What is an MVL?
If you’re looking to close down your solvent company then one way to do it is through a process called a Members’ Voluntary Liquidation (MVL).
An MVL is an HMRC-approved way of liquidating a company which does not have any debts and is no longer needed. It is generally used when the reserves of the company exceed £25,000 – because of the tax savings which the process brings to the shareholders of the company.
An MVL is a popular choice for directors who want to:
- go into an employee / PAYE role (maybe due to the new IR35 rules)
What is required to enter into an MVL?
To start the process of an MVL your company must be solvent. When entering into an MVL, directors are required to make a sworn declaration (known as a ‘Declaration of Solvency’) that the company is solvent and has the ability to meet all of its contractual obligations and pay any future liabilities e.g. taxes and creditors.
You also must instruct a Licensed Insolvency Practitioner to liquidate the company. Before the liquidation proceedings can commence, the liquidator would need the following:
- final accounts, made up to the date the company ceased to trade, to be prepared
- all creditors to be paid
- any physical assets to be disposed of
- any outstanding charges to be satisfied
- the final VAT return and Corporation Tax Return to be submitted (upon the company being placed into Liquidation, a further short period return will be required to be submitted)
- if any liability is owed to HMRC after the submission of these forms, this will need to be paid.
Benefits of an MVL
Many directors choose to formally liquidate their solvent company rather than just striking it off through Companies House as there are significant tax advantages to an MVL. This is because the funds to be distributed are subject to Capital Gains Tax, rather than Income Tax and if you qualify for Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief) you can benefit from a 10% marginal rate on distributions.
Do you want to close your company with an MVL?
At Clarke Bell, we have a number of different categories of Members’ Voluntary Liquidation which means that we close down your solvent company whatever your situation is.
Our prices are affordable, and we make the distributions to shareholders quickly – after 35 days of the date of the liquidation.
Our advice is free and confidential.
Contact us to discuss your options on 0161 907 4044 / firstname.lastname@example.org