Stage 1 Additional Information
The Practice’s Fee and Expenses Summary
The Liquidator’s Fee
In the engagement letter, you will see that we have proposed a fee to cover all the work undertaken by us both in putting the company into Liquidation and in handling and completing the Liquidation. The quantum of this fee has been calculated to reflect the anticipated complexity of the Liquidation and covers the following key items of work:
- providing all statutory documentation to convene and hold the meetings of the board of directors and of the members;
- assisting the director(s) to complete the Declaration of Solvency;
- checking all statutory documentation completed by the director(s) and arranging for statutory filing at Companies House and advertising in the London Gazette;
- maintaining a bank account (non interest-bearing where less than £2,000,000 is held) and cash book for the Liquidation estate;
- discharging any residual creditors’ claims;
- distributing funds and/or assets to members;
- liaising with HM Revenue & Customs (“HMRC”) to ensure that all statutory returns have been recorded, all liabilities have been paid and any refunds due have been received (note: even in the simplest of liquidations, it is our experience that significant time and effort is required to obtain the necessary clearances from HMRC);
- if the Liquidation is unable to be concluded within one year (which sometimes occurs because of delays encountered in dealing with HMRC), issuing a statutory progress report; and
- issuing statutory final accounts and reports to members and filing documents at Companies House to conclude the Liquidation.
Fixing the Liquidator’s fee as a set amount provides you with certainty irrespective of developments in the Liquidation (although the Liquidator has a statutory right to seek members’ approval to adjust the fee in the event that circumstances change significantly) and, if we were to charge our fee on the alternative basis of time costs at our standard rates, there is no doubt that this would result in a fee in excess of that proposed above.
Direct Expenses (Category 1)
Category 1 Expenses, which can be specifically identified as relating to the administration of the case, will be charged to the estate at cost (plus VAT where applicable), with no uplift. The quantum of these costs are dependent on the circumstances and needs of the case and are set by third parties. For example, the bank charges a set amount for transfers to/from foreign currency accounts. We may also incur other direct expenses, such as courier charges and Land Registry fees, which will be charged at cost to the estate.
If possible, the current insurance policy should be maintained throughout the Liquidation process with the Liquidator’s name noted which will prevent the requirement to take out any further cover. Should additional insurance be required, we shall provide you with quotes on a case by case basis.
Solicitors’ and agents’ fees:
Should solicitors or agents be required, we shall provide you with quotes on a case by case basis.
You should note that a number of documents to place the company into Liquidation are required to be signed in the presence of a solicitor. A charge by the solicitor is usually applicable, however this shall be a cost borne by the directors personally and shall not form part of our expenses, unless this has been agreed with us in order to deal with exceptional circumstances (see Indirect Expenses below). The price will vary between firms but you should expect to pay up to £100 for this.
Indirect Expenses (Category 2)
These are costs that are directly referable to the appointment in question but not to a payment to an independent party. All prices are exclusive of VAT, which will be reclaimed where possible. Where relevant, listed below are the current charging rates applied by external suppliers. If they increase by the time they are incurred, the Liquidator reserves the right to discharge that increase from the funds held in the MVL.
Anti-money laundering searches via external electronic databases: £2.92 per individual search
Mileage (where necessary): 45p per mile
Stationery, photocopying and postage: £10
The expenses listed below will be incurred on every case and, ordinarily, would be paid as Category 1 expenses according to the external supplier’s standard terms. However, in order to facilitate efficient progress of the Liquidation, they will be invoiced to the estate immediately upon the Liquidator’s appointment. For the avoidance of doubt, these are charged at cost and with no uplift:
Specific Bond Premium
A bond is required to protect the assets of the company during the Liquidation process. The bond premium is scaled depending upon the level of assets under our control. The exact cost of the bond premium will be ascertained once the Declaration of Solvency has been sworn, however an estimate of the bond premium in your particular case is provided in the engagement letter.
Statutory Advertising Costs
Notification of Liquidation: £105.75
Notification of Appointment of Liquidator: £105.75
Advertisement for creditors’ claims: £105.75
Solicitors’ Swearing Fee (optional)
If you wish, we can put you in touch with a solicitor to enable the Declaration of Solvency to be sworn by video call. This will usually cost around £100 for a sole director company.
