable "persons" though, rather than a Ltd Company?

The refund from HMRC doesn't need to be received before they make the distribution. You will receive the majority of the distribution early on and then the VAT refund will be passed on to you once it has been received by the liquidator.

A Limited company is a taxable person so that is the correct form.

[Crossroads]

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.

VAT 427 looks pretty straightforward, so how much hassle / delay does it add? Obviously a significant delay would make it pointless as the amount saved would be lost in interest assuming the form has to be processed before the initial distribution?

VAT 427 seems to refer to taxable "persons" though, rather than a Ltd Company?

[ChimpMaster]

For what it's worth I can highly recommend MVL Online. It's clear, easy, mostly all online (except for the solicitor's witness signatures you need to post) and hassle free. My accountant was only involved for some very basic questions I had.

The liquidation itself does take a few months, but that's only because you have to go through the motions, and of course anything involving HMRC will take a while... but again MVL Online do chase them and are quick to answer any queries even when I just simply asking for an update.

They are cheaper than others but the reason I chose to go with them is due to trusting them with the company money and of course previous recommendations here.

Feel free to PM me for more details.

[Martin at NixonWilliams]

We have seen some accountants throw their toys out of the pram and try to charge additional closing fees when their client chose not to go with the recommended IP firm. Cynics would say it's because then the accountant won't get the hefty kickback (which are illegal for IPs to pay anyway...but that's a story for another day). The accountant will argue that the good relationship means they know what their preferred IP needs, format etc, whereas the assumption is another firm (ie us) will be really difficult and cause lots of extra work for the accountant (we don't).

I'm sure NW wouldn't look to do that. Indeed a few of MVLO's clients to date have been ex NW clients (whether that was before them having their own linked IP, or after for a modest fee saving I don't know).

That's certainly not our style, we let our clients know we have a recommended provider if they want it, but it is their choice from the outset.

& either way, our fee is the same

[Scratch It]

I would agree but again mvlo and wf are surely trustworthy providers, not 'man and dog ltd' where the op needs to be concerned with trust. They'll have well over a hundred staff between them I'm sure. Care to discuss reciprocal work between accountants and ip practices and the conflict of interest this can provide?

[Maslins]

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...

Indeed there shouldn't be any risk. For clarity, I'm not talking about risk your cash will disappear due to a dodgy MVL provider, just risk of additional aggro.

We have seen some accountants throw their toys out of the pram and try to charge additional closing fees when their client chose not to go with the recommended IP firm. Cynics would say it's because then the accountant won't get the hefty kickback (which are illegal for IPs to pay anyway...but that's a story for another day). The accountant will argue that the good relationship means they know what their preferred IP needs, format etc, whereas the assumption is another firm (ie us) will be really difficult and cause lots of extra work for the accountant (we don't).

I'm sure NW wouldn't look to do that. Indeed a few of MVLO's clients to date have been ex NW clients (whether that was before them having their own linked IP, or after for a modest fee saving I don't know).

[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

[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...

[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.

[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.

[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.

[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.

[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.

[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