Members voluntary liquidation
Members voluntary liquidation is a liquidation process used to wind up a solvent company’s affairs, it is a cost effective process available to a company’s shareholders and often referred to as an MVL.
What is a MVL?
A MVL isn’t something that most directors and shareholders would consider in winding up a solvent business, but with careful planning, significant capital gains tax savings can be made when placing a Company into MVL.
In most cases, a MVL process will provide a more tax efficient conclusion to the Company’s affairs rather than distributing surplus funds available and applying to strike off the Company from the Registrar.
Why and when should you consider a Members Voluntary Liquidation?
- The Company’s directors and/or shareholders are retiring.
- The Company intends to sell its business and assets.
- The Company has reached its natural conclusion and it has ceased trading.
- The shareholders want to extract their investment in the Company in the most tax efficient manner.
- The Company needs to undergo a restructure.
How much does an MVL cost?
Directors and shareholders are often hesitant about instructing professional firms for fear of the costs that may be incurred, but with proper planning, working alongside the Company’s current advisors, and through our expertise, these can be kept to a minimum.
We will be happy to provide a quote tailored to your business, professional fees incurred in undertaking an MVL are always, agreed in advance and in writing and are, surprisingly, always significantly less than the tax savings that can be achieved.
Is a MVL the correct solution for your company?
In proposing an MVL, the directors will have formed the opinion that the Company is solvent, has assets more than its liabilities and can pay off its debts, plus interest, within a twelve-month period.
In forming that view, they will convene a meeting of shareholders to propose to them that they agree to place the company into a MVL. The shareholders will, after payment of any debts, receive any surplus funds that are available and if they are eligible for business asset disposal relief, this means they will pay a smaller amount of capital gains tax when they sell or dispose of all or part of their business, this is a significant tax saving for most shareholders.
Normally, if a company’s surplus assets are more than £25,000, an MVL process will likely be the most cost effective way for shareholders to extract funds and conclude its affairs.
What are the tax advantages of placing your company into members voluntary liquidation?
Surplus funds held by a company can be classed as capital receipts and could be, with correct planning, distributed to shareholders who if they qualify for Business Asset Disposal Relief, may pay less capital gains tax at a rate, that could be as little as 10%
What other advantages does a members voluntary liquidation provide?
- It is a relatively quick and easy process. Usually from first meeting the directors and providing appropriate advice, the formal MVL process can be started within a matter of days.
- With careful tax planning, early distributions of surplus funds can be made to shareholders almost immediately upon the appointment of a liquidator.
- The directors’ powers and responsibilities cease, and the liquidator takes over the responsibility of filing the necessary statutory accounts at the Registrar of Companies.
- The whole MVL process can usually be concluded within 6 months, with the company being struck from the Registrar of Companies shortly afterwards.
Why should I choose McLenan Corporate to be our nominated advisors?
- You will have direct access to our qualified insolvency practitioner who will provide initial advice free of charge.
- We will always work closely with a client’s current advisors to conclude a company’s affairs in an efficient and timely manner allowing us to minimise our fees.
- To be appointed over any formal insolvency process, including a MVL, a qualified insolvency practitioner must be appointed.
- We are a fully licensed Insolvency Practice authorised by the Insolvency Practitioners Association to take formal appointments throughout the UK.
If you are considering a MVL process, contact us today and we will provide you with free confidential advice and a no obligation consultation. We can be contacted via telephone, email or if you would prefer, simply fill in our contact form and our Insolvency Practitioner will get in touch with you within 24 hours.
All initial advice and guidance is provided free of charge. As an insolvency boutique firm, we do not provide the services you do so you can rest assured we will not entice your clients.
McLenan Corporate is a trading name of McLenan Corporate Solutions Limited, Marathon House, Olympic Business Park, Drybridge Rd, Dundonald, Kilmarnock, Ayrshire KA2 9AE. Company Number SC651445.
Margo McLenan is licensed to act as Insolvency Practitioner in the UK by the Insolvency Practitioner Association.
Insolvency Practitioners are bound by the Code of Ethics when carrying out all professional work relating to an insolvency appointment.