If you have any queries about our fees or expenses, including the work that we expect to carry out and who we might use to assist us, please contact us
The Board’s Duties and Obligations
1. The Board remains responsible for the conduct of the affairs of the Company until such time as a liquidator is appointed and it is under a duty to act so as to preserve the Company’s assets and minimise its liabilities for the benefit of the members.
2. Until such time as a liquidator is appointed, the Board remains responsible for ensuring that the Company and its officers continue to comply with their statutory duties. For example, it is particularly important to address any outstanding filings with the Registrar of Companies prior to the commencement of the liquidation in order to avoid the Registrar dissolving the Company.
3. The Board must ensure that all assets of the Company remain properly insured and all liability insurances such as for employees, products, professional indemnity, property owners and public should be maintained. The appropriate premiums should be paid such that adequate insurance cover remains in force for the duration of the liquidation or until such time as the liquidator confirms that alternative arrangements are in place.
4. The Board should deliver up to the liquidator any books and records of the Company that they request, but the Board will remain responsible for the safe-keeping of the Company’s records in its possession up to and after liquidation. It is the responsibility of the Board to ensure that the Company continues to comply with all data protection legislation. This includes ensuring that access to and copies of digital data are restricted so that the risk of any data breach is mitigated.
5. Where 20 or more employees are to be dismissed or transferred, formal consultation procedures must be followed and documentation completed. If this is not done correctly, the Company risks giving employees grounds to seek Protective Awards, which will rank in priority to shareholders’ distributions, and therefore it may be appropriate to seek the advice of specialist employment solicitors.
6. It is important that we work closely together and that the Board deals with any queries that we raise, both fully and promptly, so that the Company may be placed into liquidation without delay and the various statutory requirements complied with. We will provide a questionnaire, which will help you to gather the information required.
7. In the interests of shareholders, all liabilities including those due to HM Revenue & Customs should be settled before the Company is placed into liquidation. If any liabilities remain to be paid in the liquidation, these will attract statutory interest at the rate of 8% per annum calculated from the commencement of the liquidation to the date that the liability is settled. Statutory interest ranks in priority to distributions to shareholders.
8. It is vital that you provide full and accurate information to us and that you submit all VAT and other tax returns to HM Revenue & Customs up the cessation of trade. Consequently, we ask that you liaise closely with your accountants in preparing the Company for liquidation and we will be asking you to confirm that your accountants have agreed that your completed questionnaire and other documents provided are complete and accurate.
Our Changing Role and the Importance of Solvency
Before liquidation, as the company’s advisor, we owed our prime duty to the company acting through its Board and took appropriate steps to ensure that the Board received appropriate advice on its options.
Once the company is placed into liquidation, the liquidator and their staff are required to act in accordance with the requirements of the insolvency legislation and those of their regulatory body. Subject to any restrictions arising from such compliance, they are required to act in the best interest of the members as a whole.
If during the course of the liquidation, the liquidator forms the opinion that the company will be unable to pay its debts in full plus interest within the time period set out in the Declaration of Solvency, they will have to take steps to convert the MVL into a creditors’ voluntary liquidation (“CVL”). This will mean amongst other matters that the liquidator will owe their prime duty to the creditors as a whole and must act as an officer of the court. For further information regarding the potential consequences of CVL, including steps that may be taken if directors are considered unfit to act in the management of a company, please read the FAQs on this website. Before swearing the Declaration of Solvency, it is essential that the Board is satisfied that MVL is appropriate to the company’s circumstances and that the director(s) are confident that the MVL can be completed successfully.
Members Voluntary Liquidations
What is a Members Voluntary Liquidation?
An MVL is a liquidation process available to solvent companies, enabling the shareholder/s to appoint a liquidator to formally close down their company.
Closing your company through an MVL process allows your company assets to be transferred to you by way of capital distribution and thus be potentially eligible for Business Asset Disposal Relief (formerly Entrepreneurs’ Tax Relief). This is a generous allowance whereby you are taxed at 10% on the entirety of the company assets, potentially saving you £1000s
What is my Net Asset Value?
Throughout this FAQ we refer to your Net Asset Value, which is simply the value of what your company owns outright, minus what it owes, giving the resulting figure of the company’s monetary worth (the Net Asset Value).
