Members Voluntary Liquidations (MVL)
Why do an MVL?
All good things come to an end…
Up until 1st March 2012, if directors wished to wind up a solvent business, a little-known tax concession called the Extra-Statutory Concession (ESC) C16, allowed shareholders to realise assets informally, without the need to go through formal liquidation procedures. Funds distributed to shareholders were subject to Capital Gains Tax (CGT) rather than Income Tax –resulting in substantial savings.
On 1st March 2012, new formal rules were introduced. The previous informal route is now only available to small companies with distributions under £25,000. Any informal distribution involving more than £25,000 is now deemed an income dividend to shareholders.
While many shareholders did prefer the comfort of a formal liquidation (known as a Members Voluntary Liquidation or MVL), since it avoided any subsequent comeback, previously it was not necessary to incur the costs of an MVL in order to obtain the CGT relief.
However the Government, in enacting “Extra-Statutory Concession C16” clearly believed the informal system was being abused.
For all that, one can still get distributions from solvent companies over £25,000 subject to Capital Gains Tax. To do so now requires a formal MVL.
Beacon – What we Offer
At Beacon we have developed a system that enables us to move as quickly as is required to suit your needs.
So, what is the process?
We can do the whole process via email, or in whatever way suits your requirements.
The only ‘tricky’ document as far as the client is concerned is the ‘declaration of solvency’; as this must be sworn in front of a solicitor or commissioner for oaths (there is a charge for this, by the solicitor, usually between £5-10).
We then advertise the Liquidation of the company, the appointment of the Liquidator and for any outstanding creditors to submit claims.
We then obtain post Liquidation tax clearance from HMRC, settle any outstanding liabilities of the Company. Once liquidation clearance from HMRC has been received, we convene and advertise a final meeting to be held 8 weeks later. This will conclude the Liquidation, and the Company will be struck off 3 months later at Companies House.
If the company was VAT registered, we can generally reclaim the VAT and whilst initially payable, when the vat refund is received we would pay the refund across as a distribution to shareholders.
At BEACON we do not offer different levels of service or packages - all BEACON clients receive the same high standards!
If you are considering entering into a Members Voluntary Liquidation, Contact Beacon on 01256 345547 or use our contact form