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Free Liquidation Advice Service – Call 0800 066 2280

Free Liquidation Advice Service – Call 0800 066 2280

Members Voluntary Liquidation

A Members Voluntary Liquidation is a formal process to wind-up your company when it is in fact solvent. However, many directors use this process to utilise the tax advantages.

The government decided to legislate ESC C16 in the Enactment of Extra-Statutory Concessions Order 2012 in April 2012. After this time, the limit for making distributions in an informal winding-up and achieving capital rather than income treatment thereof is £25,000. If total distributions exceed that level then all distributions will be treated as dividends in the hands of the shareholders, leading to an additional tax liability for higher-rate taxpayers.

Once a limited company has gone into Members Voluntary liquidation (MVL), any dividends paid to the shareholders count as capital receipts rather than dividend income. This means that they are subject to the capital gains tax (CGT) regime rather than the income tax regime. Capital gains will count as the top splice of a taxpayer’s income, and will be taxed at 18% for gains that take the taxpayer up to the basic rate limit, then 28% thereafter. However, Entrepreneurs Relief is available to individuals disposing of shares in a trading company or the holding company of a trading group in which they were an officer or employee holding at least 5% of the voting rights. Entrepreneurs Relief effectively reduces the tax rate on any capital gain to 10%. The £10,600 tax-free capital gains allowance remains, for now.

… Then a low cost liquidation may be your solution! Contact us as soon as possible on 0800 066 2280 to start the process which is detailed below.

The Process

    1. Meeting of the Board of Directors:
      The directors are required to pass the following resolutions:-

      • Recommend MVL to the members
      • Authorise the calling of a General Meeting (GM)
      • Select a director to chair the GM
      • Authorise the swearing of a statutory Declaration of Solvency
    2. Hold General Meeting:
      14 days notice of the GM must be sent to all members of the company. The members can waive the notice period however, provided that at least 95% of those entitled to attend and vote are in favour of this proposal. We would do this more often than not as this will speed up the process.The member will sign the special resolution to wind up the company which must be filed with the Registrar of Companies within 15 days and advertised in the London Gazette within 14 days.
    3. Appointment of Liquidator:
      Following the appointment, the liquidator must give notice of his appointment to:

      • All creditors within 28 day (if applicable)
      • London Gazette within 14 days
      • Registrar of Companies within 14 days

As a licensed insolvency practice we are in a position to be able to assist your client with the process of closing the company.

Are you thinking to yourself “I need to liquidate?”, then contact us Now for free professional advice on 0800 066 2280

About

Voluntary Liquidation, also known as winding up a company, refers to the process by which a company is brought to an end, allowing the director(s) to set up a new company without any debt and any hassle.

Talk to Peter

peter-anderson
Peter Anderson Licensed Insolvency Pratitioner
Peter heads up the initial advice team at Liquidation Made Easy and specialises in providing solutions to help directors of businesses when they need it most.

Speak to Peter now on 0800 066 2280

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Services

  • Creditors Voluntary Liquidation (CVL)
  • Members Voluntary Liquidation (MVL)
  • Company Voluntary Arrangement (CVA)
  • Administration
  • Compulsory Liquidation

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