Is an MVL right for me?
No matter the reason for the company’s closure, be it retirement, a sale after a merger or simply closing the doors on a company that is no longer required, as long as you have over £25,000 of net assets to distribute between shareholders an MVL will probably be the most tax efficient way to close your business.
What other options do I have?
The other route of closing down a solvent company is by way of Strike Off (also called dissolution). While Companies House only charges a nominal fee (£10) to action a strike off, you will pay income tax on your net assets. If you have over £25,000 of net assets after all liabilities have been paid, the tax savings assigned to an MVL compared to a strike off will usually mean an MVL will see more of your hard-earned cash find its way back into your pocket.
What are the benefits of an MVL compared to a Strike Off?
To answer this, let’s use an example:
Mr Jones has a successful Ltd company and has been contracting for the last two years. He now has a role inside IR35, however, and no longer needs his limited business. He is the sole shareholder/owner and has £50,000 in the bank and is VAT registered.
There are two main options open to him:
Option 1 would be to strike the company off. In doing so, the owner’s £50,000 would be taxed at 32.5% (taxed on the shareholder as dividends), costing him £16,250. Companies House charge an additional (albeit nominal) administration charge of £10 leaving funds in the bank of £33,740.
Option 2 would be a Members’ Voluntary Liquidation (“MVL”). Using this route, the shareholder would benefit from the Business Asset Disposal Relief (formerly Entrepreneurs’ Tax Relief), taxed at only 10%, once the Insolvency Practitioners’ (IP) fees have been deducted.
Based on the asset position of £50k, a typical Insolvency Practioners’ fee will be circa £2,000 plus expenses and VAT. The expenses will be a statutory bond at £40, statutory advertising at £317.25 and sundry expenses at £12.92, totalling £2,370.17 plus VAT (£474.03). If the company is VAT registered, the VAT can be reclaimed back by the IP and distributed to the shareholder, so in this instance we will assume this has been actioned and add it to the total saving.
The Insolvency Practitioners’ fees are then deducted before the Business Asset Disposal Relief of 10% is applied, so in this case the fees (£2,370.17 are subtracted from the assets (£50,000) which leaves £47,629.83. This amount would then be taxed at 10% = £4,762.98.
Therefore, by using the MVL the total cost would be £7,133.15(£2,370.17 + £4,762.98). This option will result in the shareholder receiving a total of £42,866.85 after liabilities and taxes paid, leaving him £9,126.85 better off than a company strike off.
As you can imagine the higher the net asset balance, the higher the saving.
Looking at the example above, you will have probably noted the key difference in the contributing factors that make up the saving using an MVL is the 10% tax rate utilising Business Asset Disposal Relief (formerly named Entrepreneurs’ Tax Relief).
So, the 2 main benefits of using an MVL are:
Utilising an MVL enables you to take advantage of Business Asset Disposal Relief, with all net assets (after debts have been settled) being taxed at 10%.
Fast Distribution/Cash Release:
By signing a shareholder’s indemnity, we can release a proportion of your company’s net asset value before HMRC has confirmed clearance. While different Insolvency Practitioners release funds at different stages of the process which can sometimes take up to 60 days, SFP can usually release up to 100% (varies as per asset level) of your net asset value within 7 days of appointment.
Do I qualify for an MVL?
As mentioned above, as long as the company you are looking to close is solvent and has over £25,000 in net assets once all liabilities have been paid and has been trading for longer than 24 months, an MVL is probably the right route for you.
Fees & Expenses
What fees am I charged for an MVL?
You will be charged an initial fixed fee by your chosen Insolvency Practitioner, as well as some expenses, which are explained below. Insolvency Practitioners’ fees do vary and it’s important you understand what level of service you are receiving for the cost.
What expenses are charged and what are they?
There are various expenses you will have to pay as well as the Insolvency Practitioner’s fee. Almost all these expenses are unavoidable third-party costs incurred by the liquidator during the process of placing the company into an MVL. These costs are charged along with the Insolvency Practitioner’s fee and then the Insolvency Practitioner pays the third parties as soon as these raise their own invoices. In this way, the liquidation process moves quicker as the Insolvency Practitioner is able to apply for the VAT refund on the costs straight away.
