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October 3, 2013 / Advice For Accountants

Members Voluntary Liquidations (MVLs)

Our fee for simple MVLs is £995 (+VAT, +disbursements). This has raised a few questions from Accountants, including:

Who might benefit from an MVL?

Since 1st March 2012 changes to the ESC C16 mean that any distribution to shareholders upon closure of a company over £25,000 must be treated as income, and therefore taxed accordingly.

By using an MVL the funds can be distributed as capital, thereby reducing the tax burden. This can result in considerable tax advantages for the director(s) of the company.

A typical scenario would be where a consultant decides to return to full-time employment, and wants to close down their company and take out their money in the most cost-effective way. Or where a director is retiring and closing the (solvent) business down.

In determining if an MVL would be right for a particular situation, we would leave the tax calculations to the Accountant. Where it is deemed that an MVL is the best solution, an Insolvency Practitioner must be used.

Is there a ‘closure fee’ for the Accountant?

You can charge your client for the whole closure process, including our fee and your fee for the work you do in closing their company. Then, you pay us for the MVL aspect.

Also, we are more than happy to deal directly with you rather than with your client / the director(s) of the company – as that tends to be easier for everyone.

What is a ‘simple’ MVL?

Essentially, this is where:

  • the company’s only asset is cash at bank
  • any liability owing to HMRC has been paid

If there is an overdrawn loan account, we still consider this to be a ‘simple’ MVL.

What are the ‘disbursements’?

Statutory Adverts

Throughout the course of the MVL we have to take out 4 Statutory Adverts in the London Gazette to comply with legislation and best practise. The cost of these is (4 x £73.00 +VAT): £350.40

Statutory Bond

A compulsory bond needs to be taken out. This provides you with 100% security whilst funds are under the control of Clarke Bell. The bond fee is dependent on the cash-in-bank that is to be distributed, for example:

         Asset Value (£) Premium (£)
     25,001   –      50,000     150
     50,001   –    100,000     200
   100,001   –    250,000     300
   250,001   –    500,000     600

For more details call us on 0161 907 4044.

What is a ‘Declaration of Solvency’ fee?

Upon the company being placed into MVL, the directors are required to attend a solicitor’s office to swear a Declaration of Solvency. This can be done by any local solicitor, normally for about £10.

Do Clarke Bell give tax advice?

No. We are not tax experts, so we do not give any tax advice.

However, we can refer you to a tax solicitor who is an expert on MVL-related tax issues. (And there is no danger of them trying to poach your client).

Other topics covered in our Newsletter…

Virtual Meetings at your desk

To make life more convenient for everyone involved, Clarke Bell are able to host meetings on-line.

See the full Newsletter for more details…

Free review for anyone in a Debt Management Plan

If any of your clients are in a Debt Management Plan, they can have a FREE review of their situation to see if it really is the best solution for them.

See the full Newsletter for more details…

Supporting the Sole Practitioner Conference 2013

Clarke Bell are delighted to be supporting the ICAEW Sole Practitioners Conference (North West) for the third year running.

The event is on 14th November at Haydock Park Racecourse.

See the full Newsletter for more details…