Liquidating Ltd Company (MVL of PSC)

[bony_13]

At the end of last year I finished contracting through my own Ltd company and took a staff role. I'm planning to close the company and claim entrepreneurs relief as being the most tax efficient route out of it. The company has no debts and is a very straight forward PSC.

I have googled and read some advice but thought I would ask this forum for any advice and pointers before I started the process in earnest.

Is the suggest £4-6k for liquidators fees about right?
Should it really take 6months?
Are the online liquidators best avoided?

Thanks in advance

[robsdesk]

I used MVLonline to wind up my contracting ltd about 18 months ago (I also went back to a perm role), more details here: https://www.pistonheads.com/gassing/topic.asp?h=0&...

Substantially less than 4k costs, was easy, they have the process well setup, so long as you have the company in the right state (cash in bank, no liabilities or creditors outstanding) the process is simple, mine took about 4 months - initial distribution (75% in my case) in a couple of weeks, remainder was 4 months later once HMRC approved it - that's the slow bit.

I'd recommend them, cost effective and were on top of the admin (which is basically all this is).

[Eric Mc]

The cheapest option might be a simple winding up/striking off application. That does depend on how much value is left in the company at the time of winding up.

[troika]

If less than £25K resulting balance sheet, voluntary winding up with proceeds treated as capital gains. All depends on the numbers involved, speak to your accountant.

[johnnymiller]

troika said:

If less than £25K resulting balance sheet, voluntary winding up with proceeds treated as capital gains. All depends on the numbers involved, speak to your accountant.

This is the advice I was given too. minimise your corp tax by paying £40k into pension, then if less than 25k left strike off company and pay CGT, or if more MVL and entrepeneur relief. in my case my PSC owns my car so I'm going through MVL process now as the value of the car is considered to be part of the capital distribution

[PostHeads123]

Remember as part of MVL you have to get approval from HMRC that they are happy for you to close the company and there is no outstanding issues. Now I know when I did it years ago it wasn't a problem and HMRC pretty much said yes its fine for every company but in the current climate with IR35 changes I can imagine HMRC would be looking at MVL and ER applications a lot more closely as its easy fishing. I could be totally wrong though.

In terms of MVL generally remember you are basically giving control of your cash to the liquidator, they may pay out earlier than 6 months but a lot will wait till they have the HMRC approval, I think mine tool approx. 9 months all in start to finish. I never met the liquidator in person done all over email etc I think I used MVLonline they get good reviews on contractoruk forum.

Edited by PostHeads123 on Tuesday 3rd March 11:43

Edited by PostHeads123 on Tuesday 3rd March 11:44

[Shaoxter]

Eric Mc said:

The cheapest option might be a simple winding up/striking off application. That does depend on how much value is left in the company at the time of winding up.

Is what I'll be doing after getting the final payment into my Ltd co this Friday.
I don't want liquidators and HMRC nosing in on my company, especially in the current IR35 climate. For me the overall cost is pretty similar for both methods, but if you had hundreds of thousands in you company then MVL is probably the only option.

[bony_13]

Thanks for all the replies and recommendations.

I feel coy about saying so, but it's well over the £25k. I basically had 4years of contracting and paying myself minimal dividends as and when needed on top of the tax free allowance.

The idea of now choosing to put some funds into a pension appeals to me so I will look into that. I'm already thinking of consolidating a few small previous funds into the new Vanguard pension.