Members Voluntary Liquidations and Statutory Interest
Saving Clients’ Money on Corporation Tax with Members Voluntary Liquidations – No Statutory Statutory Interest Paid
This testimonial shows how we work with clients on Members Voluntary Liquidations to minimise HMRC’s new statutory interest at 8% per annum for corporation tax. In this instance our work was to implement a solvent liquidation of a Company which owned a basement of a house in Central London. Everything went very smoothly and our suggestions saved the Company and therefore the shareholders hundreds of pounds of statutory interest. No statutory interest had to be paid. Click here for our news story about the 8% level of statutory interest.
This is What the Client had to Say
“I was delighted to work with Tom Gardiner on our members’ voluntary liquidation. Initially I had thought the fee reasonably high, but in the end I felt it was a very fair fee, and it was helpful that it was fixed in advance. Tom was accessible, approachable, constructive and I greatly enjoyed working with him. If I have to do a liquidation again, I’d go to Tom.
Thanks again for being brilliant.”
The Details of this Members Voluntary Liquidation
The Company had originally been set up as a Specific Purpose Vehicle to own the property in Central London. The reason for the MVL was to transfer ownership of the property out of the company because the main director (the father) wanted the shareholders (his children) to own the property in their own names.
The first thing we did was to arrange Royal Institution of Chartered Surveyors’ valuations, which determined that the value of the basement was c.£225,000. We then went on to ensure a smooth and speedy transfer of the assets to the shareholders.
Saving Statutory Interest on the Capital Gain
Given that the main reason for Members Voluntary Liquidations is to realise the assets in a company for the benefit of the shareholders, HMRC’s new policy on statutory interest puts an even greater premium on planning to ensure as much of this interest charge as possible is avoided.
For that reason, we suggested the directors estimate the corporation tax liability for the transfer and pay this on account to HMRC to seek to avoid incurring statutory interest. In addition, we understood the basement was to be converted into a flat, which would massively increase its value, and as the owner would then occupy the property, under current legislation they would not be liable to the capital gain as the company would have been.
The Corporation Tax liability was £33k, and with the new statutory interest @ 8%, the liability for a year would have been £2,640, with the pro rata amount c.£880.
In this instance, the numbers involved were small, but it demonstrates that our team of Members Voluntary Liquidation specialists across our 4 main offices – London, Essex, Salisbury and The Cotswolds – are fully up to speed with this legislation and are doing their very best to avoid the new statutory interest charge. Our approach would be exactly the same on MVLs with additional zeros on the numbers involved.
Contact us about Members Voluntary Liquidations and Statutory Interest
Our commitment is to give ‘big four’ levels of service at sensible prices and delivering the results our clients want, as this client’s comments demonstrate.
If you are looking to use a Members Voluntary Liquidation as a tax efficient way of realising your assets out of company you no longer need, contact us or call us on 0207 831 1234 for a FREE initial chat. Click here to see some other testimonials.
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