IT Contractor Saves £10,000 By Using MVL
An IT contractor recently approached SFP Group as he had come to the end of his contract and had decided to return to a permanent role.
During the 5 years he had been contracting, he had accrued around £42,000 of cash in the business bank account. In addition, he had around £6,000 worth of fixed assets – despite taking his required salary and dividends each year.
The contractor was going to close down his limited company and take the cash as a dividend. The tax on this would have been 32.5%.
Fortunately, after a consultation with his accountant, he approached us to discuss using a Members Voluntary Liquidation (MVL).
We talked him through the process and gave an indication of how much he could save. Not surprisingly, he decided to go ahead.
After appointing us as his liquidator, he received an initial payment of £36,000 of his funds on the first day of his appointment.
He will receive the remaining funds of £10,000 once HMRC have cleared the liquidation (usually within 6 months).
Overall the MVL process saved our client over £10,000.
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