Members’ Voluntary Liquidation – MVL
How to exit and liquidate a solvent company you don’t want to run anymore.
What is an MVL?
A Member’s Voluntary Liquidation or MVL is the formal procedure to close down a solvent company.
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Is an MVL right for my business?
The best option for solvent companies to close down in a structured and tax-efficient way.
When a MVL is a good option
Examples include: (1) Retiring or stepping away from business ownership. (2) Closing a company once its project is complete. (3) Shutting down an unneeded subsidiary within a group.
Benefits of a MVL
(1) Returns surplus assets to shareholders tax‑efficiently. (2) Cuts accounting and audit costs. (3) Saves management time on statutory returns and compliance. (4) Reduces director risk. (5) Simplifies complex structures, improving investor perception. (6) Provides quick access to shareholder funds. (7) Extracts business value as cash.
Members’ Voluntary Liquidation Criteria
Solvency – The company must be able to pay all its debts, including interest, within 12 months. Declaration of Solvency – Directors must sign a formal statement confirming the company can settle its liabilities. Shareholder Approval – At least 75% (by value) must agree to the liquidation. Appointment of a Liquidator – A licensed Insolvency Practitioner must oversee the process.
Taxation benefits in detail
All distributions to a shareholder are taxed as a capital gain in an MVL. However, if the company is wound up and closed by dissolution, distributions are taxed at the dividend rate.
Whether an MVL is more beneficial than dissolution depends on the shareholder’s unique tax position; we can advise accordingly.
Can I Simply Dissolve My Business?
Dissolution is often a cheaper way to close a company
When Dissolution is Suitable?
There must be no outstanding debts or liabilities, no ongoing legal proceedings, and unanimous agreement among all directors and shareholders.
When Dissolution is Not Suitable?
For solvent companies with shareholder distributions over £25,000, a Members’ Voluntary Liquidation is preferable for tax reasons.
For insolvent companies with creditors or HMRC likely to object, a Creditors’ Voluntary Liquidation is needed.
Why Use A Professional Service?
It's vital all matters are dealt with correctly – otherwise it could be costly, for example:
- Post‑dissolution, any assets of a dissolved company are frozen, and any credit balance belongs to the Crown.
- A company can be restored by court order for reasons such as outstanding debt or HMRC liability.
Dissolving Your Company With Us
We can be as hands‑on as you require, handling creditors, Companies House, and HMRC.
The strike‑off process addresses outstanding company assets, debts, and any other unresolved issues. Upon completion, your company is removed from the register, and your duties as a director come to an end.
When is a MVL a good option?
"If you have a cash-rich company and want to keep your tax bills low then an MVL can be a very tax-efficient way forward."
Elana Ward
Office Manager
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