What Is A Members Voluntary Liquidation?
A Members Voluntary Liquidation (“MVL”) is a solvent liquidation and one of the ways to liquidate your company when the creditors can anticipate and ought to obtain 100 pence in the £. An MVL can be undertaken entirely online.
An MVL is a procedure that is not strictly an insolvency procedure because the company is solvent and the creditors will be paid in full. It is a procedure that enables a business’ trade to be concluded and for a distribution to be provided to the shareholders or otherwise known as the members.
It is commonly undertaken for reasons of tax efficiency to obtain entrepreneurs relief for capital gains tax purposes.
The process looks to obtain tax clearance from H M Revenue and Customs so that the Directors and Shareholders can be confident that there will be no claims remaining against the company.
The stages applicable to the MVL Procedure are set out in detail for you below. Apply for an MVL.
How To prepare For Members Voluntary Liquidation
In order to prepare for a Members Voluntary Liquidation of a company the following is required:
- Statutory Declaration of Solvency based on an Estimated Statement of Affairs
- Meeting of the Board of Directors to confirm the winding up
- Members Resolution authorising the winding up and appointment of a liquidator
What Is The Procedure?
Stage 1 – Initial Assessment
Is the company solvent?
Is MVL fit for purpose?
Stage 2 – Pre-Liquidation Period
Cease trading operations
Identify actual and or contingent liabilities
Provision of an indemnity
Review and conclude final tax affairs of company
Execute pre-Liquidation transactions
Prepare statutory Declaration of Solvency
Stage 3 – Commence Liquidation
Convene directors’ meeting
Review accounts to confirm solvency of company
Sign & certify statutory Declaration of Solvency (valid for five weeks)
Cease interest on bank account
Convene Extraordinary General Meeting of shareholders or undertake written resolutions
Stage 4 – Commencement of Liquidation
Extraordinary General Meeting or written resolutions undertaken
Pass relevant resolutions
Appointment of Liquidator
Stage 5 – Post Liquidation
Statutory filing and advertising
Notification of the Liquidator’s appointment to authorities and interested parties
Collection of books and records
Open new Liquidation bank account
Complete asset realisation where applicable
Agree and settle creditors’ claims
Ensure Corporation Tax, PAYE & NIC and VAT compliance
Obtain tax clearance
File Liquidator’s receipts and payments accounts
Distribute surplus assets to shareholders including any distribution in specie
Stage 6 – Close of Liquidation
Final report and Liquidator’s final receipts and payments account
Hold final meeting and obtain release of Liquidator
Stage 7 – Dissolution
Company dissolved three months from the date of filing of Liquidator’s final return Disposal of books and records (12 months after dissolution)
Don’t hesitate to contact us at our offices on 020 3925 3613 to discuss your MVL needs. We can assist all companies in need of such a service.