Members Voluntary Liquidation (MVL)
An MVL is, in essence, the liquidation of a company that is solvent. A company is solvent by definition if it has assets sufficient enough to settle all liabilities in full plus statutory interest.
The Director’s decision to instigate an MVL is generally because the company has no further purpose and is a tax efficient way of distributing its assets and profits to the Shareholders. The assets are sold, and the proceeds would be used to pay creditors in full and the liquidator’s fees. Any remaining monies would be distributed to Shareholders.
There are a number of reasons why Shareholders want to place a solvent company into Liquidation:
- Retirement of the Directors, for example the closure of a family business or the desire to transfer funds into a personal estate.
- A change in circumstances e.g. a desire to move out of the country or no longer wanting the responsibility of running a business.
- The Directors or Shareholders want to close the company and take money out in the most tax efficient manner.
- Tidying up of tax affairs for a singular or group of companies.
- The reorganisation of a group of companies after a merger, or if there is a need to increase efficiency.
- More than one MVL may be required, but your insolvency practitioner can advise on this.
Members Voluntary Liquidation is generally available to companies meeting the following requirements:
- The Directors and/or Shareholders want a greater degree of certainty and comfort regarding ongoing liabilities than a striking off can give.
- The Shareholders wish to remove their investment from the company.
- The Directors of the company wish to retire.
- The company is no longer profitable, but it is possible for the business to cease whilst still ensuring a surplus to the Shareholders.
Advantages of an MVL
- Low tax rates on shareholder distributions
- Saves management time in preparing statutory returns and compliance information
- Reduces risk to directors.
- Improves transparency by simplifying complex and unwieldy structures thereby enhancing investor perception.
- Returns surplus assets in a tax efficient manner to shareholders.
- Quick access to shareholder funds
Contact:
We offer all our customers a complimentary initial meeting to establish what options may be available to mitigate your situation.
confidential@pathbr.co.uk
0161 413 0999
