Challanging times for oil and gas contractors
These are challenging times for contractors in the oil and gas business, and whilst there have been some encouraging signs the indications are that the road to recovery will be a long and troubled one.
With day rates cut and contractors jackets on a “shoogly peg” those who operate their own limited companies need to be aware of the options.
Creditors Voluntary Liquidation (CVL)
If you can't pay all of the company's bills then the director can call meetings of shareholders and creditors to put the company into liquidation. An insolvency practitioner then takes over and deals with the realisation of assets and payment of creditors.
Members Voluntary Liquidation (MVL)
If the company can pay its debts in full but is no longer required – because you are taking a staff job or have decided the time for retirement is now here - then you need to think about the most tax efficient way to extract the remaining funds and how to then get the company dissolved.
If you continue to take dividends, then these will be subject to income tax (and higher rate tax) in the usual way. However if you put the company into liquidation then when you get back is capital – and that is subject to Capital Gains Tax (CGT) which can be at as low a rate as 10% if you are entitled to entrepreneurs relief. You are also entitled to an £11,000 capital gains allowance each year. There is a balance to be struck there – since you have to pay the liquidators fee to benefit from the lower CGT rates. If there is more than say £50,000 there then an MVL will generally be best.
Free advice on Voluntary Liquidations (CVLs and MVLs)
Whichever is your situation, we can act as liquidator and we are are happy to meet with you at no cost and with no obligation. You can then discuss the options with an experienced Insolvency Practitioner who will advise what is best for you and for your business.
Just don't leave it too long!