Statutory Bond – A statutory bond is best described as a form of insurance to protect your capital while it is in the hands of the Insolvency Practitioner. All Insolvency Practitioners are legally required to take out a statutory bond upon being appointed to manage a solvent liquidation.
The cost of a bond operates on a sliding scale based upon the asset capital within the company.
Statutory Advertising – As part of the MVL process, the IP is obliged to publish various notices in the Gazette. This will make the liquidation public knowledge so any outstanding creditors can submit a claim for monies owed before the liquidation is officially closed.
Three notices must be published: one on appointment of an IP, another on resolution and one to serve as a notice for claims.
The advertiser’s current cost for each advert is £105.75
Sundry Expenses – These are nominal IP costs directly related to the MVL. Usually these are made up of:
- AML (Anti-money laundering search) – £2.92 per individual search
- Stationery, photocopying and postage – £10
So, including fees & tax, how much will the liquidation cost me in total?
Taking into account all of the above, let’s use an example to set out the costs clearly:
Net Asset Value: £50,000 (i.e. the balance after any remaining liabilities owed)VAT@20% = £474.03 (can be reclaimed back during the liquidation process if the company is VAT registered (or was VAT registered when it ceased to trade))
|Typical IP Fee:
|Statutory Bond (based upon asset value) – £40
|Statutory Advertising (three adverts) – £317.25
|Sundry Expenses – £12.92
|Total IP costs:
The IP costs are then deducted from the net asset value before Business Asset Disposal Relief (BADR) is applied, so in this case:
|£50,000 – £2,370.17:
|Shareholders’ distribution taxed at 10% (BADR) = £47,629.83 @10%
|Total cost of MVL
|IP fees and expenses – £2,370.17
|Tax on distribution – £4,762.98
In this case, the total cost to the shareholder of the MVL process is £7,133.15 leaving the client with £42,866.85 from the initial net asset value of £50,000.
Obviously, the costs are reflective of the initial asset value and will vary as the net asset value increases.
SFP – Our Service
Who are SFP Group?
Founded in 2002, SFP Group are a fully regulated & leading specialist Turnaround & Restructuring company operating on a national level, based in Canary Wharf, London.
The group is made up of various divisions comprising of Turnaround, Restructuring, Property, Recoveries, Corporate Solutions and a Financial Brokerage.
Why should I choose SFP to act on my behalf in closing down my company?
Last year more clients trusted SFP to handle the closing down of their business via an MVL than any other IP in the UK, a testament to our professionalism, expertise & level of service in this area.
SFP are the IP of choice for the top contractor accountants in the country to pass their clients onto, as well as over 100 other chartered accountancy firms across the UK, again displaying a proven level of service and expertise when it comes to trusting us to handle their clients’ affairs.
SFP have won multiple awards in various categories of the prestigious Business Moneyfacts Awards, attracting the ‘Best Business Recovery Specialist’ award 5 times as well as the ‘Invoice Finance Broker of the Year’ award 6 times in the last decade.
We are the market leading IP practice for clients who wish to close down their solvent companies via an MVL.
SFP are an insolvency practice. Is there any stigma attached?
No. An MVL is a solvent liquidation where there are surplus assets to cover all liabilities, meaning we are helping you to close down a successfully run business, but by law it must be done by an insolvency practitioner. There should be no adverse effect to you or your credit rating.
What service does SFP offer?
There are various benefits in choosing SFP to deal with your MVL:
- Distribution of up to 100% of your company’s net assets within 7 days of appointment
- Number 1 provider of MVLs in the UK
- Peace of mind: your money is in safe hands
- Highly experienced expert MVL team
- No hidden fees!
- Personalised service with your own dedicated account manager
Can I be sure that my money is in safe hands?
SFP Group are a regulated insolvency specialists with great experience in handling procedures for businesses large and small. All funds that pass under our care are handled and distributed with the upmost care and attention. All of our insolvency practitioners are licensed and our liquidation operations are overseen by the Recognised Professional Bodies.
