Member Voluntary Liquidation Costs and Timescale

[swebb]

Hi, I'm considering shutting my company down as I've been in business almost 10yrs have a fair amount locked in the company and I plan to take an extended break.

I've done a bit of reading around the forum and discovered that Liquidation is probably the way to go ahead and hopefully I will only take a 10% hit.

Before I go ahead with this I'd like some feedback on what is considered to be a reasonable charge to handle the liquidation and also from the start to finish how long it normally takes.

Also if in future I wish to start a company again which may well be another IT company does the fact that my previous company went in to liquidation have any bearing on matters.

Thanks in advance

[ChimpMaster]

MVLOnline if you have a straightforward company structure.

Probably around £2k to £3k.

6 to 9 months.

[TheCyclingProgrammer]

Liquidating shouldn't cause any future issues.

There is legislation (transactions in securities) HMRC can use if they think somebody is simply closing down one company, extracting all the cash at relatively low tax rates and then shifting all remaining assets (particularly goodwill and existing trade) to a newly formed company just to continue trading (often called phoenixing although I'm pretty sure HMRC use that term to refer to something else).

However this shouldn't normally apply if you are genuinely cease trading and taking a break (or going back to a permie job). So I wouldn't worry too much about it, unless having done the liquidation you have a change of heart and want to start up straight away again in which case it might be prudent to get professional advice.

[swebb]

MVLOnline if you have a straightforward company structure.

Probably around £2k to £3k.

6 to 9 months.

Wow 6 to 9 months ! I was thinking it would take 6-8 weeks .... blimey

[swebb]

Liquidating shouldn't cause any future issues.

There is legislation (transactions in securities) HMRC can use if they think somebody is simply closing down one company, extracting all the cash at relatively low tax rates and then shifting all remaining assets (particularly goodwill and existing trade) to a newly formed company just to continue trading (often called phoenixing although I'm pretty sure HMRC use that term to refer to something else).

However this shouldn't normally apply if you are genuinely cease trading and taking a break (or going back to a permie job). So I wouldn't worry too much about it, unless having done the liquidation you have a change of heart and want to start up straight away again in which case it might be prudent to get professional advice.

Yes just looking to take a break and get the cash out of the company for use elsewhere, none business related. However after finding it takes 6-9 months to close the company my idea of using the money elsewhere might have hit its first brick wall

[JB3000]

Hi, I'm considering shutting my company down as I've been in business almost 10yrs have a fair amount locked in the company and I plan to take an extended break.

I've done a bit of reading around the forum and discovered that Liquidation is probably the way to go ahead and hopefully I will only take a 10% hit.

Before I go ahead with this I'd like some feedback on what is considered to be a reasonable charge to handle the liquidation and also from the start to finish how long it normally takes.

Also if in future I wish to start a company again which may well be another IT company does the fact that my previous company went in to liquidation have any bearing on matters.

Thanks in advance

I've seen this done for around £3k-£4k within 2 months.

If you are going permie, retiring, or are starting up a business in an entirely new sector I can't see a problem claiming ER.

If you are not going to genuinely cease with your trading activities, i.e. are going to start the same process all over again after a break, your claim could easily be blocked if HMRC bother to look into your affairs.

[JB3000]

Wow 6 to 9 months ! I was thinking it would take 6-8 weeks .... blimey

Google liquidators and call a few, I don't think it will take 9 months!

circa 8 weeks in my experience.

[Maslins]

MVLOnline if you have a straightforward company structure.

Probably around £2k to £3k.

6 to 9 months.

Disclosure - I own 50% of MVL Online Ltd.

Cost all in (inc VAT) will be more like £1,600-1,800 through us, exact amount depends upon net assets.

Timescale we tend to quote an estimate of 1 month until you get 75% of your funds, then another 2-3 months (ie 3-4 months total) until we have all we need from HMRC to close down and pay out the balance. Unfortunately these timescales are both heavily outside our control, the first depending upon your bank, the second upon HMRC.

As Cycling guy says, bear transactions in securities in mind. I think realistically it would only bite if someone started up a new company before the other one was liquidated, so there was no clear break in trade. Liquidating a company certainly doesn't mean you can never run another company, you just might (worst case scenario) lose the tax benefits if you started up again doing exactly the same thing straight away.

[Craig at Nixon Williams]

Also if in future I wish to start a company again which may well be another IT company does the fact that my previous company went in to liquidation have any bearing on matters.

The transactions in securities rules have not been tested in court in this type of scenario, so their interpretation is still unclear. The intention of the legislation is to prevent you from obtaining a tax advantage as a result of closing and re-opening – the length of time between closing and re-opening (and what the person did, or intended to do during that period) has been discussed here numerous times, but that is simply peoples opinion and not necessarily what HMRC would see as being reasonable.

What is known is that we don’t know how the rules will be interpreted, but if you are only taking a break from contracting (and will return in the future) then these rules are certainly something that you should pay attention to. Do your research, ask your accountant and make a decision from there about how to proceed.

I hope this helps!
Craig

[st0001]

Having recently completed the process with MVLOnline, I highly recommend them. They made the process straightforward, emails were always answered promptly with detail responses.

You get the first payment relatively quickly and then have to wait for the second final payment. MVLOnline kept me up to date on the progress of the liquidation throughout the process.