SOLVENT LIQUIDATION

MEMBERS VOLUNTARY LIQUIDATION (MVL)

WHAT IS IT?

An MVL is a formal method in which solvent companies or Limited Liability Partnerships are wound up or liquidated. The assets of the company are realised (often sold) and the money is paid out to shareholders. Under an MVL the assets of the company can be paid out to shareholders too if the shareholders prefer.

WHAT IS A SOLVENT COMPANY?

This is a company that can pay its debts as they fall due and, its assets exceed its liabilities. It is a company that is not insolvent. Insolvent companies cannot use the MVL procedure to be wound up. When considering whether a company is solvent the directors must account for 12 months statutory interest on any creditors debt and the cost of the liquidation itself.

WHAT IS INVOLVED

It is largely a paper exercise. We undertake the required statutory paperwork and ensure the tax implications (which are many) are taken into consideration. The company’s assets are then distributed to the shareholders and the company is struck off the Register of Companies.

WHAT ARE THE BENEFITS

Tax planning. An MVL will invariably attract tax savings for the shareholders or members as the distribution to the shareholders will attract the Captial Gains Tax and not (higher rate) income tax.

Finality. It formalises the termination of a company. The liquidator will rule off the creditors and pay all who have legitimate claims. In particular any HMCR claims will be finalised. The company will then be dissolved.