Insolvency

Members’ Voluntary Liquidation

This is often a very tax efficient way to release shareholders equity in a solvent company, or where a company has several activities that are best continued by new companies. The assets are transferred to the new companies, again in a very tax efficient manner.

Although the procedures governing MVL’s are contained within Insolvency Legislation, the company must be solvent and the directors prepared to swear such a declaration.

An Insolvency Practitioner (IP), who is regulated and holds a license from their governing body must act as the Liquidator of the company, but often works with the company’s existing tax and other professional advisors.
Typical companies entering into an MVL include:

A solvent company, which has concluded the purpose for which it was formed. The company can be formally wound up and its surplus assets distributed as a final cash dividend, or as a distribution in specie to its shareholders;
A solvent company with a number of trading activities, where it is resolved that the business is better continues by several new companies. The assets can be transferred to the newly formed companies with specific scheme clearance from the Inland Revenue that utilizes Insolvency Legislation to avoid capital gains and other taxes;
A solvent company, with shareholders who wish to release their investment whilst utilising Insolvency Legislation to benefit from retirement, taper and other potential tax reliefs that may be available.

Please call Mark Bassford or Tess Whitney on 020 7213 0470 if you are the director or shareholder of a company and are considering its restructuring or dissolution and want to benefit from the tax advantages that can be utilized. Alternatively ask your company’s existing professional advisors to contact us to discuss the options available.