How does members voluntary liquidation work?
What is a Members Voluntary Liquidation ?
A Members Voluntary Liquidation (MVL) is an effective way to wind down your solvent business, and allows shareholders to withdraw funds in the most tax efficient way.
If the Company structure is simple, ie the same director/s and shareholder/s, the MVL process is extremely simple.
Members Voluntary Liquidation Steps:
We will draft all the documents you require to call and place your company into liquidation under these easy steps:
· Arrange for the directors to agree to place the Company into MVL and to swear a Declaration of Solvency. This is a document that shows the Company’s assets and liabilities and confirms that any liabilities (with statutory interest) will be paid within 12 months of the Liquidation.
· The shareholders/members then vote and agree that the Company should be placed into MVL.
After the appointment has been confirmed, the liquidator will realise the company's assets, settle creditor claims (if any) and distribute any surplus funds to the shareholders/members.
Providing the Insolvency Practitioner is comfortable with the Company’s position, a distribution of the Company’s cash asset can be made to shareholders/members shortly after the Liquidation appointment.
The funds you receive will be classed as capital receipts, and you will therefore benefit from Business Asset Disposal Relief (formerly entrepreneurs relief), paying less tax.
If the Company has any non-cash assets, these can be distributed in specie to shareholders/members, thereby alleviating the need for them to be sold.
Creditors voluntary liquidation vs members voluntary liquidation
What is the difference between a MVL and a CVL? An MVL would be the most effective way for a solvent company to be liquidated, whereas a creditors voluntary lidquidation is often a solution for a insolvent company, whereby the directors volunteer to liquidate rather than waiting for compulsory liquidation.
Get free expert advice about how an MVL may be the right choice for you by contacting us now on 01482 427175.