If you’re the director of a solvent limited company that you wish to close, you can apply for a Members Voluntary Liquidation (MVL) can be a tax-efficient alternative to a dissolution.
What is a Members Voluntary Liquidation?
A Members Voluntary Liquidation (MVL) is a company closure arrangement for solvent companies wishing to close. MVLs are generally more tax-efficient than a straightforward dissolution, without the imposition of income tax. If you apply for a solvent liquidation, and the company has more than £25,000, it qualifies for Business Asset Disposal Relief (formerly Entrepreneurs’ Relief).More information about an MVL
Applying for an MVL
Whether you’re a director deciding to retire, or your company has come to the end of its useful life, speak to us about closing via an MVL. Our standard MVL price is £1,695 + VAT and disbursements. Our licensed insolvency practitioners (IPs) will guide you through the process from start to finish.
- Engagement and declaration of solvency
After you’ve reached out to us, we will send you an engagement pack. Once you complete and return the pack, you’ll complete a Declaration of Solvency. This declaration confirms the company’s financial status and its ability to repay its debts within twelve months. Doing so fraudulently can lead to a fine or even imprisonment. The declaration must be made up to no later than five weeks prior to the liquidation, and a solicitor is needed to have it sworn in.
Indemnity also needs writing into the engagement letter. Although MVLs are for solvent liquidations, this provides the liquidator with some protection if any unexpected claims are made later.
- Preparing for liquidation
Before liquidation, you should ensure all accounts and returns are prepared for HMRC. This includes VAT and PAYE, and payments should be made, with evidence before the liquidators’ appointment. We will then prepare all statutory, minutes, notices, and resolutions.
- Alerting Companies House and the bank
After our appointment, we send the documents to Companies House, confirming us as liquidator. As with an insolvent company, an advertisement appears in the London Gazette so any creditors you may have can make a claim.
- Distribution and indemnity
Once we receive the funds from your company bank, these are distributed. How long this takes depends on the bank and how fast they distribute to liquidators.
Members Voluntary Liquidations (MVLs) are designed for solvent companies wishing to close. They’re more tax-efficient and profitable than a dissolution and allows companies with more than £25,000 in cash and assets, to qualify for Business Asset Disposal Relief (formerly Entrepreneurs’ Relief). We can guide you through the process and ensure a quick cash release and a fast distribution.
How we can help
If you’re the director of a limited company that’s reached the end of its useful life, or you want to retire, and you’d like to explore a solvent liquidation, speak to us. Our initial advice team can provide free, impartial, actionable advice, and a no-obligation quote for our services.
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