You won’t need a TARDIS to solve this mystery
Not just in the negative sense – there can be positive surprises for businesses, owners and directors too.
A company could be doing OK by itself but a new opportunity or change of direction might mean that suddenly much bigger things are on the horizon.
This is exactly what’s happened to popular comedian John Bishop.
Along with selling out arenas and venues all over the country when fans were allowed to attend in person, Bishop is also a prolific television presenter.
He formed his own production company – Lola Entertainment – nine years ago which produced a number of his own projects including The John Bishop Show for BBC One; John Bishop: In Conversation with… for UKTV and John Bishop’s Ireland for ITV.
The company also co-produced critically acclaimed BBC hits such as the Detectorists, which won a BAFTA, and the new Worzel Gummidge series of specials.
Despite being in a positive professional position, things were about to take another direction for Bishop’s career that would have ramifications for the company.
It was announced that Bishop had been cast in the 13th Season of Doctor Who as Dan, the Doctor’s latest companion.
Taking such a career-defining opportunity on one of the BBC’s flagship properties means a big personal and professional commitment so he made the decision along with his agent Lisa Thomas, his co-director in Lola Entertainment, to voluntarily liquidate the company on December 15th 2020.
According to the latest filed documents with Companies House, Lola Entertainment had capital and reserves totalling £1.26 million with creditors owed £61,429.
As the company is solvent and able to pay off creditors within a 12 month period, a Members Voluntary Liquidation (MVL) is the ideal vehicle for them to use to close the company and release cash and assets in the most efficient and orderly way.
The company had no registered employees in the previous year so there are no outstanding redundancy issues to conclude either.
Depending on circumstances the process can be concluded in as little as ten working days but due to the Christmas and New Year holiday along with the star’s positive Covid-19 diagnosis, it has taken longer to proceed.
Another key benefit of using an MVL to close your business is the tax benefit it bestows.
Directors can claim Business Asset Disposal Relief (BADR), which used to be known as Entrepreneurs Relief until April 2020.
This allows them to pay a lower rate of tax on their share of the business’ assets after they’ve been disposed of.
However, the Office of Tax Simplification have already recommended that the Chancellor clamp down on this ability and have recommended that it be curtailed by:
- Requiring a minimum 25% shareholding in a business to qualify
- Bringing in a ten-year waiting period before relief can be claimed
- Mandating that the beneficiary be close to retirement age before being allowed to claim
An MVL is efficient but it’s not Galli-free
If the Chancellor implemented any or all of these recommendations in the next Budget on March 3rd then this advantage of an MVL would be lost.
The tax year ends at the end of March so the clock is already ticking if this is something you’re considering for your business. Once this benefit is withdrawn, you won’t have a TARDIS to go back and submit your claim – once it’s gone, it’s gone.
We might not get the chance to accompany the Doctor on their adventures through time and space like John Bishop has, but we might get other life-changing opportunities and challenges arriving this year that mean our businesses have to change or even close to allow us to pursue them.
Not every business that closes is in financial difficulty or requires rescue and restructure, but every closure does have to be handled professionally to make sure there are no expensive loose ends that, like Daleks, could return to wreak havoc.
Get in touch with us to arrange a free virtual consultation if you’re planning a new venture or adventure and your business is stopping you.
We can advise you on what you need to do to end things properly and free yourself so you can face the future (or the past) with confidence.