In the right circumstances, a members voluntary liquidation (‘MVL’) can often be the most tax efficient way for shareholders to withdraw any remaining funds from the Company, once it has reached the end of its life but remains solvent.
Examples of where an MVl may be appropriate are;
– sale of the business
– restructuring/ reorganisations
– shareholder disputes
– Orderly wind downs
– Dormant/ non-trading subsidiaries
Tax savings normally outweigh the costs of the liquidation
An MVl is a formal process that must be undertaken by a licenced insolvency practitioner.
Our competitive prices and efficient service allows us to ensure a quick and cost effective return to shareholders. Whilst cost is an important consideration we also understand that often the practitioner will be required to be in control of substantial sums of shareholders money and therefore the shareholders will need to have complete trust in their chosen professional. A majority of our work comes from professional referrals demonstrating our reliability and integrity. We can arrange a suitable indemnity to ensure funds are received as a priority and we are fully transparent with all of the costs involved including disbursements.
We will work with your accountant/ tax advisor to ensure a fast and effective wind down
Why is it Tax Efficient?
It allows the distributed funds to be classed as capital rather than income, therefore a lower tax rate is applicable and the monies can be withdrawn immediately without any adverse tax consequences. The MVl will also mean tax bands for that year are not utilised and remain free for alternative sources or income
There may also be the possibility of entreprenuers relief
A distribution in specie may be possible where assets can be distributed directly to shareholders without the need for sale/ realising first
Company is in a solvent financial position (including contingent claims)
Company has assets above £25,000
Shareholder agreement above 75%
(*all subject to company’s individual articles of association)
There are certain restrictions that apply to MVL’s and it is important to fully understand these before proceeding with the process. If you would like to find out more and undergo a free initial assessment to decide if an MVL would be beneficial for you please contact us now.
CBA Business Solutions specialise in liquidations and have a dedicated manager to deal with solvent liquidations, ensuring you are always in safe hands.
For our directors guide to MVL’s please contact us.