Members’ Voluntary Liquidation (MVL)
If your company is solvent and you want to close it due to a change of career, retirement or simply because it’s outlived its purpose, a Members’ Voluntary Liquidation (MVL) has lots of advantages.
It can give you tax breaks that mean you’ll get more of your money out of the company. We’ll tie-up loose ends with creditors and HMRC so there’s no repercussions later on. Our MVL service also pays you 100% of your cash immediately – no waiting around.
You can read on to find out more about the process. Or if you would prefer to talk through the options for closing a solvent company, our licensed insolvency practitioners are ready to help.
Members’ Voluntary Liquidation process
Members’ Voluntary Liquidation is a way of closing or winding up your company, when your company is solvent. If you’re looking to close an insolvent company (a company that cannot pay its debts) then you need to use a Creditors’ Voluntary Liquidation. You can find out more about it here.
Members’ Voluntary Liquidation is a formal tool that needs to be overseen by a licensed insolvency practitioner. We’ll need you to sign a declaration of solvency at the beginning of the MVL process, to confirm that you have enough funds to cover your outstanding debts. The next step is to get the approval of your shareholders (we need at least 75%) for the liquidation. Once we have that, we assume the role of liquidator and take control of your company during the winding up journey.
As part of the formalities of an MVL we’ll notify Companies House and The Gazette. We’re also responsible for distributing the company’s fund to your shareholders. Once this is all done, and we’ve made sure you have no outstanding payments to make, your company will be closed and struck off the Companies House register.
MVL tax benefits
We recommend Members’ Voluntary Liquidation for any company that wants to make sure there are no outstanding legal obligations or payments to creditors due when they close. It’s especially beneficial if your company has significant assets for two reasons, depending on your situation.
If you’re a sole trader or partnership and have owned your business for over two years, you’re entitled to Business Asset Disposal Relief (which used to be Entrepreneur’s Relief). This reduces your Capital Gains Tax to just 10% on the profits you extract from your company when it closes.
For limited companies, we can treat all profits in the company as capital instead of income. So when we distribute funds to your shareholders during the MVL, they pay Capital Gains Tax instead of income tax, which reduces the rates and means more take-home cash.
Members’ Voluntary Liquidation isn’t right for everyone. In many cases, if you have few assets to liquidate and a simple company set-up, a strike-off might be the best option for you. We can help with that too. As licensed insolvency practitioners, we can show you all the options to close your solvent company before guiding you through the MVL process.
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