When a director chooses to liquidate their company through a Members’ Voluntary Liquidation (MVL), there are certain costs that are involved in the process.
One of the costs involved in the MVL process is the fee that must be paid to the liquidator, for handling the appointment and carrying out the liquidation. There are also additional costs to pay, which are the legal disbursements.
If you are thinking about putting your company into Members’ Voluntary Liquidation, you will need to understand what costs are involved.
To help you, Clarke Bell has put together this guide explaining what a disbursement is and how much you can expect to pay to liquidate your company with an MVL.
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What is a Members’ Voluntary Liquidation?
Before we take a look at disbursements, we will start by explaining what a Members’ Voluntary Liquidation (MVL) is.
Through the MVL process, the company’s assets are realised and its funds are distributed amongst the shareholders. This is a popular option for solvent companies as it lets the director quickly close their company and therefore free up funds.
The MVL process is an HMRC-approved way to close a solvent company in a tax-efficient manner.
By using an MVL 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 Entrepreneur’s Relief) you can benefit from a 10% marginal rate on distributions.
This means there can be considerable tax savings for the director(s) of the company.
For this reason, closing your solvent company through Members’ Voluntary Liquidation can save you a significant sum on your tax bill.
As a Members’ Voluntary Liquidation is a formal legal process, a licensed Insolvency Practitioner must be appointed to carry out the process.
For this reason, there are statutory costs associated with the process which directors must be aware of.
What is a disbursement?
As we have mentioned, when a company is placed into Members’ Voluntary Liquidation there are certain costs that are incurred, such as disbursements.
Disbursements are costs that are involved in the MVL process that are unavoidable.
What disbursements are charged in an MVL?
Throughout the course of the MVL the Insolvency Practitioner (also known as the liquidator) has to take out three Statutory Adverts in The Gazette. This is to ensure that the liquidation is on public record and to provide any possible creditors the chance to come forward to lodge their claim.
The cost of these will vary depending on the Insolvency Practitioner you appoint, and whether they charge you ‘at cost’ or add on an additional charge.
At Clarke Bell, we charge you ‘at cost’. (The current rate is £81 +VAT per advert.)
The other disbursement which needs to be paid in an MVL is the compulsory statutory bond. This provides the directors with security whilst funds are under the control of Clarke Bell. The bond fee is dependent on the assets of the company.
Again, the cost of these will vary depending on the Insolvency Practitioner you appoint, and whether they charge you ‘at cost’ or add on an additional charge.
At Clarke Bell, the typical cost is between approximately £50 – £110.
All of the disbursements in an MVL with Clarke Bell are charged at cost. We regularly review them to ensure we are getting the best prices available.
Are you considering an MVL?
If you are a company director and you are looking to close your solvent company in a tax-efficient way, then an MVL is likely to be the best option for you.
If you’d like to find out more about Members’ Voluntary Liquidation and how the process works, simply get in touch with Clarke Bell.
Our team of experts will work closely with company directors (and their accountants) to get to know their situation and find out if an MVL is the best option for you.
Clarke Bell has a range of categories for our Members’ Voluntary Liquidation service, depending on the situation of the company.
So, we are well-equipped to close your solvent company whatever your situation is.
We have been trading for more than over 27 years and have helped more than 2,600 companies through the MVL process, distributing over £435 million to shareholders.
Our prices are very competitive, starting from just £995 (+VAT +disbursements).