What is a Members Voluntary Liquidation?
Members Voluntary Liquidation is a way of closing a limited company that is solvent
What is a Members Voluntary Liquidation (MVL)?
This is a way of closing a Limited Company that is solvent - its assets outweigh any liabilities. This can be a tax efficient way for Directors to withdraw remaining funds from their company before closing it.
The directors can apply for entrepreneurs relief (which allows them to pay 10% tax on the funds that go to them rather than the standard rate of income and dividend tax).
How much does a Members Voluntary Liquidation cost?
A licensed Insolvency Practitioner needs to be engaged and appointed to conduct the MVL. Fees range from 1k-5k dependent on Insolvency Practitioner and these are paid from the assets of the company.
Additionally, all accounts, and corporation tax has to be up to date and paid so an accountant is needed in the process.
What is the process of a Members Voluntary Liquidation?
A licensed Insolvency Practitioner needs to be engaged and appointed to conduct the MVL and all accounts & corporation tax has to be up to date and paid, so an accountant is needed in the process.
- Licensed Insolvency Practitioner is appointed
- Declaration of Solvency sent to Companies House
- Winding up resolution completed
- Advertisement in the Gazette and any creditors notified
- Assets are sold and any funds are distributed to creditors
- Company removed from register at Companies House
If you want to close your Limited Company which has assets but no debts, and you would like to withdraw the funds from that company before you close it, a Members Voluntary Liquidation could be the most suitable route for you.
However, each case is different and it is important you seek guidance before entering the formal process. The Directors Helpline's team are experienced in helping Directors just like you and our service is completely FREE.Get in touch
Typically, the whole process can take between 6 months to one year, depending on the complexity of the company.
This is a process that is used by Directors of solvent companies who want to close; either to retire or step down but nobody else wants to run their business.
A Members Voluntary Liquidation is commonly used because it offers benefits to Directors and shareholders of the company.
A Creditors Voluntary Liquidation is a process for insolvent companies (its debts outweigh its assets) that want to close.
A Members Voluntary Liquidation is for solvent companies (it has assets but no debts) that want to close.
A Members Voluntary Liquidation is a process for solvent companies that have assets and no debts. An MVL requires a Licensed Insolvency Practitioner to close the company.
A Dissolution is a process for solvent companies that have no assets and no debts. A Dissolution requires completion of a DS01 form (which can be completed yourself) to close the company.
They key difference between the two processes is the level of assets within the company and how the company is closed.
- Speak to your accountant to see if you will be eligible for entrepreneurs relief.
- The speed of how quickly it can be done will vary on each case and firm you appoint.
- Ask your accountant to explore other alternative ways and tax implications.