Buy Cheap, Buy Twice?
12 March 2020: Contact was made with our Milton Keynes office by the director of a Company who had been placed into solvent liquidation more than two years prior. For those not in the know, a solvent liquidation is known as a Members’ Voluntary Liquidation (“MVL”) and, here at BRI, we generally aim to finalise our administration of such matters within the first year of appointment thereby avoiding the costs of annual reports in addition to a final report.
This particular director had chosen an MVL provider found on-line who had marketed their (apparently very reasonable priced) services for a fixed fee of less than £2,000. Such a fee is not the benchmark for the industry and possibly should have raised an eyebrow for a director.
However, understandably, the director considered that a service was being provided for a fair price. The reason for the call to us stems from an outstanding issue with HM Revenue & Customs (“HMRC”). The liquidator, having received his fixed fee, was not prepared to spend time and costs liaising with HMRC in order to resolve matters.
Such situations can usually be avoided through conversations with the proposed liquidators prior to starting the liquidation. At BRI we are happy to meet with clients to discuss and prepare for such a procedure prior to our formal appointment and before the ‘clock is running’. In many cases we help prospects avoid the need for our services at all – making £2,000 look expensive!
In this instance, the director was left with several choices: a) resolve the matter himself (difficult as HMRC were advising that they would only deal with the liquidator) b) paying a fee to his accountant to deal with the matter c) pay an additional fee to the liquidator to resolve matters or d) seek the removal of the liquidator and pay a firm such as ours to become liquidators.
Each option involved further time and costs for the director. The cheap option now looks like it would be more expensive than if they had engaged with BRI in the first instance. The director has yet to decide what to do.
If you or your clients are considering an MVL process and are considering who to engage then please note that BRI will always seek to provide the right advice first time every time regardless of the fee outcome for us. Once appointed, we will manage the liquidation process from start to finish and our IPs are always on hand to deal with any matters arising.