Deciding to close down your company can feel like a daunting decision, which is likely to be costly and stressful. However, this doesn’t have to be the case. A Members’ Voluntary Liquidation (MVL) can make the whole process of closing your company easier and far more tax efficient. Ensuring profits are fairly distributed to shareholders as Capital Gains Tax.
If you’re considering an MVL to close your company, you’re likely wondering how long the process will take overall and what to expect in terms of time frames. So, to allow you to make a more informed decision, here’s a simple and succinct rundown of the MVL process…
Initiating an MVL
- In order to initiate the whole process, directors need to send statutory declaration of solvency to the Registrar of Companies.
- This needs to state that after reviewing finances, the company will feasibly be able repay all existing and contingent debts, plus interest, within 12 months.
- Within 5 weeks of issuing the declaration, you and any other directors of the company need to pass a resolution. This will officially start the winding up process.
- An advert will then be placed in the London Gazette within 14 days of the resolution being passed. The resolution must also be lodged with the Registrar within 15 days too.
- A creditors’ meeting is then held, which any creditor must be notified about at least one week before it takes place.
The funds to be distributed
- We aim to distribute 100% of the funds to shareholders after 35 days from the date of liquidation.
- The precise timing of the distribution can vary as it depends on how quickly the bank releases the funds to the liquidator.
When does an MVL end?
- A final meeting takes place that’s held by the liquidator. This marks the end of the whole MVL process.
- Notice of this final meeting will be sent to the London Gazette. The company will be struck off the Registrar around 3 months later.
(It’s worth noting that the company directors could potentially restore the company. This would need to be done via a Court order within 6 years of dissolution.)
A Members’ Voluntary Liquidation (MVL) isn’t the only way to close down a solvent company, but it can be the most tax-efficient option, which could end up saving you thousands of pounds.
You could also qualify for Entrepreneur’s Relief (ER), which will allow you to benefit from a 10% marginal rate on distributions. This can result in considerable tax savings for you and other shareholders of your company.
At Clarke Bell, we aim to distribute the assets of the company after 35 days from the date of liquidation. And our standard cost for an MVL is £995 +VAT +disbursements.
Get in touch with our friendly and highly experienced team today.