Updated: 4th September 2020
Date Published: 29th June 2020
The situation remains unchanged
Life has changed dramatically in recent months, but for solvent companies considering a Members’ Voluntary Liquidation (MVL) the situation remains unchanged – for now.
Thousands of directors and contractors expedited the closure of their companies via an MVL in Q1 this year, largely due to the impending changes to off‐payroll working rules (IR35) which were set to go ahead in April.
Then Covid-19 hit the UK and just one week after the IR35 changes were confirmed in the Budget, the Treasury announced that any IR35 tax reforms would be pushed back for 12 months.
Despite this extra breathing space, it would be wise to advise clients considering a Members’ Voluntary Liquidation not to delay.
The Covid-19 outbreak has left many UK companies in a state of flux, battening down the hatches and trying to stay afloat through buoyancy measures such as government grants, loans, VAT deferment and landlord negotiations among other protective strategies. There are thousands of previously solvent companies now having to dig deep into cash reserves as trade dries up, but overheads continue to accrue.
After the initial flurry of MVLs earlier this year, we’re seeing a rise once again as directors look to protect their financial position in the face of Covid-19. April 2021 will soon come around and if 2020 is anything to go by, who can predict what’s around the corner?.
April 2021 will soon come around and if 2020 is anything to go by, who can predict what’s around the corner? We know the Government reduced the attractiveness of Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs’ Relief prior to April 2020, in the Spring Budget and it’s likely that the Treasury will look to claw back funds in a number of ways following its astronomical efforts to support businesses and employees since lockdown – which means that Business Asset Disposal Relief could even be quashed in the coming months.
As news breaks of the economy shrinking by more than 20% and thousands of UK sectors still essentially locked down or facing an uncertain future, our advice to those considering a solvent company closure is to take advice as soon as possible.
For more information on MVLs or for a free consultation about your client, please contact [email protected]
Following graduation from the University of Hull, Julian qualified as a Chartered Accountant with Coopers & Lybrand in Leeds. After a short time with Baker Tilly, in 1989, together with David Wilson, he established Wilson Pitts, a specialist independent practice dealing with all aspects of insolvency and corporate recovery work. In 2006, the Wilson Pitts practice was acquired by Begbies Traynor where Julian is now the Joint Regional Managing Partner for the North-East region.