0800 987 1040

Free Director Helpline: 0800 987 1040

Solvent Liquidation (MVL)

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

REQUEST A CALL BACK MEET THE TEAM
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.

Free Solvency Test
In Under A Minute

Understand your solvency position and find the right solution for your company in under a minute.

Take The Test
banner

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

robin.tarling@bridgewood.co.uk

Connect on LinkedIn

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.

Insolvency Test

Have you taken our 3 step solvency test?

Quickly understand your company's debt asset position.

take the test
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.




    

        

            

               

                    

                        
Need advice?

                        
Book your FREE consultation or request a call back.

                    

                    

                        
                            Request a Callback                        
                        
                             Call 0800 987 1040                        
                    

                

            

        

    









 
    

        

            

                

                    
Related Posts

                

            

            

                

                    

                                                        

                                    



	


		

			who gets paid first in a company liquidation			

				
			

		

	


	


		
		
		 Insolvency Law   Insolvent Liquidation

Who Gets Paid First in a Company Liquidation?

		

	

	
	


		How are funds distributed in a Liquidation and who is at the top of the pecking order? In this month's article we discuss the strict hierarchy within the Insolvency Act,...	


	

		
By Robin Tarling

		
14 Nov 24

	




                                

                                                                

                                    



	


		

						

				
			

		

	


	


		
		
		 Administration

Administration Sale: Tips for buying a business from an Administrator

		

	

	
	


		With the current economic landscape witnessing the highest number of company insolvencies in 30 years, there are more opportunities than ever to acquire struggling businesses. Tom Grummitt, Insolvency Practitioner &...	


	

		
By Tom Grummit

		
12 Apr 24

	




                                

                                                                

                                    



	


		

							Bridgewood Placeholder Logo
						

				
			

		

	


	


		
		
		 Insolvent Liquidation

Why did insolvencies jump in 2023?

		

	

	
	


		Last year saw a surge in corporate insolvencies across England and Wales, with the Insolvency Service documenting a total of 25,158 cases, marking the most recorded since 1993. The breakdown...	


	

		
By Rick Lees

		
1 Mar 24

	




                                

                                                                

                                    



	


		

						

				
			

		

	


	


		
		
		 Insolvency

Who Pays the Fees for an Insolvency Practitioner?

		

	

	
	


		When a company is facing financial difficulties, the director may choose to appoint an Insolvency Practitioner to manage the process of restructuring or winding up the company. One question that...	


	

		
By Robin Tarling

		
12 Oct 23

	




                                

                                                                

                                    



	


		

						

				
			

		

	


	


		
		
		 Insolvency

What is the Insolvency Practitioners Association (IPA)?

		

	

	
	


		As a company director, you may have come across a regulatory body called the Insolvency Practitioners Association (IPA) but may not be clear on what it actually is and how...	


	

		
By Robin Tarling

		
4 Oct 23

	




                                

                                                                

                                    



	


		

						

				
			

		

	


	


		
		
		 Insolvency

Understanding Insolvency Practitioners: A Comprehensive Guide for CEOs and Managing Directors

		

	

	
	


		As a company director, you may be aware of insolvency practitioners but might not fully understand their role. An insolvency practitioner is a licensed and regulated professional who provides specialist...	


	

		
By Robin Tarling

		
29 Sep 23

	




                                

                                                    

                

            

            

                

                    View All Articles
                

            

        

    


 


   






	

		

			

				

					

						
					

					

						
					

					

						
					

					

						
Advice you can trust.