We get a lot of questions about whether or not you can reverse the decision once a company has been placed into a Members Voluntary Liquidation.
So we thought it would be a good idea to address the question here. However, before we get to that here’s a quick overview of what a Members’ Voluntary Liquidation actually is and why it is chosen by so many company directors.
What is a Members’ Voluntary Liquidation?
A Members’ Voluntary Liquidation (MVL) is a method of closing a solvent company i.e. a company that is not in any debt. Through an MVL distributed funds are subject to Capital Gains Tax rather than Income Tax. Depending on how much money is in your company, an MVL could be the most tax-efficient way to close your solvent company.
Additionally, if you qualify for Entrepreneur’s Relief you could benefit from a 10% marginal rate on distributions.
This makes a Members’ Voluntary Liquidation a popular choice for directors because of the tax savings that are on offer – especially when the cost of an MVL from Clarke Bell is just £995 (+VAT, +disbursements).
Why would someone want to close a solvent company?
A director will typically want to close their company if they:
- are looking to retire; or
- to go back into full-time employment.
Can a Members Voluntary Liquidation be reversed?
A Members’ Voluntary Liquidation can be reversed but it isn’t as easy as a director simply changing their mind.
You can only reverse an MVL within six years of the company being wound up. An application must be made to the High Court requesting an annulment of the liquidation. A successful application must provide evidence that there would be some benefit to the company by reversing the decision. It is not enough for the director to have changed their mind.
Thinking about a Members’ Voluntary Liquidation for your company?
If you are, Clarke Bell can help guide you through the entire process.
Get in contact with one of our advisors today.