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Liquidator costs

We have a company which has ceased to trade and its balance sheet comprises simply this (paraphrased):

Cash £44000

Distributable reserves £43998

Share capital £2

That's it folks!

They are considering appointing a liquidator to wind up the company.  Any income dividends would be subject to higher rate tax.

I am informed that the going rate for a liquidation in these circumstances is around £5K.  They have got to be having a giraffe!

I have no personal experience in liquidations, and so I keep an open mind.  But would someone please clue me in on what procedures would be involved by an insolvency practicioner to deal with this, and how many chargeable hours that would involve (or any other justification, or is it simply a supply v demand question)?

Perhaps the figure of £5K banded around is off base?

With kind regards

Clint Westwood

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Speak to one

Hi Clint - I spoke to a local firm a couple of months ago and they said that for a simple members voluntary they would be talking £2.5K to £3K.  This range has been mentioned by others on this site.

This however relies upon the situation when they take it on and, in particular, the presence or not of a bank account, ie if there's no bank account, and just a director's loan account in debit it makes their life & procedures a lot simpler.  They will all be ramping up to start competing for this market and so give a local one a call and see what they say.

With regard to the time & work they have to do it reminds me why I never went into it, auditing was bad enough, Insolvency compliance is worse, especially when you consider what is being achieved and the bonding/insurance they have to have in place. It's a real necessary evil.

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15th Mar 2012 19:45

£3000

I've been quoted £3k for a straightforward liquidation. It pays for itself if the distribution would otherwise be subject to HRT as a dividend(£6350 against £11k).

Liquidation is a legal process, it's not just a case of writing a cheque to the shareholders.

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By DMGbus
16th Mar 2012 09:03

HMRC say £7,500 in context of ESC16 withdrawal

 

Enactment of Extra-Statutory Concession C16

Tax information and Impact Note 6 December 2011

From an HMRC document:

 

"    The cost of a winding up will vary with the size and complexity of the business, but is thought to be about £7,500 for a small business with straightforward affairs.     "

 

So, if it can be done for £3,000 this is great news and the firm of insolvency practitioners concerned deserves naming here to gain more business.

 

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16th Mar 2012 09:09

£3000 - £4000 fees by the

£3000 - £4000 fees by the smaller firms of Insolvency Practitioners is the going rate for this type of liquidation. I can give you a firm I have used for 20 years and always been happy with if you e-mail me

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16th Mar 2012 10:57

there is another option,distribute 19001,Leaving 24999 to be dealt with under the statutory concession

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be careful

If the £19001 is deemed by HMRC to be "in anticipation of the company's dissolution" it is added to the £25,000 and all taxed at Higher rate. NO CGT. In the circumstances mentioned this is likely unless you produce a paperwork trail of the directors planning new ventures after paying the £19001 which then prove abortive and they close with £25000.

 

 

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16th Mar 2012 11:42

or just continue trading

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For everything else there's Mastercard.

uktaxpal wrote:
or just continue trading

Accumulate more.  Priceless!

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