MVL
(Members Voluntary Liquidation)
A Members Voluntary Liquidation is a solution for solvent companies, giving shareholders tax efficient distributions through the government's Business Asset Disposal Relief (Entrepreneurs' Relief) scheme.
A Breakdown
What Is A MVL?
- It’s the winding up of a Solvent Company and is a means of bringing a Company to a formal end and distributing its surplus assets.
- The Directors swear a Declaration of Solvency which sets out the Company’s assets and liabilities and which states that it has the ability to pay all its creditors, together with costs and statutory interest, within 12 months.
- The Shareholders then pass a Special Resolution at an EGM to wind up the Company and appoint a Liquidator.
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What Are The Benefits Of A MVL?
- It’s a tax efficient way for Shareholders to extract their investment, where applicable benefitting from retirement, taper and other potential tax reliefs.
- It enables Directors, often of family businesses, to retire or facilitate a change of circumstances, such as, moving abroad or taking a different career path.
- Allows the tidying up of the Company’s affairs in an orderly manner.
- Provides a far stronger degree of certainty for the Directors regarding ongoing liabilities than Striking Off/Dissolution.
- Usually conducted for a pre agreed Fixed Fee.
- Employees can claim Redundancy Pay and other entitlements from the Redundancy Payments Office (RPO) once the Company is in liquidation. The RPO will become a Creditor in the MVL and be paid in the fullness of time.