To provide added comfort, we can assure you that, as required by law, a bond is arranged whereby the surety undertakes to be liable for losses caused in the extremely unlikely event of the liquidator’s fraud or dishonesty. Although our insolvency practitioners are bonded generally, they also arrange a bond specific to each insolvency case and the cost for this specific bond is charged as an expense at the start of the liquidation (See Statutory bonds in the Members’ Voluntary Liquidation (MVL) section).
Do you have professional indemnity insurance?
Yes. Our professional indemnity insurers are Travellers Insurance Company Limited, Saint Paul House, 61-63 London Road, Redhill RH1 1NA (coverage relates to the United Kingdom (including Channel Islands and the Isle of Man) and the Republic of Ireland).
The MVL Process
What are the stages in the MVL process?
We have a section on our website that explains the MVL process in stages – How it works.
How long will the process take?
We are able to work as quickly as you like. We shall require the final accounts and tax returns to be complete and all liabilities paid (where possible) before the company can go into liquidation, however we can start the process our end before this time and send you all the liquidation documents in advance for your review.
After your initial distribution within 7 days of appointment, in cases where the first distribution was up to 80%, a final distribution of remaining assets will be held until such time as we are satisfied that all other matters, including the company’s tax position, are cleared. HMRC tax clearance can take up to 6 months and on occasion longer than this.
Do I need to visit your offices?
No. All correspondence can be undertaken via email and we can accept all signed documents in this way as well.
Which solicitor should I use to witness my Declaration of Solvency?
You can use your own solicitor to witness any documents, which usually incurs a small fee (circa £20 – £100). However due to having our own relationships with trusted solicitors, by using one of SFPs recommended solicitors we can arrange this at no extra cost to you.
Do you undertake anti-money laundering checks?
Yes, the law requires us to do this before the liquidation begins. We will use external electronic databases to check the identities of directors and shareholders, but we will also ask you to provide proofs of identity, e.g. passports and utility bills.
Should I continue with the company insurance?
If possible, the current insurance policy should be maintained throughout the Liquidation process with the Liquidator’s name noted which will prevent the requirement to take out any further cover.
Run-off insurance should be arranged to cover the company up to dissolution. Your current insurers may be able to help with quotes.
There is a pension in the company, what should I do?
The pension provider should be contacted prior to liquidation as it is easier to assign to new trustees before liquidation.
It takes longer for us to deal with pensions during the liquidation as we would be required to complete forms before they can speak to us.
Can I set up another company doing the same thing?
From our understanding, this is not possible for two years from receiving your final distribution, as it may affect your entitlement to Business Asset Disposal Relief (formerly Entrepreneurs’ Tax Relief).
I am abroad, how would I have the Declaration of Solvency sworn?
This can be sworn abroad in front of a notary, solicitor or equivalent.
I'm on the flat rate VAT scheme. Can you still reclaim the VAT?
Yes, we would ask you to de-register from the flat rate scheme onto the standard scheme prior to liquidation to ensure that reclaiming the VAT on our fees and expenses will not be a problem.
What should I do with the company’s books and records?
On rare occasions, the liquidator may ask for some of the records, but any books and records left with you will need to be kept safe by you for at least 15 months after the end of the liquidation. Although we will change the company’s registered office (unless it is a Scottish-registered company), you will remain responsible for the statutory books.
One of the Directors of the company has sadly passed away, what needs to be done in this situation?
The accountant will have to ensure that the executor is appointed as the Director so that they can swear the Declaration of Solvency.
If the Director were also a shareholder, once the probate is obtained the executor would be required to sign share transfer forms. We will require a copy of the probate and share transfer forms.
This should be completed by the accountant, before we can liquidate the company.
Liquidation Bank Account
Will I have control of the company’s bank account during the liquidation?
No. Once the company is in liquidation, the Directors’ powers cease and the liquidator takes control.
What protection do I have to ensure my money will be protected?
It is a statutory requirement for the liquidator to have a bond in place for every liquidation based on the asset value. The bond is provided by a third party provider and the premium paid from the company’s reserves.
I still don’t feel comfortable to transfer the funds to you?
In every liquidation, the liquidator has to take control of the assets of the company. If you do not feel comfortable transferring the funds before the liquidation begins, we can write to the bank on appointment and once they have completed their own internal checks, they will transfer the funds to us. This will mean an initial distribution will not be completed until we have received the funds and from experience it can take up to 6-9 weeks.
