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Solvent Liquidation (MVL)

A Solvent Liquidation - or MVL - is a formal, cost effective process for bringing the life of a company to an end.

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explaining the difference between liquidation and administration

What is solvent liquidation (MVL)?

An MVL is a formal, cost effective process for bringing the life of a company to an end and distributing the remaining assets to shareholders, in the most tax efficient way. This can be done for reasons of retirement, an intractable shareholder dispute, or simply because the company is no longer needed.

The company must be solvent – i.e. it can afford to pay all of its creditors and still have funds left for the shareholders.

The main advantage of an MVL, is that it can be a tax efficient way of extracting the remaining funds from the company. This is because distributions made out of an MVL are treated as capital receipts, rather than income and are therefore subject to capital gains tax, rather than income tax.

This is likely to be beneficial if Business Asset Disposal Relief (BADR) is available (there are criteria to meet).

  • Distributions treated as capital, potentially qualifying for Business Asset Disposal Relief (BADR), resulting in just 14% tax.
  • Formally closes the company, ending ongoing compliance and administrative duties.
  • Assets are distributed in an orderly and legally structured way to shareholders.
  • Ensures all debts are paid before distribution, avoiding future disputes and protecting creditors.
  • A licensed insolvency practitioner manages the process, ensuring legal compliance and transparency.
  • Helps convert company assets into cash for efficient distribution.
  • Demonstrates responsible winding up, preserving directors' reputations and limiting future liability.

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Robin Tarling

Founder, Partner and Lead Consultant

With over 25 years of experience in the financial sector, including 14 years dealing with insolvency matters.

0115 871 2901

07855 744 672

[email protected]

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Robin Tarling lead consultant at Bridgewood

What are the first steps?

Complete Cessation Accounts

  • The company’s trading needs to be brought to a formal close, with all liabilities paid, including any final corporation tax.
  • VAT, PAYE and any pension scheme will need to be closed.

Decide on the Method of Closure

  • Members Voluntary Liquidation (MVL): initiated by the shareholders with the remaining cash and any other assets being passed to them by the Liquidators as a capital distribution.
  • Voluntary Strike-Off: if the remaining funds in the company are less than £25,000 then it may be more tax efficient to withdraw this as income or dividends and then dissolve the company via a voluntary strike-off.

Appoint a Licensed Insolvency Practitioner (IP)

GOOGLE REVIEW

Managing Director

Home Insulation Business

bridgewood google reviews

We used Bridgewood when we decided to voluntarily liquidate our business. The whole process was made so easy. It was quick and a lot more easier than we thought. I would definitely have no hesitation in recommending this company to anyone.

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director's personal liability notice

Should I liquidate my company?

Liquidating a solvent company offers several advantages, allowing owners to close the business in a tax-efficient way and avoiding future liabilities.

  • Settling Debts: Liquidation helps a company manage its outstanding debts in an organised way. Asset sales generate funds that are distributed to creditors in line with legal rankings, promoting fairness and accountability.
  • Legal Safeguards: Choosing voluntary liquidation can limit directors’ exposure to personal liability. Taking timely action shows legal compliance, helping protect both reputations and personal finances.
  • Expense Reduction: Entering liquidation halts regular business operations, cutting off ongoing costs. This helps preserve remaining funds for creditor repayment and avoids deeper financial loss.
  • Finalising Affairs: Liquidation brings a formal end to a company's obligations. It allows directors to step away cleanly, without lingering concerns over debts or potential legal issues.
  • Creditor Confidence:: A structured liquidation process shows goodwill toward creditors by prioritizing repayments. This can support stronger relationships and trust in future ventures.
  • Emotional Relief: With insolvency professionals guiding the process, directors are freed from the pressure of managing an unviable business, offering clarity and a chance to reset.
    By liquidating, companies can exit the market responsibly and lawfully, limiting both financial damage and reputational risk.




    

        

            

               

                    

                        
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