Members Voluntary Liquidation (MVL)

From £2,000 inc disbursements^*

Use an MVL to liquidate your solvent company to release your assets, tax efficiently.

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The Old Law

Up to 1 March 2012, H M Revenue & Customs could grant a concession to company shareholders known as the Extra-Statutory Concession C16 (ESC C16) which enabled the shareholders (known as "members" under company and insolvency law) of a Limited Company to close a solvent Company without the need to appoint a Liquidator.

The Directors were allowed to distribute any surplus funds or assets to the Shareholders as Capital Receipts rather than as a Dividend.

This therefore meant that the tax on that distribution was taxed as a capital gain, rather than income, hence attracting a lower rate of tax.

The New Law

On 1 March 2012, the ESC C16 legislation was enacted. The legislation stipulates that where a company has surplus cash or assets available to distribute of £25,000 or less, the concession would be automatic under the new legislation and such distributions can be treated as a Capital Receipt by the Shareholder.

But where the Company distributes more than £25,000, it will be taxed as a dividend unless the company is placed into Voluntary Liquidation.

A solvent liquidation instigated by the directors and approved by shareholders is known as a Members Voluntary Liquidation (MVL). A distribution to shareholders by a Liquidator is treated as a capital gain and not taxed as income.