If you are a Director of a solvent company, Oliver Elliot can help you get money from a members voluntary liquidation quicker.
The number one question that most shareholders want to know is how quickly they can receive their money in a Members Voluntary Liquidation.
Overview Of How To Get Money From A Members Voluntary Liquidation Quicker
Why Does The Money Take So Long To Get To Shareholders?
The main reason that in a Members Voluntary Liquidation it takes time for the money to be received by the shareholders is because of HMRC tax clearance.
This is explained in an article called Why Does A Members Voluntary Liquidation Take So Long?
So what can you do if you are a shareholder still waiting for your money and how long could you be waiting?
The answer to this question is how long is a piece of string. Upon appointment, the Liquidator will write to two departments within H M Revenue and Customs (“HMRC”) as a minimum to seek to obtain HMRC tax clearance.
HMRC Tax Clearance
Members Voluntary Liquidation Unit
The Liquidator will write to a unit known as the Members Voluntary Liquidation Unit (MVL Unit) at the following address:
Enforcement & Insolvency Service Newcastle
BP5 102 Dunstanburgh House
Benton Park View
Newcastle upon Tyne
The purpose behind writing to the MVL Unit at HMRC is to obtain clearance to distribute to the company in liquidation’s shareholders in relation to all possible taxes applicable to the company other than corporation tax.
Corporation Tax Operations
In addition, the Liquidator will write to the Corporation Tax Operations section of HMRC to obtain HMRC tax clearance in respect of corporation tax.
Once these two clearance letters have been obtained from HMRC, provided the Liquidator has dealt with all the assets of the company and settled with all the creditors, then he or she will be free to distribute to the shareholders.
How Long Could A Shareholder Wait For Money In A Members Voluntary Liquidation?
However, obtaining HMRC tax clearance can take some considerable time because a distribution by a Liquidator in a Members Voluntary Liquidation is a popular tax efficient way of extracting funds from a limited company.
It is possible to wait for anything up to a year before HMRC provides tax clearance in some cases. Even where there is nothing for HMRC to be concerned about or to investigate it can still take many months.
It would seem that the resources that HMRC deploys to attend to these Liquidation clearances is outstripped by demand. As such HMRC adopts a first in first out approach to processing correspondence in dated order.
Therefore even after some considerable time period has elapsed, if an earlier letter is followed up it is understood that it would end up in the correspondence queue in dated order for processing by HMRC.
However, HRMC tax clearance delays may not be down to any delays by HMRC. If there are matters that have not been properly concluded by the company in liquidation in relation to any tax matter then that could delay the process. When you apply for HMRC tax clearance HMRC will expect that all tax matters have been fully complied with otherwise you may find yourself with an even longer wait until the tax matter is resolved and then for the request for clearance to be resubmitted. It is therefore important to get all tax matters in order before applying for HMRC tax clearance and ideally to do so before you even appoint a Liquidator.
Complain To HMRC
The timescales involved do sometimes appear unduly lengthy and it is certainly possible to challenge this position instead of suffering in silence. It is possible to highlight such matters if the timescales appear unreasonable.
HMRC has a Charter that sets out a code of conduct.
What Is The HMRC Charter?
The HMRC Charter is a legal requirement under the Finance Act 2009. The legislation states that the Charter ‘must include standards of behaviour and values to which Her Majesty’s Revenue and Customs will aspire when dealing with people in the exercise of their functions’.
The HMRC Charter therefore sets out a code of conduct that HMRC says that it will abide by. In common with many codes of conduct, the HMRC Charter says that it will treat people fairly.
It also says that it will be RESPONSIVE as follows:
When you get in touch with us, we’ll make sure that the people you deal with have the right level of expertise. We’ll answer your questions and resolve things first time, or as quickly as we can. We’ll also explain what happens next and when you can expect a response from us. If we make a mistake, we’ll put it right as soon as possible. If you’re not satisfied with the service you’ve received, we’ll explain how you can make a complaint.
In addition, as HMRC is a government agency it has a ministerial team that a complaint might be escalated to:
Ministerial Correspondence Team
Solicitor’s Office and Legal Services
100 Parliament Street
London SW1A 2BQ
E: email@example.com T: 03000 589 668
However, a Members Voluntary Liquidation is not under the control of shareholders but the Liquidator. It is therefore unlikely that shareholders will be able to complain directly to HMRC but the Liquidator will be able to do so. As a result, if you have concerns about the length of time that HMRC clearance is taking you could raise such matters and ask for the Liquidator to complain.
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