An MVL is a voluntary liquidation process by a solvent company allowing the shareholders to obtain the value of the
business in cash and instead of being charged income tax on the funds a capital gains tax is applied instead,
meaning a significant saving on taxes.
recently come out of contract, retiring or perhaps returning to a staff position? Or simply decided to stop
contracting and want to close your limited company and have funds remaining in your business bank
account. There are a variety of ways to close down your company. The most common way is just
to take any remaining profit as a dividend. However, depending upon how much is profit is left you may be able to
close it via a MVL (Members Voluntary Liquidation) which could be more tax efficient potentially saving you
thousands of pounds. How does an MVL work in practice?
needs a licensed insolvency practitioner to be the liquidator. The term “members” means “shareholders” so it is
a liquidation driven by the owners of the shares. Usually the proposed liquidator will prepare all the
statutory paperwork and meet or discuss the process with the director/shareholders.
Key considerations for a MVL
important issues for directors to consider for a MVL are:
accurate up to date balance sheet showing all the assets and liabilities. This is needed for the declaration of
available all the names and addresses for shareholders (the
advisable to have the company in as simple a form as possible. This means having collected in all the assets
and sold them and paying out creditors (suppliers) where
only creditor outstanding at the start of the liquidation is HMRC for corporation tax and/or VAT, which the
liquidator will settle once in funds.
should only be used where all creditors have been paid in full or will be paid in full within 12 months from
the date of liquidation.
legislation continually changing it’s important to seek up to date advice about the tax and other implications
of a members’ voluntary liquidation. Call us today and discuss if you could benefit from a
Accounts and tax advice for contractors and consultants in the Oil & Gas
and IT industries.