What is a Members’ Voluntary Liquidation?

A Members’ Voluntary Liquidation (MVL) is a formal way to close down a solvent company, that is one that can pay all its debts within 12 months. An MVL is a way to get the money that’s left in the company to you and any fellow shareholders in a tax-efficient way.

The most important feature of an MVL is that it treats the money you take out as capital rather than income, which for most people means a considerably smaller tax bill. An MVL has to be handled by a licensed insolvency practitioner, which is where we come in.

MVLs tend to suit contractors, consultants, and company owners who’ve stopped trading, whether that is due to retirement, heading back to permanent work, or simply winding up a company that is no longer needed. MVLs work best when a company has more than around £25,000 sitting in the business to take out. If it’s less than that, an MVL usually isn’t worth the cost and a simple strike-off is often the most appropriate option.

What are the alternatives to an MVL?

There are a number of ways to close a limited company which is no longer needed or wanted, and it’s worth being clear which one is most appropriate for your company:

Strike-off (dissolution) is the cheapest and simplest option, however, it is not right for all companies. Strike off suits those companies which are solvent but have £25,000 or less to distribute to shareholders.
An MVL is for solvent companies with more than £25,000 to distribute who want to close down in the most cost-effective and tax-efficient way.
An insolvent liquidation (such as a Creditors’ Voluntary Liquidation) is an entirely different process which is aimed at companies that can’t pay their debts. An MVL simply isn’t an option in that situation.

At MVL Online, we only handle solvent liquidations. If your company isn’t solvent our advisers can still provide advice and point you towards the right kind of help.

Is your company right for our MVL service?

Our fixed fee model is built for straightforward, solvent cases. To keep it simple, and to ensure we can offer this cheap service, your company needs to tick these boxes:

It’s solvent meaning all debts, including any tax, can be paid in full.
The balance sheet is down to cash only. This means there are no assets to sell and no liabilities to settle. Just money in the bank.
No more than two shareholders, and none of them another company.
Under £1 million in the bank.
Any director’s loans are cleared before we’re appointed.
No open HMRC enquiry. This one frequently catches people out, so it’s worth checking.

Not quite ticking every box? It doesn’t automatically rule you out of our service as some of this can be sorted first with your accountant. Get in touch with our team and we’ll tell you where you stand.

What needs to happen before an MVL can start?

From start to finish, an MVL typically takes between 6-12 months to complete. However, in terms of what is needed from you, and more importantly when you can get your money, this is all wrapped up much sooner.

You will find that your involvement is needed at the start, but after that it’s largely hands off when it comes to your input, as the appointed insolvency practitioner works to complete the administrative requirements in the background.

What is the process of an MVL: Step by step

Once the groundwork’s done, here’s how the MVL process with us works.

You tell us to start the liquidation. We set up a secure client portal for you and ask for some basic information.
We run the checks. We conduct the obligatory anti-money-laundering checks and do a sanity-check of your details. You will need to e-sign our terms and pay the fixed fee.
We send you the Declaration of Solvency and ask you to withdraw the company’s funds. That money will temporarily count as a loan to you as shareholder, but provided there are no creditor claims, you won’t have to pay any of it back.
You swear the Declaration of Solvency in front of a solicitor and post the signed original to us.
You close the company bank accounts and send us a closing statement showing the funds have been withdrawn.
We send you the liquidation paperwork to e-sign. Once this is done, your involvement is more or less done.
We file a nil Corporation Tax return for the short dormant period between your accountant’s final accounts and the liquidation.
We declare the first distribution in specie. In simple terms, this is the company formally handing that shareholder’s loan back to you, which clears the bulk of it meaning the money you already withdrew becomes properly yours, as extracted capital.
We handle the Companies House filing and the statutory advertising of the appointment, which also opens a 21-day window for any creditors to come forward.
We declare the final distribution for the remaining balance, once we’re satisfied there are no claims.
We file the final documents with Companies House.
The company is dissolved and struck off the register.

You will be required to declare the distributions on your personal tax return(s) for the relevant year. It’s at this point that you will feel the benefit of the distributions being classed as capital treatment, as well as the ability to claim Business Asset Disposal Relief, if you qualify. Your accountant will be able to help you with this process.

See what an MVL would cost your company

A fixed fee, confirmed upfront. No obligation, no sales pressure.

Get your fixed-fee quoteGet your fixed-fee quote

Ready to get started?

If your company’s affairs are straightforward, meaning there is cash only, no more than two shareholders, and no open HMRC enquiry, you can get a fixed-fee quote and start your MVL in a couple of minutes with us.

Lee De’ath

Licensed Insolvency Practitioner

Lee is a licensed Insolvency Practitioner with over 30 years’ experience advising company directors, owner-managed businesses, and accountants. He oversees all of MVL Online’s Members’ Voluntary Liquidations and writes our guidance on the practical side of closing a solvent company.