Your company must be solvent (be able to pay all of its debts) and be no longer needed.
What is a members’ voluntary liquidation?
A members’ voluntary liquidation (MVL) is used to close a company down when it is no longer needed. The important point is that the company must have sufficient cash or assets to pay all of its debts in full – it must be solvent. This is also known as a solvent liquidation. Any surplus assets and cash to be returned to the shareholders after all liabilities are paid is taxable as a capital gain, rather than income. This makes an MVL more tax efficient than striking the company off.
Why use an MVL?
- Surplus cash is usually taxed at a lower rate as it is treated as a capital gain rather than income
Provides finality and protects against unknown claims coming forward later
Assets can be distributed in “in specie” so properties do not have to be sold
What are the steps of an MVL?
If you are looking for an effective, low cost and tax efficient way to close your business, a Members Voluntary Liquidation (MVL) could be the answer. An MVL is a legal process that allows shareholders to liquidate their company providing it is solvent. This means that the business must have enough funds to pay all of its liabilities.
There are many reasons why you might consider an MVL, such as:
Company has achieved its purpose, e.g. a property development
Extracting surplus cash
New contract for IT specialists, offshore workers and other contract workers
Following a business and asset sale where you retained the company’s shares
Potential to claim Entrepreneurs’ Relief
At Leading we understand that business owners want a fast, reliable service giving them the advice that they need, when they need it, at the best price possible. That’s why we offer free initial consultations and should you decide to go ahead with an MVL, we will give you a fixed fee quote and be on hand every step of the way to guide you through the process.