MVL - Members’ Voluntary Liquidation

If you decide to stop contracting or want to close your limited company and have funds remaining in your business bank account there are a variety of ways to do close it down. The most common way is just to take any remaining profit as a dividend. However, depending upon how much is profit is left you may be able to close it via an MVL which could be more tax efficient.

How to close down a Limited company via the MVL process 

If you have over £25,000 profit left in your company and wish to close it down using capital distribution and Entrepreneurs’ Relief, new legislation means you will need to liquidate the company and enter into Members’ Voluntary Liquidation, to do this you will need to appoint an insolvency practitioner. If you appoint a suitable insolvency practitioner the process is relatively straightforward with your accountant and the insolvency practitioner doing all of the work.

Even for a company with only £25,000 to distribute, the much lower tax rate under Entrepreneurs’ Relief means shareholders on the higher rate income tax band will enjoy a net benefit of at least £2,500 after allowing for the costs of the liquidation, when compared against just taking all the profit as a dividend.  For companies with more cash to distribute the benefits are correspondingly greater.

What is Members’ Voluntary Liquidation?

In a nutshell Members’ Voluntary Liquidation is when a company is to close down and is solvent (has no debt), the funds are distributed as capital via an Insolvency Practitioner to the shareholders which in turn means the shareholders will be liable to pay less tax on the funds.

Typically you would choose the Members’ Voluntary Liquidation process when you cease trading and, having collected in all the money owed to the company, and having paid all the company’s debts, bills and taxes, there remains at least £25,000 cash to be distributed to the shareholders.

What is the MVL process?

The process can vary case to case, depending on what assets your company has. For example is it just money in the bank? Below is a rough idea of the process you’d go through using an MVL.

  • As the director of the Limited company you will need to appoint a liquidator, who must be a licensed insolvency practitioner.
  • The liquidator will file appointment documents at Companies House.
  • The liquidator will publish in The London Gazette (or the Edinburgh Gazette) a statutory notice of his appointment.
  •  A notice of insolvency will be submitted to HMRC.
  • The liquidator will complete post-liquidation VAT return and deregister.
  • The liquidator will write to the bank to close the account and receive company funds.
  • After 1 month the liquidator will distribute funds to the shareholders.
  • A final report will be prepared to the shareholders and a meeting is held.
  • A final corporation tax return will be submitted for the post-liquidation period.

 During all this time they will liaise with your accountant.

SJD Insolvency Services Ltd

SJD Insolvency Services offers an inclusive fixed fee package, which includes every aspect of what is needed to close down your limited company. It aims to make the MVL process as simple as possible, with plain simple English advice along with a hands-off approach for you as the director. All necessary documentation will be prepared by the insolvency practitioner; they will also work closely with your accountant and bank to move the funds from your business bank account to you in the most tax efficient way and as swiftly as possible.

As a client of SJD your accountant will be able to help guide you through an MVL with our in-house insolvency service. However this service is not limited to clients, anyone who is thinking of using an MVL to close down their Limited company can use this service.

For more information on SJD Insolvency Services please call Phillip Beck on 01442 275794 or email philip.beck@sjdaccountancy.com, alternatively please complete the form below and Philip will get back to you as soon as possible.

SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

  • Unlimited face to face meetings. This is a unique service only SJD Accountancy offers - unlimited face to face meetings across the UK - tax is complicated and sometimes only a meeting will do.
  • UK's Largest contractor accountants with more qualified staff. No call centres, no outsourcing, no automated call handling. Simply telephone, email or meet your own dedicated accountant* face to face.
  • Money back service guarantee. All your telephone calls and emails will be answered the same day or we will make a full refund of that months fee.
  • Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market, including: Best Accountant for Contractors, Accountant of the Year and Best Professional Service Team to name just a few.
  • All inclusive low cost fixed fee accountancy package which includes completion of accounts*, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, your own dedicated accountant* and all company returns for a fixed fee of £120 plus VAT per month.

If you have any questions about contracting or would like any further advice please call our new client services helpdesk on 01442 275789 or email: janice@sjdaccountancy.com.

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again.

Form your own Limited company with SJD - our same day online company formation service includes company bank account set up, VAT/PAYE registration and advice on optimum share structure. 

You may also find the following pages, guides and case studies useful:

*If you would like us to complete your company year end accounts we simply ask that you have been a client of SJD for one year or have made 12 monthly payments. All accountants are part or fully qualified.