Who closes the company’s bank account?
We will write to the bank requesting the account closure and the transfer of any remaining funds to the liquidation account.
What if the company holds fixed term bank accounts and will not mature for 6 months?
Depending on the amount involved and if the shareholder is happy to lose the interest, the bank will return the capital once a company is liquidated.
Alternatively, we would do the following If a large sum is involved and the Director/shareholder does not want to lose the interest.
Where there is a sole shareholder and sole director involved, it may be possible for the shareholder to speak to the bank to have the bank account transferred into their personal name. This asset would need to be represented in the final account; this would then be distributed in specie on appointment. This is a paper exercise where we distribute the asset to the shareholder.
If there are any other shareholders, we are happy to discuss further how this can be managed.
Can I close my company’s bank account myself as there are no funds held, before liquidation to avoid further bank charges?
Yes that’s fine and we would still write to the bank on appointment, confirming that the bank account is closed.
Creditors/Debtors, Liabilities, Loans etc
Do I pay my creditors?
Ideally all creditors should be paid prior to liquidation. This is why we wait for the final accounts before proceeding to liquidation.
The accounts are prepared up to cessation of trade. As soon as the payment of any final invoice has been received by the company, there should be no taxable income apart from bank interest after this point.
Unpaid creditors at the date of liquidation are entitled to statutory interest of 8% per annum.
The company is owed money from another company (inter-company debt), will this need to be paid back?
Yes, the loan should be repaid to the company. If this is not possible and depending on the structure of the company, we may be able to distribute the inter-company debt in specie. This is a paper exercise where we distribute the inter-company debt to the shareholder at the value shown in the final accounts.
We will have to consider the current shareholding/Directorship of the company being liquidated and also the shareholding/Directorship of the company owing the money, as there may be a requirement for a formal Deed of assignment of the debt.
What happens to a loan due to the company by the Director?
The loan should be repaid to the company if possible.
If the Director’s loan is still outstanding, we would distribute it in specie to the shareholder as part of the initial distribution. This is a paper exercise where we distribute the asset to the shareholder.
A tax refund is owed to the company, do I have to wait until this has been received to liquidate my company?
No. As part of our post appointment responsibilities, we will write to HM Revenue and Customs and request that any refunds due to the company should be paid to the liquidation account.
I have outstanding debtor monies due in. Will this hold up the process?
No. Upon liquidation we can request that the company bank account remains open until all debtor funds have been received before the funds are transferred to the liquidation account.
Do I need to have paid all liabilities before entering liquidation?
Ideally, we request that all liabilities are paid wherever possible prior to liquidation to ensure the process runs as smoothly as possible. This will reduce the time needed for the liquidation, meaning that your final capital distribution will not be delayed.
What about my fixed assets?
You should have any remaining fixed assets valued and you can purchase them prior to liquidation either for cash consideration or by way of a loan account transaction.
We can also distribute these to the shareholder in specie (which is a paper exercise) as part of your initial distribution on appointment.
|Minus liquidator’s fee @ £2,406.60
|Assets after costs £97,593.40
|First distribution of 100% = £97,593.40
|Actual first distribution will be:
|£5,000 in specie
How can I be sure that you have dealt with all the liabilities?
We ask you and your accountants to provide information on all known liabilities before the liquidation begins. We will send a questionnaire to help you do this. You should also consider whether there are any unusual parties that might have a claim against the company, for example previous customers who could claim that the company has failed to provide the agreed quality of service or goods or former employees who claim that they were not provided sufficient notice that they were being made redundant. A notice will also be published in the Gazette, which will serve as an opportunity for any other creditors to come forward, although in view of the serious consequences of converting to CVL, we urge you to identify all possible creditors at the start.
Can the VAT be reclaimed on the liquidation fees?
Yes we will reclaim the VAT back on our fees during the liquidation process, if the company is VAT registered (or was up to the point that it stopped trading).
What would happen if it turned out that there were insufficient funds to settle all the liabilities?
You would need to return to the liquidator some or all of the funds/assets distributed to you as a shareholder after the liquidation commenced. If those are still insufficient to settle all liabilities, the liquidator will need to convert the MVL into a Creditors’ Voluntary Liquidation (“CVL”).
