Members’ Voluntary Liquidation (MVL)
Perfect your company's closure with Members' Voluntary Liquidation (MVL), a solution for winding down a solvent business.
Process: How MVL works,
step by step
If you’re really not sure if MVL is an option for you, we’ll help you decide, step by step.
The company may have ceased trading and all debts can be paid in full. Potentially you’re selling or winding down, a director’s retiring or there are plans to simplify a group of companies.
Set up a free, no obligation consultation, meet or chat remotely with a qualified insolvency practitioner. We’ll have a frank conversation about whether MVL is the right option for you.
Practical guidance on how to prepare a formal Declaration of Solvency (DoS). This summarises the company’s assets and liabilities to represent that it is solvent and can pay the creditors.
Directors swear and sign the DoS before a solicitor to confirm it’s true. We’ll plan a director’s board meeting, followed by a general meeting of shareholders to place the company into MVL.
As appointed liquidator, we’ll settle any outstanding debts before distributing assets to the shareholders.
We’ll obtain clearance from the HMRC to ensure there is no objection to completing the liquidation.
We’ll file the final MVL report with Companies House, the company will be removed from the register three months later and be dissolved.
A member’s voluntary liquidation (MVL) is often referred to as a solvent liquidation as it is used to liquidate a company that still has a surplus of assets. This process is often preferred when directors or shareholders have decided to bring the company’s life to an end and extract the remaining assets in the most tax efficient way. The tax rate payable on the remaining assets will only be 10% if entrepreneurs’ relief is available.
There are many reasons why a company might cease to trade. Examples include:
- Completion of a project which a company was specifically created for
- Sale of a company’s business
- Retirement of a company’s owners
- When a self-employed contractor no longer needs their company because they have moved into employment
- The simplification of a group of companies
Generally, an MVL is a tax-efficient process for shareholders to receive the surplus cash/assets from their company. This is because, in an MVL, the payment of surplus assets/cash by a liquidator to shareholders is treated as a capital distribution for tax purposes. Capital distributions are subject to capital gains tax, which may be more tax efficient. In certain circumstances, shareholders may also qualify for Entrepreneurs Relief which reduces the tax on the capital gain even further.
Paul Bailey FABRP, Tom Ahmad FABRP ACA, Matt Reeds MABRP and Kirren Keegan MABRP are licensed to act as Insolvency Practitioners in the UK by the Institute of Chartered Accountants in England & Wales