If you need any clarification or have other questions, drop us a call and we will be happy to help.
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This is probably the most important question on your agenda. Normally if the shareholders are prepared to sign a deed of indemnity then a payment can be made to shareholders within a few days of the receipt of the Company funds. However, it does take time to get to the stage of closing the liquidation and this will vary depending on the complexity of the work to be done.
One of the areas to deal with is getting clearance from HMRC. This is for them to confirm that all returns have been submitted and either confirm that they have no claim or alternatively they do have a claim that needs to be paid. Again, with planning in the period prior to appointment, the aim is to ensure that all returns are submitted and paid prior to our appointment.
Currently due to the pandemic getting clearance from HMRC is taking much longer.
Yes, as soon as it is possible to give you an idea of how long the process will take, we will. It’s a difficult waiting process but unfortunately there are certain legal requirements that involve a waiting period, so creditors have time to come forward, and it is currently taking longer to get clearance from HMRC.
The overarching, simple answer to that is ‘you need to do the books’. That means finalising the accounts, ensuring creditors are being paid, making sure the staff and other parties have been notified. What needs to be done will vary from business to business, but the end result is the same.
We appreciate this may seem a complex and rather difficult process. Directors are often surprised by the amount of detail required in closing the books. It actually isn’t quite as daunting as it seems because we will work with directors to help them through this process prior to our appointment. In an ideal world, all of the company assets will have been realised, all creditors have been paid, and all returns have been submitted to HMRC.
Once the three stages above are complete we need to advertise our appointment and advertise for creditors to come forward within 28 days in the London Gazette. We will also need to communicate with HMRC regarding your position on tax, VAT and any other monies owed to them (or owed to you) and get clearance from HMRC.
Happily, no. The practicalities of the situation are that by the time you reach these meetings, you will have appointed us, already have agreed the process and be ready to move on. In the case of a family business or a consultancy for example the whole process can often be completed in around an hour on the same day.
The simple answer is that it saves you tax. In the past, it was possible to simply close up your business and tell HMRC. It was felt that this was open to abuse though so a new system was put in place requiring that if your solvent business had assets over £25,000 you must use an Insolvency Practitioner in order to claim the distribution as a capital distribution.
No. By appointing us the return to you as a shareholder will be treated as a capital return and therefore be subject to capital gains tax (CGT). First of all, each shareholder will have an annual exemption which means an amount will be tax-free. Secondly, if Business Asset Disposal Relief applies currently, the first £1 million pounds will be taxed at 10% rate rather than the higher GCT rates. Obviously, this all depends on your personal circumstances, but we will explain your position fully at our meetings. We would however recommend that you discuss the matter with your tax advisor.
It will vary depending on the liquidation. A company with, for example, 5 directors and 30 shareholders will have a higher cost than the majority of cases where the directors and shareholders are the same people. We offer a fixed fee so that you know what you will be paying before you instruct us. There are also certain legal disbursements that are required, for example, the statutory advertising, but again these will be explained to you prior to us being instructed. What we will always do is make sure that all costs are clear and there are no surprises.
Firstly, as highlighted above, if you have assets greater than £25,000 and you want the distribution to be treated as a capital distribution, legally you need to appoint an insolvency practitioner. The difference with a specialist practice like ourselves is that we are offering more than form filling. Our years of expertise can mean a much better result for you. We spend time with you prior to our appointment to ensure that the process is as simple as it can be and keep you up to speed at all times. What it comes down to is knowing that you are getting the best result legally, financially and in terms of support.
Find out more about our insolvency, liquidation or recovery service. Learn how we can support you with clear, straightforward and empathetic guidance and support.