A Members’ Voluntary Liquidation (MVL) (also known as a ‘solvent liquidation’) is a very tax effective way to close down your solvent limited company.
By using an MVL, you can close down your limited company and take the money out in the most cost-effective way. This is because the funds to be distributed are subject to Capital Gains Tax, rather than Income Tax. Also, if you qualify for Entrepreneurs’ Relief (as most of our clients do) you can benefit from a 10% marginal rate on distributions.
In determining whether an MVL would be right for a particular situation, we would leave the tax calculations to your Accountant. Where it is deemed that an MVL is the best solution, an Insolvency Practitioner (like us) must (by law) be used.
We aim to distribute the assets of the company after 35 days from the date of Liquidation.
Our standard fee for an MVL is £995 +VAT, +disbs (see below for the disbursements).
Low Cost£995 +VAT +disbursements (at cost)
Tax Advantagesfor company directors
Quick Paymentusually received after 35 days
Credit Ratingnot affected
Insolvencypractitioner must be used
Not Tax Avoidanceis a legitimate and tax-effective way to wind up a solvent company
Nationwideno need for face to face meetings
Available to individuals disposing of shares in a trading company where they were an officer (or employee) holding at least 5% of the voting rights. Allows relief on lifetime gains up to £10 million
Effectively reduces the tax rate on any capital gain to 10%.
For more information on Entrepreneurs’ Relief speak to your Accountant or look at the gov.uk website.
A typical scenario would be where a director or contractor decides to: retire; or return to full-time employment
and wants to close down their company; and take their money out in the most cost-effective way.
In determining whether an MVL would be right for a particular situation, we would leave the tax calculations to the Accountant (including those relating to Entrepreneurs’ Relief). Where it is deemed that an MVL is the best solution, an Insolvency Practitioner must be used
Once appointed, it is our aim to make the necessary payments to the shareholders as quickly as possible – usually after 35 days. There is no need for face-to-face meetings – as the process can be done via e-mail and using our Client Portal.
There are some legal disbursements that have to be paid in an MVL.
Clarke Bell charge all of these at cost, and we regularly review them to ensure we are getting the best prices available.
These are to provide any possible creditors the chance to come forward to lodge their claim.
For companies registered in England & WalesThroughout the course of the MVL we have to take out 3 Statutory Adverts in the London Gazette. The cost of these is (3 x £72.00 = £216 +VAT): £259.20
For companies registered in ScotlandThroughout the course of the MVL we have to take out 4 Statutory Adverts in the Edinburgh Gazette and an additional advert in the Scottish Daily Mail. The cost of these is (4 x £72.00 = £288 +VAT and 1 x £69+VAT): £428.40
For companies registered in Northern IrelandThroughout the course of the MVL we have to take out 4 Statutory Adverts in the Belfast Gazette. The cost of these is (4 x £72.00 = £288 +VAT): £345.60
A compulsory bond needs to be taken out. 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.