Frost Group Members Liquidation Practice: A Brief History

I vividly remember being made aware that HMRC IR35 policy changes would generate loads of Members Voluntary Liquidations (“MVL”).  

It was in a phone call with a regular referrer Accountant back in 2016. I had worked in a MVL team thirty years ago so was aware of the requirements, how firms tended to deal with them and how I would resolve them effectively if we had a load to deal with.  It still took me a couple of phone calls, two coffees and a sandwich to get my head around what the need was going to be, what the sweet spots might be and how we might develop a process and strategy to deliver what customers might want.

We were looking at a low-cost consumer sell with limited asset types and clients viewing our service as a tax saving necessity rather than a portal for wider advice.  

Over a couple of months, we developed a process, refined it (i.e. cut it in half) and generated the necessary paperwork which allowed us to protect ourselves in terms of complying with our statutory and best practice obligations within a minimum cost environment.  

At the same time, we investigated how we would find clients in a cost-effective manner.

Both arms of the strategy came together with a low-cost product, a line-by-line crib sheet for clients an indemnity to protect us and a list of ideas as to how we might deal with what we thought the problems might be.

By 2019 we had enough experienced staff, (now complete with offspring) and resources generally to take any brake we had imposed off our client acquisition process.

2019 generated 175 clients with distributable assets of £18.5m at an average distributable assets per client of approximately £105,000.  By 2021 the number of clients was 500 per year with the distributable assets of £114.5m.

Over this time, we continued to evolve our processes as we derived with stakeholders (including HMRC) how to resolve what might be seen as a costly intractable problem in an individual case. How to resolve s455 claims within a year (an HMRC suggestion), tax refunds and property transfers as distributions are all much simpler the second time you have to deal with them than the first. Similarly, KYC (Know Your Client) and source of funds due diligence has evolved massively since 2019 as regulatory requirements have increased.  Some clients comment that the level of information required is onerous, but this is now the environment in which we work, and I am afraid there are no shortcuts.  What we can offer is minimised processing time from our end and an experienced and friendly team who guide clients through the process.  

When we started receiving enquires in relation to more complicated matters the clients and their Accountants seemed to appreciate that our understanding of the process and its necessary requirement that the existing relationship between Client and Accountant be maintained. We advised and explained what we needed to see and provided a fixed fee quote. This would be delivered, and we carried out the liquidation, backed up of course by an indemnity.

The change in client types is best exhibited by the distribution per cases we are now administering. £105,000 in 2019 has evolved into £247,000 a case in 2023.  

Since 2019 the total distributed to Shareholders now exceeding £382m, with the largest case exceeding £12.5M of distributions, across 3 related companies.

With the complexity average fee levels per case have risen somewhat but we still welcome straight forward contractor type Clients to add to the machine.  

If you think of us as merely a contractor Members Liquidator then please do bear us in mind if you or you or your clients come across anything out of the ordinary.  In short, we have probably seen it before. Oh yes, we also deal with Insolvent Companies as well.

If you have any questions then please do not hesitate to contact with me or Kelly on 0345 260 0101 or kellyw@frostbr.co.uk.  

We look forward to working with you soon.

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Jeremy Frost

Managing Director