Members’ Voluntary Liquidation

A Members’ Voluntary Liquidation (MVL) is an option open to those who wish/need to step away from their company. It is a relatively easy process as long as the correct measures have been taken before an initial declaration.

Hillcrest Finance has a team of insolvency practitioners who specialise in MVLs. Their proven track record has helped many directors and shareholders handle the process with ease. Knowing if it is an appropriate path and understanding where it sits within the wider scope of liquidation options is important.

If you are in this position and need expert help, please get in touch with Hillcrest Finance.

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Is Members’ Voluntary Liquidation a good idea?

An MVL can be a good idea if you fit within one of the following criteria:

  • You are retiring
  • You don’t want to run the business
  • You don’t have a replacement to run the business

You need to meet one of these, as well as showcase that your company is solvent. Solvency is the most important factor as a business won’t be able to enter into an MVL without appropriate tax clearance and being able to pay any creditors on time.

How does solvency affect Members’ Voluntary Liquidation?

When a business is seen as having a good level of assets in place without debt, an MVL is a suitable option. Typically anything above £25,000 is a significant enough figure to push for an MVL. If a company is below that and does want to close, it may be better to extract assets and dissolve the company.

If you’re unsure which is best for your situation, please get in touch.

How does Members’ Voluntary Liquidation work?

MVLs have quite a straightforward process compared to other means for closing a company. It starts by getting in touch with contacting licensed insolvency practitioners (IPs) like those here at Hillcrest Finance. An IP will act as liquidator and review a company’s assets. Upon review, they will help pay any remaining debts, distribute assets amongst shareholders if there are any, and ask for clearance from HMRC.

When they get the all-clear, the business is dissolved and will be taken off the companies register in a few months.

Advantages of Members’ Voluntary Liquidation

MVLs are a viable option as:

  • Shareholders may be entitled to surplus funds
  • It is a relatively simple liquidation process
  • It allows for better tax planning
  • The procedure ensures no liabilities are left hanging for creditors
  • You’ll have no problems if shown to be debt-free

Disadvantages of Members’ Voluntary Liquidation

An MVL can have some disadvantages, namely:

  • More expensive than dissolution
  • Creditors need to be paid within a year of the decision to wind up
  • If MVL takes too long from running into issues, it can be changed to a Creditors’ Voluntary Liquidation, i.e. the company is then seen as financially distressed

Demystifying Members’ Voluntary Liquidation

The process of winding down can seem confusing if you don’t get appropriate help. The team at Hillcrest Finance can help with the members’ voluntary liquidation process, and overlooked areas such as tax implications, tax clearance & capital gains tax.

You may feel like the whole process will be simpler if you decide to strike off the company, but it may not be the best choice if the company has been trading in recent months or there are assets worth disposing of.

How do I get started with a Members’ Voluntary Liquidation?

You’ll need to consider how much work in the process, from making a Declaration of solvency to getting records in check, you’ll want to do yourself. It is much easier to have an authorised insolvency practitioner act as a liquidator as it helps ensure there are no hiccups.

If you’d like to speak with someone about MVLs, or would like to know what your options are for successfully dissolving a company, call our team on 0141 478 0862. Lines are open every weekday from 8 am.

Get in touch with us about MVLs today