Members Voluntary Liquidation (MVL)
What is Members Voluntary Liquidation (MVL)?
Members Voluntary Liquidation (MVL) is a formal process for winding up solvent companies or Limited Liability Partnerships (LLPs). It involves realising company assets, distributing funds to shareholders, and potentially paying out company assets directly to shareholders, if preferred.
Understanding Solvency
A company considered solvent can pay its debts on time and has assets exceeding liabilities. Insolvent companies cannot undergo MVL. Directors must account for 12 months of statutory interest on creditors' debts and liquidation costs when determining solvency.
Process Overview
MVL is primarily a procedural task involving statutory paperwork and careful consideration of tax implications. Company assets are distributed to shareholders, and upon completion, the company is deregistered from the Companies House.
Benefits of MVL
Tax Efficiency
MVL typically results in tax savings for shareholders, as distributions attract Capital Gains Tax rather than higher-rate income tax.
Finality
It provides a formal conclusion to the company’s affairs. The liquidator settles all legitimate creditor claims, including those from HMRC, and facilitates the company’s dissolution.
FAQ's
MVL is a legal process to wind up solvent companies or LLPs, distributing assets to shareholders.
A solvent company can pay debts on time and has assets exceeding liabilities.
Primarily paperwork and tax considerations, with assets distributed to shareholders before company dissolution.
Tax efficiency due to Capital Gains Tax treatment and formal closure of company affairs.
Starting a new company with the same name is possible but requires careful legal steps to avoid liabilities.
Yes, as long as they meet legal requirements and are not disqualified.
HMRC claims are settled during the liquidation process, ensuring finality for all creditors. Please note however that HMRC no longer provide formal tax clearance for companies undergoing MVL. It is therefore essential that, where possible, all tax matters are resolved prior to liquidation.
