Members Voluntary Liquidation from only £995+VAT

Members Voluntary Liquidation

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P Bean, Leicester

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If you own a company that has assets over £25,000 and has no future purpose then a Members Voluntary Liquidation (MVL) is probably the best way to close it down. Prior to the 1st March 2012 shareholders did not need to appoint a liquidator and could request permission from HMRC to distribute surplus funds as capital receipts (lower rate of tax) rather than a dividend.


However ESC C16 was then introduced and meant that any funds over £25,000 would be taxed as dividends unless the company was placed into Members Voluntary Liquidation (MVL).


Since then MVLs have become increasingly popular as the capital distribution should attract entrepreneur’s relief which makes it is an extremely tax efficient way of extracting cash and other assets from the company.


Shareholders can often be paid within 24 hours of appointing an Insolvency Practitioners and the company itself can be completely wound up in less than 6 months.


A Members Voluntary Liquidation is usually a straightforward process with the key steps outlined below:

  • Company will cease trading – in order to keep costs to a minimum any assets will be sold and any creditors settled before the formal MVL process begins.
  • An essential requirement for a members’ voluntary liquidation is that the directors must make a statutory declaration of solvency. This confirms that the company will be able to pay its debts in full within a specified period, not exceeding 12 months.
  • Within 5 weeks of the declaration of solvency a board meeting is convened and the shareholders formally resolve to wind up the company and appoint a liquidator.
  • Within 14 days the liquidation notice is published in the London Gazette and any creditors that come forward are settled.
  • Tax clearance is received from HMRC (final accounts will have been prepared by the accountant along with VAT, Corporation tax and PAYE returns) and if all creditors have been satisfied the company can be struck off the register of companies.

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As part of the Finance Bill 2016 a new targeted anti-avoidance rule (“TAAR”) was introduced in an effort to reduce tax avoidance and the use of ‘phoenix companies (where a company is closed to extract funds and starts again in the same field under another name) by some Directors. Despite these changes MVLs remain an extremely effective tax planning tool but it is essential you do not fall foul of the new rules. At the Insolvency Helpline we specialise in Members Voluntary Liquidations so why not call us on +44 77 1566 4532 and confirm if it is still the best way forward.

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