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Members Voluntary Liquidation (MVL)

A Members Voluntary Liquidation (MVL) closes formally a solvent limited company. As soon as the liquidator realises the company’s assets and pays all remaining creditors and debts. The liquidator immediately pays a capital distribution to shareholders, either in species or from other assets in the company.

A solvent limited company must be distinguished from insolvent limited companies, as there will be sufficient assets to repay all creditors and distribute to the company’s shareholders.

While the company’s Directors initiate a Members Voluntary Liquidation Process, it still requires 75% of shareholders to give notice of members’ meetings to pass the winding-up resolution.

Ensure you obtain professional, experienced advice on MVL’s from our team.

Take immediate friendly advice about how MVL’s work right now via live chat or by calling 0330 056 3120. Liquidate your limited solvent company in the most tax-efficient way.

How long does a Members Voluntary Liquidation Process take?

The actual liquidation time will vary depending on the complexity of your company’s financial circumstances.
Our priority at HBG Advisory is to manage the MVL as quickly as possible. We request clients sign ‘deed of indemnity’ to aid the process to enable almost instant payout in part.

However, the remaining balance depends on how long HMRC takes.

Why consider a Members Voluntary Liquidation?

Here are the reasons why directors might place a company into Members Voluntary Liquidation:
The directors prepare to cease trading. Shareholders can exit their company in a tax-efficient way through entrepreneurial relief. However, the distribution as capital via an MVL may offer more favourable tax benefits than distribution through income tax.
Shareholders may consider splitting the company’s assets, and a section 110 IA86 reorganisation through Members Voluntary Liquidation may facilitate this.

The directors or shareholders of the company may wish to retire, move abroad, or an IR35 company no longer required due to relocation or full-time employment.

An MVL could however be used to reorganise a group of companies.  So, for example, a subsidiary is no longer required or may have become dormant, this is a way to close it.

Tax Benefits of an MVL?

Several tax benefits exist using a member’s voluntary liquidation. Shareholder distribution remains treated as capital distributions, thereby lowering tax rates than conventional dividends.

Members Voluntary Liquidation (MVL) and Entrepreneurs Relief

MVL distributions may qualify for Entrepreneurs Relief. It may offer a lower tax burden through reduced Capital Gains Tax of 10% on company qualifying assets.

We recommend you contact us to consider the potential tax implications of voluntary liquidation for your business.

What is the contrast between an MVL and a CVL?

MVL’s provide shareholders of a solvent company with a way to liquidate and potentially draw money from the company at a more advantageous tax rate.. A CVL is adopted when a limited company is insolvent. The directors opt to liquidate voluntarily, rather than face compulsory liquidation.

What is the timeline for an MVL?

Once the decision has been made to liquidate your solvent company. Many directors have concerns about how long it takes to make a distribution to shareholders. So, to speed the process up, we ask the shareholders to sign a deed of indemnity. By doing so, the liquidator may then perform an earlier distribution of funds within one to two weeks. The deed of indemnity protects the liquidator in the event an unknown creditor crops up requiring payment.

The Members Voluntary Liquidation Process?

  • Hold board of directors’ meeting.
  • Directors sign a declaration of solvency of the company.
  • Carry out a company shareholders meeting.
  • The company enters liquidation.
  • Sign the ‘Deed of Indemnity’;
  • Conversion of an MVL into a CVL;
  • Hold a final meeting.

Costs to carry out a Members Voluntary Liquidation?

MVL Fees:

  • Liquidators Fee – Depends on the complexity of the case. At HBG Advisory, our fees start at £995 + VAT.
  • HBG Advisory provides clients with Fixed Price MVL;
  • Disbursements – four separate notices in the Gazette (costing £60 + VAT each), and a bond, of approx £200.

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