The client was delighted with the outcome and had this to say about our work:
“…. We found ourselves well supported with ample and timely explanations provided at all stages, especially regarding the treatment of corporation tax. All of our queries were answered promptly.”
Background Details of this MVL
On 30th January, Antony Batty, one of our Licensed Insolvency Practitioners, was appointed as Liquidator for the Members Voluntary Liquidation (or solvent liquidation) of the London registered company, C & A Holden Dermatology Limited.
The directors agreed that the company had come to the end if it’s useful life and wished to liquidate the company and distribute the resulting proceeds to the shareholders.
The declaration of solvency proved that the company was indeed solvent, with cash at bank of £127,579. There were no preferential creditors, and there were two non-preferential unsecured creditors:
- A credit balance on the directors’ current account
- Accrued expenses in respect of accountancy fees
14 months later, the MVL was successfully completed, with a distribution to the shareholders of £79,842 being paid in two tranches.
The Corporation Tax Liability
Due to the recent change in HMRC’s stance regarding statutory interest, the statutory interest on the company’s corporation tax liability had to be paid before we were given the necessary tax clearance to close the case. We were able to quickly respond to this and make the statutory interest payment to HMRC in respect of corporation tax.
HMRC’s new policy is to claim statutory interest at 8% per annum, on the actual amount owed, starting from the date of liquidation, even if the normal due date for corporation tax hasn’t yet passed.
Our response to this new policy is to avoid the interest charge by calculating and paying any corporation tax for periods that have already closed, even if the tax is not due yet, which is exactly what we did in this case.
An alternative method would be to estimate the liabilities for the closing periods and make payments on account prior to the MVL commencing. In our experience it is easier to either top up or receive refunds from HMRC at a later date.
More details of HMRC’s statutory interest policy can be found here.
