What is Members’ Voluntary Liquidation [MVL]?
A formal winding up of a solvent company’s affairs but still governed by the Insolvency Act 1986. An MVL is undertaken to realise value for the benefit of shareholders in a tax efficient way, or as part of a group re-structuring, or simply because the company is no longer required.
The company will usually have ceased trading, often following the sale of its business and assets, and there is no longer any need for the company. An MVL is often a highly tax efficient way of returning surplus assets to shareholders/members. Shareholders may qualify for Entrepreneurs’ Relief, subject to meeting the criteria, meaning that their qualifying capital gains are taxed at a more attractive rate.
We deal with many MVLs and aim to ensure that capital distributions are made to shareholders in a timely and efficient manner. In most MVLs, a significant early cash distribution can be made to shareholders. We usually work closely with the company’s existing accountants and professional advisers to ensure that all outstanding tax returns are submitted promptly and the clearances needed from HMRC are obtained.
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