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Unlike insolvency, which is driven purely by financial pressure and often involuntary, MVLs are a deliberate decision to move on. As the name suggests a Members Voluntary Liquidation is a choice and happens when the directors and shareholders of a company simply no longer wish it to continue. That means there are often very personal reasons for wanting to close the business down. For example, the most common reason for an MVL is usually so that the owners can retire. Another is where a business can see a reducing marketplace or change in supply which means it is unlikely to continue to thrive in the long term. In some cases, shareholders want to release the cash in one business to start another, but selling is not the right option. The list goes on but, whatever the motivation behind the decision, the main reason most people choose a solvent liquidation is to release any money in the business to the shareholders. We have part of our site dedicated solely to Members Voluntary Liquidations, so to learn more on the ins and outs that would be a great place to start.
If you are considering MVLs already then, yes, it is probably the right time. However, this is really a two-part response because there are so many variables that can affect a decision to go the solvent liquidation route.
If you are in a position where you are ready to close your solvent business for personal reasons, such as retirement, then I suppose there is an argument for saying it is always the right time to consider an MVL. After all, this is a voluntary liquidation so you are choosing to take the step. That means your own agenda is going to be the main motivation. However, within that decision, there will also be time scales to think about. MVLs don’t happen overnight because they need careful planning and unfortunately HMRC are not always as fast as we would like them to be. In the end though the point where you start the process of solvent liquidation is down to you and any other directors in the business.
Of course, there are a number of matters that need to be dealt with; employees, assets and liabilities, the final accounts and taxes, but we will always be on hand to help you before our formal appointment.
One thing to certainly think about is that in the last few budgets there has been no change to capital gains tax. Every time it slips through unchanged it is a surprise and this seems a very likely target for an increased source of income for HMRC at some point soon. For the present though it is a very attractive proposition to go the MVL route because you will benefit from a low tax burden on the funds you release. The danger of a tax increase is therefore something that you should consider in your timing.
That will be dependent on the amount that is left at the end of the process. Once everything has been liquidated and creditors, HMRC as well as any other costs are paid, the company is officially closed. Whatever remains will be divided amongst the shareholders. We will make sure things are done as equitably and as fast as possible so you can get your money and move on to whatever you have planned next.
In the last couple of years alone, we have released £3.8 million pounds to our clients through the Members Voluntary Liquidations. That is important to us because each shareholder was receiving more than just money in the bank, they were getting back the results of the sweat they put into building a successful business. While we have helped directors and shareholders through MVLs for all sorts of reasons they all had one thing in common - they wanted the process to be clean, accurate and as fast as possible.
Call us if you want to talk about MVLs or there is a link to book a free session by clicking here. We also have a downloadable guide to MVLs at the top of the same page.
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