Members’ Voluntary Liquidation (MVL) is a procedure that is used when a company has fulfilled its purpose, has sufficient assets to meet all of its liabilities, trading has stopped and the company’s shareholders wish to realise their investment in a tax efficient way.
The key tax benefit of an MVL arises from the fact that a distribution of assets to shareholders via MVL are treated as capital rather than income distributions. Tax paid by shareholders on capital distributions will be based upon capital gains tax rather than income tax rates, which subject to the circumstances, can give rise to a substantial tax saving.
The following diagram provides an overview of the key steps involved in placing a company into MVL and the subsequent duties of the liquidator.
If you have any questions, please do not hesitate to contact a member of our team on 020 8662 6070 or by email at firstname.lastname@example.org.
Assuming no creditor claims or HMRC objections are received, shareholder s will receive a first distribution of cash assets (less £10,000) within 6-7 weeks of commencement of liquidation.
Non-cash assets and the retained £10,000 are thereafter distributed to shareholders just prior to conclusion of the liquidation, typically within 5 to 7 months of commencement of the liquidation, provided no creditor claims are received in the interim.
Advice in relation to cessation of trading, accounting, and tax (corporate and personal) should be provided by the company’s accountant. Fees associated with these activities and any other assistance provided should be agreed between the accountant and directors/shareholders independently.
Bailey Ahmad is an independent firm which specialises in providing corporate and personal rescue, recovery and insolvency solutions to those in financial ddifficulty.
We also assist shareholders of solvent companies with extracting surplus funds in a structured and tax efficient way via solvent MVLs.
We are licensed and regulated by Institute of Chartered Accountants in England and Wales and a firm member of R3, The Association of Business Recovery Professionals. This ensures that we maintain the highest ethical and professional standards in the solutions we deliver for our clients
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