A Members’ Voluntary Liquidation (MVL) is a formal process used to close down a solvent company, meaning the company has enough assets to pay off all its debts. It is often the most efficient and tax-effective way for shareholders to extract the remaining value of a company after it has fulfilled its purpose or when the owners wish to retire.

What is an MVL?

An MVL is a legal procedure that allows directors and shareholders to voluntarily close a solvent company. The Insolvency Practitioner will liquidate the company’s assets, settle outstanding liabilities, and distribute any remaining surplus to shareholders.

The key feature of an MVL is that the company must be solvent, meaning it can pay off its debts within 12 months of the liquidation process beginning. If the company cannot meet this requirement, a different type of liquidation would be needed.

Why Choose an MVL?

An MVL can be beneficial for companies that:

•Have completed their purpose or project and are no longer needed.

•Are looking for an efficient way to wind down operations due to retirement.

•Wish to release remaining funds in a tax-efficient manner.

By opting for an MVL, shareholders can often benefit from Entrepreneurs’ Relief (now Business Asset Disposal Relief), which may significantly reduce the tax on distributions, making it a favored option for tax planning.

Key Benefits of an MVL

•Tax Efficiency: Distributions to shareholders in an MVL may be subject to capital gains tax.

•Closure with Integrity: An MVL allows a solvent company to be closed in an orderly manner, ensuring that creditors are paid and all legal obligations are met.

Is an MVL Right for Your Company?

An MVL is ideal for solvent companies looking to close down in a structured and tax-efficient manner. If your company has completed its operations, or you’re planning for retirement, an MVL could be the best option to ensure a smooth and financially beneficial closure.

If you’re considering an MVL and want professional guidance through the process, our team is here to help. We work closely with company directors and shareholders to ensure the process is seamless and maximises the return to shareholders.

Contact Us

For more information about Members’ Voluntary Liquidation and how we can assist, please get in touch with our experienced team. We offer tailored advice and support, ensuring a smooth and efficient closure of your business.