If you are a Director of a solvent company, Oliver Elliot can help you extract your money and obtain HMRC clearance.
An MVL (Members Voluntary Liquidation) typically takes so long in most cases because the Liquidator is waiting for clearance from HMRC.
What is HMRC clearance?
In order to distribute in many instances the Liquidator will want clearance from HMRC for Corporation Tax purposes and any other taxes that the company was a party such as VAT and PAYE.
Without such clearance, if HMRC does come along and say that there is a liability and the Liquidator has distributed all the assets to the shareholders, then the Liquidator will have to reclaim those assets. If the assets cannot be reclaimed for any reason or the shareholders will not repay them to the company then the Liquidator is potentially personally liable for the same.
What is an MVL Indemnity?
There is a way around the problem to speed up the distribution to the shareholders by the Liquidator. That is for the shareholders to provide an indemnity to the Liquidator for any liability for which the Liquidator would be personally liable resulting from the Liquidation.
However, the Liquidator’s acceptance of that is at his or her discretion. It is down to the Liquidator if they feel comfortable because although an indemnity is a legally binding agreement it is not the same as cash in the bank. If for any reason a Liquidator who called upon an indemnity was unable to recover company assets distributed to the shareholders the Liquidator is still potentially personally liable to the company and its creditors who have lost out as a result of an early distribution.
If you are a Director looking to extract value from a company contact us for an consultation. We have more than 20 years of experience. Contact Us to speak to our CEO, Elliot Green on 020 3925 3613.
Why does a Members Voluntary Liquidation take so long? is not legal advice and not to be relied upon as such.