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What is a MVL?
Members Voluntary Liquidation
Closing your company and extracting the capital in the most efficient way.
Benefits of going down the MVL route
- Quickly unlock surplus cash
- Withdraw cash in the most tax efficient way (much better than salary of dividend)
- You could qualify for entrepreneur’s relief – tax bill could be as low as 10%
What is an MVL?
A Members Voluntary Liquidation, or MVL, is a process that allows shareholders to appoint a liquidator in order to formally close down a solvent company. The liquidator will check all the company’s assets and make sure that there are no outstanding liabilities against the business. When this is done, a capital distribution will be paid to all the shareholders.
As a solvent company, there must be sufficient assets to repay all the creditors as well as funds to pay the shareholders. The MVL may be initiated by the directors of the company but it will also need the approval of 75% of the shareholders in order to pass.
There are multiple reasons why a company might choose to be placed into Members Voluntary Liquidation. Below we explore some of the most common.
- The company is looking to bring an end to trading as shareholders require an appropriate exit strategy. As they may be able to obtain a tax-efficient release of their capital under entrepreneurial relief, the MVL could be more tax beneficial. There may also be HMRC Entrepreneurs’ Relief (now also known as Business Asset Disposal Relief) to take into consideration.
- Several shareholders are looking to split the company’s assets. Reorganisation through Members Voluntary Liquidation might prove the best way to achieve this.
- The directors or shareholders may want to retire, move overseas or revert to full time employment.
- It can be used as a tool to re-organise a group of companies, as it is an easy way of closing them down.
What is the Members Voluntary Liquidation Process?
In order to go through the MVL successfully, you need to follow the agreed process. The first stage is to have a meeting of the board of directors. If you decide the MVL is the best course of action, then you need to make a declaration of solvency. This will state that a full enquiry has been made into the state of the business and that everything is in order.
There will then need to be a shareholders meeting and 75% of them are required to be in agreement in order for the MVL to pass. The company will then be placed into liquidation and the deed in indemnity is issued.
If you are currently solvent but thinking of closing down a company, then an MVL might be the best option. You can find out more about the process by getting in touch with our team. We look forward to hearing from you.
SimpleLiquidation.co.uk is a regulated insolvency practice
Our liquidators are authorised by the Insolvency Practitioners Association and the Institute of Chartered Accountants in England and Wales. We are not an intermediary, broker or sales company.