Members’ Voluntary (solvent) Liquidations (MVL)

A Members’ Voluntary Liquidation, or MVL, involves the voluntary liquidation of a solvent company by its shareholders.

An MVL is a positive step – What is an MVL?

A Members’ Voluntary Liquidation, or MVL, involves the voluntary liquidation of a solvent company by its shareholders.

Unlike a Creditors’ Voluntary Liquidation (CVL), the cash and assets coming from the liquidation go to the company’s members rather than its creditors.

An MVL is a tax efficient means of closing your solvent company and unlocking the capital

Benefits of an MVL

The benefits to shareholders of winding up a company in a solvent liquidation are attractive due to the difference in rates between Capital Gains Tax and Income Tax along with Entrepreneurs Relief. Instead of the higher rate taxpayer paying 40% to 50% on a distribution of assets, with an MVL assets can be distributed and capital gains tax rates will apply at 18% or 28%, plus the costs of the liquidation. The MVL will:

  • Return surplus assets in a tax efficient manner to shareholders
  • Reduce risk to directors
  • Save accounting and audit fees
  • Save management time in preparing statutory returns and compliance information
  • Improve transparency by simplifying complex and unwieldy structures thereby enhancing investor perception

When to use an MVL

  • Are you (or your clients) planning to make distributions of more than £25,000 to shareholders?
  • Can the shareholders claim reliefs allowing them to pay 10% tax?
  • Is the company nearing the end of its life?
  • Recent changes in tax legislation have caused you or your clients to complete a corporate structure check-up, as having many corporate vehicles is no longer tax beneficial

The process

  • The Company must be solvent (able to pay all of their debts in full) and a meeting of directors is held where they swear a statutory declaration of solvency.
  • A meeting of shareholders is held to pass resolutions to put the company into liquidation
  • The liquidator will review the company's books and records looking for any liabilities, will close any bank accounts and realise all assets
  • All creditors' claims will be agreed and paid in full (with statutory interest). Any surplus assets will be distributed to shareholders
  • Corporation tax, PAYE & NIC and VAT compliance will be concluded - with all clearances received before closure of the liquidation
  • A final meeting is held to close the liquidation and dissolution of the company is approximately three months later.

An MVL is a positive step

  • If you have a cash rich company and want to keep your tax bills low then an MVL is the most tax efficient way forward
  • Find out how an MVL can help you by getting in touch today
  • Call us on 01226 215999 or complete the form below and we will call you
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