What could be the consequences for the director, if the MVL converts to CVL?
If the company turned out to be insolvent, then it is presumed that you did not have reasonable grounds for swearing the Declaration of Solvency (in which you will have stated that all claims (plus any statutory interest) and the liquidation costs would be settled in full within 12 months), which under law could result in a fine and/or imprisonment. The liquidator would also need to report on your conduct as a director and, if the Secretary of State considers that you are unfitted to be concerned with the management of a company, you could face disqualification proceedings.
When will I receive capital distribution / my funds?
We shall pay up to 100% (100% if assets are up to £250,000, 80% if assets are between £250,001 and £500,000, 75% if assets are between £500,001 and £1,000,000 and % to be agreed with the proposed Liquidator if assets exceed £1,000,000) of the net assets (i.e. after costs and any remaining liabilities) as an initial capital distribution usually within 7 days of liquidation (where the funds are transferred to us pre-liquidation; otherwise, it shall be once we are in receipt of the funds from the bank).
If the distribution was 80% or 75%, a further half of the balance held is distributed at month three and the remainder once the relevant clearances have been obtained from HMRC and we are satisfied that there are no further assets or liabilities.
Can you please confirm the distributions and when are they completed?
Our distribution percentages are based on the following net asset reserves:
- Net assets below or equal to £250,000 – 100%
- Net assets between £250,001 and £500,000 – 80% (10% at month 3 and final 10% at closure)
- Net assets between £500,001 and £1m – 75% (12.5% at month 3 and final 12.5% at closure)
- Anything above £1m – we will review the company’s position and provide a tailor-made schedule
Initial distributions are completed within 7 days of liquidation, provided that all funds and correctly signed documentation have been received.
Can you split the distribution, so I receive it over two years?
Yes, in cases where the initial distribution is up to 80% and depending on when the company is placed into liquidation.
For example, if a company is being placed into liquidation on 13 March 2021, the shareholders will be receiving a split distribution anyway. As an amount of 75% to 80% will be distributed immediately, the further distribution(s) will be made in the new tax year.
However, we cannot keep the liquidation open purely to accommodate distributions over two tax years.
What could delay my distribution?
There are number of possibilities:
Incorrectly signed documents received or an incomplete pack of documents received
We will require a complete pack of documents in order to proceed with the initial distribution. We provide step by step instructions to help you work through them. If we receive any incorrectly completed or signed documentation, we will need to ask you to make corrections to ensure that the legal requirements are met so that the liquidator can act.
Reconciliation of the final position
The position from your final accounts to funds/assets received will have to reconcile. The liquidator’s responsibility is to realise all assets; therefore the position would need to reconcile before we can complete the first initial distribution.
Poor quality of documents
The signed documents will have to be on a white background with no shading, as poor quality documents will be rejected by Companies House.
Lack of funds
We can only complete the initial distribution if the funds have been received!
Where do I go if I want to complain?
We always strive to provide a professional and efficient service, however if you should have cause to complain, we ask that in the first instance you write to our Compliance Department, so that your complaint can be put through our internal complaints procedure. If you are not satisfied that your complaint has been resolved or dealt with appropriately, you may complain to: The Insolvency Service, IP Complaints, 3rd Floor, 1 City Walk, Leeds, LS11 9DA; email: email@example.com; phone: 0300 678 0015; website: www.gov.uk /complain-about-insolvency-practitioner.
- The services you require will be dealt with by SFP Restructuring Limited (“SFP”)
- SFP is associated with JA (SFP) Limited, JA (SFPRM) Limited, SFP Brokers Limited (each t/a Touch) and SFP Property Limited and as such they promote each other’s services.
- Where you have been referred by your accountant:
- Accountants that have provided the URL directing you to this page are on either JA (SFP) Limited’s approved panel of contractor accountants or JA (SFPRM) Limited’s approved panel of SME accountants, which brings them into contact with business owners interested in finding new accountants.
- Where you have been referred by a business finance provider:
- Business finance providers that have provided the URL directing you to this page are on SFP Brokers Limited’s approved panel of business finance providers, which brings them into contact with business owners interested in finding business finance products.
