Best MVL Companies

If you are looking to close a solvent company with zero debts a members voluntary liquidation (MVL) is potentially the best option in December 2023.

An MVL is a formal process to bring a company to a close that is not insolvent. Directors are required to make a sworn declaration that the company is solvent and can pay all its taxes.

In this Members Voluntary Liquidation guide, you will learn everything involved in closing a limited company in the UK that is solvent.

Is an MVL The Right Solution?

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Best MVL Companies 2023

There are many top-rated MVL companies in the UK to choose from.

From our research, here is a list of the best Members Voluntary Liquidation companies in December 2023:

  1. Business Insolvency Company
  2. Debtline
  3. GW Financial Solutions UK Ltd
  4. Business Debt Help 
  5. Trust Debt Advice
  6. NTF Financial Solutions Insolvency
  7. Payplan
  8. National Debt Advice
  9. Stepchange

What is An MVL?

A Members’ Voluntary Liquidation (MVL) is a method for cost-effectively winding down a solvent company. MVL’s are frequently used as an exit planning tool when a profitable firm is no longer useful, where shareholders want to get a return on their investment, or when the company’s directors are nearing retirement or are looking to leave the company for any reason.

Differences Between MVL and Company Dissolution

Members’ voluntary liquidation and dissolution are two methods for closing down a solvent business that is no longer needed. However, there are some significant differences between the two processes that impact the way the company is closed as well as your ability to claim director redundancy.

The main differences between an MVL and company dissolution is the amount of money left in the company you are looking to close. If you have no money or assets in the company you are closing then dissolution with a DS01 form to Companies House is the best way to go. If you have retained profits within the business (above £25,000) then an MVL carried out by a licensed insolvency practitioner will be the best option to save money with Business Asset Disposal Relief (also known as entrepreneurs tax).

Business Asset Disposal Relief means you’ll pay tax at 10% on all gains on qualifying assets.

Make sure to speak to a professional insolvency practitioner today if you are unsure which avenue best suits you and your specific situation.

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MVL Cost

An MVL typically costs between £1,600 to £2,000 plus VAT and expenses.

When a company’s only asset is cash in the bank, and all liabilities have been paid, this standard fee applies. Fees will be higher if the case is more complicated and actual assets must be realised, existing liabilities must be paid, or assets must be distributed in cash.

What are the Liquidator Costs To Process an MVL

The cost of processing an MVL is typically deducted from the liquidation assets of the company (cash in the bank).  The remaining funds are distributed in accordance with the company’s shares. As a result, you rarely need to pay any money in advance for an MVL.

What Are The Benefits Of An MVL?

The main benefits of an MVL are:

  • Shareholder distributions are taxed at a low rate.
  • Expenses for accounting and auditing are reduced.
  • It saves time for management when it comes to producing statutory returns and compliance data.
    Directors’ risk reduced.
  • Extract the business’s value in the form of cash.
  • Returns assets to owners in a tax-efficient manner.
  • Quick access to funds held by shareholders.
  • Enhances investor perception by improving transparency by simplifying complex and unmanageable arrangements.

Tax Efficiency of an MVL

All retained profits are recognised as capital rather than income when a company is closed through an MVL. The funds distributed to shareholders are subject to Capital Gains Tax (CGT) rather than income tax, which is a far better choice than paying dividends in the vast majority of circumstances.

MVLs are extremely popular when large quantities of retained profits are involved due to this tax benefit.

How Quickly Do Shareholders Get Paid?

From start to finish, a typical MVL will take roughly eight months. However, most of the monies due to shareholders are generally received from the corporation within three months.

The insolvency practitioner will keep a small amount until the company is legally closed; the liquidator will keep the agreed fee for placing the company into an MVL plus expenses, and any residual cash will be dispersed among the shareholders at this time after approval from HMRC.

How can I Prepare My Company For An MVL?

If you’re looking to place your business into an MVL, there are several things you can do to prepare your company for the process. Getting your firm into as simple a state as possible before beginning the MVL makes the process easier further down the line and assures that your company qualifies for this method.

Ensuring the following methods are taken care of can reduce the time and cost of your MVL:

  • Check your liabilities are paid.
  • Ensure your debtor book is chased and collected and all HMRC duties are met.
  • Arrange to sell remaining stocks and assets

Following important internal conversations among the company’s directors and shareholders, you should approach a licenced insolvency practitioner (IP) to discuss MVL’s viability.

MVL Entrepreneurs Relief

If you have run a successful business and built up a lot of money that you wish to take out of the company, you will want to do so in the most tax-efficient way.

A members’ voluntary liquidation (MVL) could help you benefit from a tax rate of just 10 per cent, which is far less than the rate you would be charged if those funds were to be taken as income in the form of wages or dividends.

The MVL Entrepreneurs Relief of paying just 10% in taxes is considered the best solution for many looking to sell their company or take out a significant amount from their business banks.

Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs’ Relief prior to April 2020, is a tax relief scheme which allows for a reduced rate of Capital Gains Tax (CGT) to be paid upon the sale or solvent liquidation of a limited company.

Entrepreneurs’ Relief is available on up to £10million in lifetime gains, which could result in a tax saving of £1.8million.

Other Debt Solutions

When analysing your credit report and current debtors it is advised to understand all the debt solutions available to you.

Here are all the debt solutions available to you depending on where you are based in the UK:

Popular Questions

What happens in a MVL?

An MVL is a formal procedure for winding down a solvent business. As a liquidator, a licenced insolvency practitioner will sell the company’s assets, resolve any legal challenges, pay any outstanding debts, and then distribute the remaining surplus funds to the company’s shareholders/members.

How long does a MVL take?

The duration of an MVL normally takes around six months to a year, however will vary depending on the circumstances of each case.

This will entirely depend on the type of service you choose and how much of the preliminary work you undertake yourself before appointing a liquidator.

Once the MVL has taken place your business will normally be removed from Companies House within 3 months.

Can you do your own MVL?

You cannot carry out your own MVL. You need to be a licensed insolvency practitioner to create a Members Voluntary Liquidation.

What is Moneyboxing in an MVL?

Moneyboxing is the act of holding profits in a company’s books that are deemed excessive for its commercial needs to gain a tax advantage upon the company’s eventual liquidation.

HM Revenue and Customs have expressed reservations about the usage of this procedure, describing it as “aggressive tax planning” that is unfair to other taxpayers who cannot make similar arrangements.

As a result, if you close your business through a Members’ Voluntary Liquidation (MVL), HMRC will examine the circumstances for the liquidation and try to determine whether moneyboxing has occurred.

What is Entrepreneurs Relief?

When you decide to sell or close your company, you may qualify for Entrepreneurs’ Relief, which enables you to pay less capital gains tax.

Entrepreneurs’ Relief is offered on up to £10 million in lifetime gains which has the potential to save you £1.8 million in taxes.

A MVL can offer a tax-efficient way of closing a company for company directors.

What is the Targeted Anti-Avoidance Rule?

According to the Finance Act of 2016, the targeted anti-avoidance regulation (TAA) was created to target those who falsely reduce their tax liability by converting dividends into capital payments by closing up their business. This rule prevents people from Phoenixing their businesses by closing them down.

Is an MVL only Available to Solvent Companies?

MVLs are only available to solvent companies, and the directors must verify that the company is solvent and that it has the financial means to pay all of its taxes, creditors, and contractual obligations.

All UK Insolvency Practitioners

Here is a full list of Insolvency Practitioners in the UK:

The insolvency practitioner list above gives you plenty of options to choose the best IVA firm in December 2023.

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