Solvent business closure
Members' Voluntary Liquidation (MVL)
An MVL is a tax efficient means of closing your solvent company and unlocking the capital.
The benefits to shareholders of winding up a company in a solvent liquidation are attractive due to the difference in rates between Capital Gains Tax and Income Tax along with Entrepreneurs Relief.
Instead of the higher rate taxpayer paying 40% to 50% on a distribution of assets, with an MVL assets can be distributed and capital gains tax rates will apply at 18% or 28%, plus the costs of the liquidation.
The MVL will:
- Return surplus assets in a tax efficient manner to shareholders
- Reduce risk to directors
- Save accounting and audit fees
- Save management time in preparing statutory returns and compliance information
- Improve transparency by simplifying complex and unwieldy structures thereby enhancing investor perception
When to use an MVL
You are likely to need an MVL if you can answer ‘yes’ to these questions:
- Are you (or your clients) planning to make distributions of more than £25,000 to shareholders
- Can the shareholders claim reliefs allowing them to pay 10% tax
- Is the company nearing the end of its life
- Recent changes in tax legislation have caused you or your clients to complete a corporate structure checkup, as having many corporate vehicles is no longer tax beneficial
Using Frost to manage your MVL
We are experts in this field with a designated department dealing solely with this type of liquidation. We provide MVL services from our offices in Croydon, London and Bournemouth for businesses nationwide. We can provide a fixed fee quote and a comprehensive breakdown of the disbursements, which will differ depending on your circumstances.
Our MVL product is tax efficient and competitively priced and you can be assured of expert advice based on expertise and experience. Good advice is key when managing an MVL – if the process is not handled diligently then you could face many years of tax investigations and not achieving the result that you wanted.
You can call us on 0845 260 0101 to discuss your requirements in more detail.
- The Company must be solvent (able to pay all of their debts in full) and a meeting of directors is held where they swear a statutory declaration of solvency
- A meeting of shareholders is held to pass resolutions to put the company into liquidation
- The liquidator will review the company's books and records looking for any liabilities, will close any bank accounts and realise all assets
- All creditors' claims will be agreed and paid in full (with statutory interest). Any surplus assets will be distributed to shareholders
- Corporation tax, PAYE & NIC and VAT compliance will be concluded - with all clearances received before closure of the liquidation
- A final meeting is held to close the liquidation and dissolution of the company is approximately three months later.