PHILIP A BECK
Licensed Insolvency Practitioner
41 Kingston Street, Cambridge CB1 2NU
Tel: 0800 1953605 (Free call) or 01223 367022
Fax: 0844 5048737
This site explains solvent liquidation (Members' Voluntary Liquidation or MVL). A tax-efficient liquidation for only £2,000 + disbursements..
An MVL is a formal process for bringing the life of a limited company to an end so that the company can distribute its remaining assets to the shareholders. This can happen for reasons of retirement, intractable shareholder dispute, or simply because the limited company is no longer needed. The process can be done informally too, without the expense of a liquidation, subject to certain conditions, which is explained also. The company must be solvent, i.e. it can afford to pay all its creditors so that there is something left over for the shareholders. If the company is insolvent, it must be dealt with by another type of insolvency procedure, whether administration, receivership, voluntary arrangement, creditors' voluntary liquidation or compulsory liquidation.
The main advantage of the solvent liquidation procedure is that distributions made in the liquidation count as capital receipts in the hands of the shareholders rather than income, and are subject to capital gains tax rather than income tax. This is likely to be beneficial if Entrepreneur's Relief is available for liquidations of trading companies
Although MVLs are for solvent companies, the process is in many ways similar to handling an insolvent liquidation, for this reason, only a Licensed Insolvency Practitioner can legally be appointed Liquidator in an MVL.
An MVL can also be used in a tax-efficient manner where a company running more than one business wishes to split off one or more businesses. This is known as a Section 110 reconstruction and is explained below.
Philip Beck is a Licensed Insolvency Practitioner operating since 1996 with substantial experience in undertaking liquidations, both solvent and insolvent.
Please note that this site deals only with company and tax law in the United Kingdom of Great Britain and Northern Ireland. It is not applicable to other jurisdictions.
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