- Where you have been referred by B2B Quote Services Limited t/a The MVL Organisation:
- B2B Quote Services Limited t/a The MVL Organisation has been instructed by SFP Brokers Limited to operate a website designed to introduce potential new MVL clients to us.
- Where you have been referred by someone who has previously used our MVL services:
- We operate a referral system for existing MVL clients. Please contact us if you want to know more.
- Where you have been referred by a member of our staff:
- We also operate a staff bonus system, which pays out a fixed sum to staff where they introduce leads for new clients to us. Although this is very rare, if you were introduced to us by a staff member and you want to know more about the bonus, please get in touch.
- In addition to the sources detailed above, we also have business relationships with a range of professionals and finance providers, who refer clients to us simply because they know we will provide an effective and efficient service.
- To learn about some of the advantages and disadvantages of an MVL in comparison with the alternatives, see the FAQs section.
- To learn about some of the advantages and disadvantages of any proposed insolvency process in comparison with the alternatives, go to our Business Survival website and Compare Insolvency Regimes.
- Depending on your circumstances, SFP will also provide one-to-one assistance in considering your options.
- The services that SFP provide could be arranged and administered from a different provider for a different cost.
- Seeking independent advice should be considered.
Once the MVL has Begun
The Liquidation Commences
- Prior to the start of the Liquidation, a Statutory Declaration of Solvency is sworn by all, or a majority of, the Directors. This is a statement confirming that the Company will pay all debts (plus statutory interest and costs) in full within 12 months and providing details of the Company’s assets and liabilities.
- At a meeting, the Board of Directors resolves to summon the Shareholders’ meeting.
- At the Shareholders’ Meeting, resolutions are passed to place the Company into Liquidation and to appoint a Liquidator.
Statutory Filing and Advertising
- Notice of appointment must be sent to Registrar of Companies (Plus the Accountant in Bankruptcy ‘AIB’ in Scottish Cases) and to creditors within 14 days and 28 days respectively, but we look to complete these within the first week. If there are any creditors, they are given 6 weeks to claim any amounts owed.
- Notice of appointment must be advertised in the Gazette within 14 days, but we look to complete this within the first week. A notice is also published in the Gazette inviting any creditors to submit claims within 6 weeks.
- The Declaration of Solvency must be filed at Registrar of Companies within 15 days, but again we aim to complete this within the first week
First Distribution Payment (N1)
- The Liquidator makes payment of an interim distribution to the shareholders. This distribution will be an agreed percentage of the funds held (less liquidation costs and anticipated creditors’ claims).
Liquidator Agrees Any Creditors’ Claims and Seeks Tax Clearance
- After the 6-week period for creditors to submit their claims has ended, the Liquidator will look to agree and pay them. The Liquidator has 2 months to do so, however they will typically undertake this in short order, subject to receipt of any complex claims being received (Note: because of the different legal requirements in Scotland, it may take up to 6 months to pay creditors’ claims in Scottish liquidations or longer if the claims are complex). Statutory interest at 8% pa is also payable.
- The Liquidator seeks confirmation from HMRC that there are no outstanding tax matters. HMRC is notoriously slow at providing tax clearance and it may take several months and chasers from the Liquidator before tax clearance is received.
Interim Distribution Payment (N1)
- In the event that the initial capital distribution was 80% or less, then once any creditors have been paid in full and the only outstanding matter is receipt of tax clearance, a further payment of 50% of the remaining company funds being held are distributed to shareholders.
Final Distribution Payment (N1)
- In cases where the initial distribution was up to 80% and confirmation has been obtained from HMRC that there are no outstanding tax matters, the remaining company assets being held will be distributed to the shareholders.(N2)
- Once the funds have been distributed, a proposed final account and report are issued to members.
- 8 weeks later, a final copy is sent to the members and to the Registrar of Companies (Plus the Accountant in Bankruptcy ‘AIB’ in Scottish Cases) and the Liquidator is released from office. This 8-week period can be shortened, if all members give consent in writing.
- We are then able to close the liquidation and the company is dissolved 3 months after.
(N1) We are unable to assist with personal tax affairs in relation to distributions to shareholders.
(N2) It is impossible to be certain when the final distribution will be paid, as it can vary according to HMRC’s workload and any other delays or complications experienced.