Members’ Voluntary Liquidation (MVL)
Unlike a CVL, which applies to insolvent companies, an MVL is an option only for solvent companies. It can provide a tax efficient method of releasing shareholders’ equity.
When is an MVL appropriate?
Typically, an MVL will be appropriate for solvent companies that have decided that it would be better if the various activities of the business were split between several new companies. An MVL allows the assets to be transferred to the new companies in a tax-efficient manner.
An MVL might also appeal to a business which has naturally come to the end of its original purpose. It will be formally wound-up and a final cash dividend or distribution in specie can be allotted to the shareholders.
The MVL process
The procedures governing MVL’s are contained within Insolvency Legislation, but in fact to make use of an MVL the directors must be able to swear a declaration to the effect that the company is solvent.
A regulated, licensed Insolvency Practitioner (IP) will act as the Liquidator of the company, usually in association with the company’s existing tax and other professional advisors.
Please call Ted Wetton on 01226 215999 if you are the director or shareholder of a company and are considering its restructuring or dissolution and want to benefit from the available tax advantages that can be utilised. Alternatively, ask your company's existing professional advisors to contact us to discuss the options available.
|
