What is an MVL?
MVL is a process for liquidating a solvent limited company or LLP. It provides a tax-efficient means for an individual to divest capital from a business and is often used when a shareholder wishes to retire or walk away from the business. Technically the process is similar to liquidating an insolvent company. Both procedures have to be undertaken by a licensed insolvency practitioner.
How long does an MVL take?
An MVL can take as little as 7 days from receipt of engagement paperwork. It is usual that all assets will have already been realised and creditors repaid leaving only a bank balance to distribute. This can be distributed to shareholders within 7 days of receipt of the cash. The completion of the liquidation process is concluded within 12 months.
What does MVL mean?
MVL stands for Members Voluntary Liquidation and as the name suggests it describes the process whereby the members (or shareholders) choose the liquidate all the assets (ie turn into cash) before closing down the company. Companies entering an MVL must be solvent and in a position to repay all outstanding creditors within 12months.
Why use an MVL?
Using an MVL can legitimately minimise tax liabilities for shareholders wanting to withdraw their investment from a company. This makes it the ideal, tax-efficient way of walking away from a solvent business on retirement and benefitting from Entrepreneurs' Relief, reducing the tax liability to 10% compared with the normal Capital Tax rate.
What is Entrepreneur’s’ Relief?
Entrepreneur’s’ relief is a concessionary rate of capital gains tax (CGT) available to shareholders who are selling or gifting part or all of their shareholding. They must own at least 5% of voting shares in a qualifying company. Entrepreneur’s’ relief is also available to sole traders and partners. The applicable rate is 10% (subject to a lifetime £10m limit)
How much will an MVL cost?
An MVL costs £1,695 + VAT and disbursements. There are two disbursements. The first relates to 4 advertisements in the London Gazette. The second is the cost of a Liquidator’s Bond – a statutory requirement – which is based on a scale depending on the value of assets. We can provide you with an exact fixed quote upon contact.
Are you looking for a fast, low cost tax efficient way of unlocking your cash? Then a members voluntary liquidation (MVL) may be the right solution for your business.