A Members' Voluntary Liquidation, or MVL, is a process used to close a solvent business that has reached its natural end, helping shareholders and business owners extract money in a tax-efficient way.
It’s different to an insolvent liquidation, where a business has more liabilities than assets and debts are not fully paid off.
MVLs have particular appeal for small businesses and contractors. They are a great way to keep more of your business’s value for any privately owned solvent UK company that wants to close and pay a dividend to shareholders.
You could choose to simply ‘strike off’ a company from Companies House. However, if your business has more than £25,000 of net assets (that’s after taking off its liabilities), then it could be more tax efficient to wind up the company through an MVL, since it will be liable for capital gains tax.
Moreover, if you choose to strike off a company voluntarily, you would still be at risk of restoration. This is where your creditors could reinstate your company and make a claim on its assets, which would need to be paid by the directors, otherwise the business would be forced to go through insolvency.
When else might a Members' Voluntary Liquidation be useful?
✓ You’ve sold your business or investment property
✓ Your business has stopped trading
✓ You no longer need a limited company because, for example, you’ve taken up employment or want to retire
✓ You’ve stopped trading and are concerned about contingent or unknown creditors
✓ Business partners want to go their separate ways
✓ And in all cases, you have over £25,000 cash once all debts have been paid
One of the main advantages of a Members' Voluntary Liquidation is that it’s a tax efficient way to extract value from and close a company. When cash is distributed to individual shareholders from a Members' Voluntary Liquidation, it’s subject to capital gains tax (and potentially business asset disposal relief), rather than income tax like a normal dividend. That could have a huge impact on how much of your business’s value you’re able to realise.
We can also help with the closure of the business, selling assets and consulting with employees etc rather than directors having to do so prior to starting the process
* there’s no need to wait three months after trade has ceased, as you would do for a strike off application.
We’ve distilled the process into three main stages and answered some common FAQs on the link below.
Interpath is a financial advisory firm that boasts market leading experts, and deals with organisations of all sizes from some of the largest brands on the planet to smaller, owner-managed businesses and individuals.
We are problem solvers, who offer bespoke and flexible solutions by providing the right people, with the right experience, at the right time.
We work with over 50 accountants in the UK, helping their clients, like you, use MVLs to lower their tax burden when they want to wind down their business.
Why choose Interpath?
✓ We have one of the biggest teams in the UK that’s dedicated to working full time on MVLs. The team is made up of qualified accountants and licensed insolvency practitioners, who have a combined total of more than 200 years’ experience behind them.
✓ We have dealt with nearly 5,000 MVL's over the last 25 years.
✓ Every MVL client is assigned a dedicated case manager to manage the process from start to finish, giving you and your accountant a single point of contact.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
