What you Need to Know About Members Voluntary Liquidation
A Members Voluntary Liquidation or MVL is a process that allows business owners to bring in a Liquidator in order to close down a solvent company. But how does it worK?
Members Voluntary Liquidation
A Members Voluntary Liquidation (MVL Liquidation) is an option any business owner should take if they are solvent but cannot afford to pay all debts, as it’s a more tax efficient procedure.
During the process, the director is the one who is to begin the MVL liquidation process by contacting their Insolvency Practitioner. And, with this being one of the most common methods for directors and stakeholders, it provides the realisation of what the business holds in the forms of belongings, buildings, cash, etc.
What Is A Member’s Voluntary Liquidation?
Like we have just touched upon, MVL Liquidation is a formalised process that solvent companies undergo to close.
However, Members Voluntary Liquidations are only available for solvent companies and the directors have to make a sworn declaration that the company is solvent, whilst being able to pay all its taxes and creditors in a form that ensures all costs will be covered.
Depending on the case, the process can vary from company to company, this is due to the amount of assets each one holds.
For example, if you are in a situation where you solely owe money in the bank or perhaps buildings. Below you can find a realistic idea of the MVL liquidation process:
The director of the Limited company will need to appoint a licensed insolvency practitioner (liquidator) to carry out the process.
The first thing a liquidator will do is file appointment documents at Companies House. The liquidator will then publish in The London Gazette (or the Edinburgh Gazette) a statutory notice of his appointment. A notice of solvency will then be submitted to HMRC.
The liquidator will then complete post-liquidation VAT return and deregister the company at Companies House. Where they will then write to the bank to close the account and receive company funds.
After 1 month the liquidator will distribute any funds to the shareholders and a final report will be prepared to the shareholders and a meeting is held. After this, a final corporation tax return will be submitted for the post-liquidation period.
How Long Does A Member’s Voluntary Liquidation Take?
Typically, all shareholders will receive around 75% of the funds that have been extracted within a 3 month time period of when you started the MVL liquidation process. Afterwards, members should be given the remaining amount after HMRC have fully cleared the case, which can take around another 2 months.
Will An MVL Liquidation Negatively Affect My Future?
Going through the MVL liquidation process should more than likely not negatively affect your business reputation, or even your credit score in the same ways a CVL would, this is because although the voluntary winding up petition does have to be advertised in the Gazette, making it a matter of public record an MVL is not considered an insolvency procedure.
How Do I Choose The Right Company To Liquidate My Business?
Choosing certified professionals to work alongside you and your company liquidation is the best way to make sure you have no problems in the future, alongside ensuring you receive the right Insolvency Practitioner that will effectively handle your case.