Members’ Voluntary Liquidation (MVL)
A members’ voluntary liquidation (MVL) also ends a company’s life but when it is solvent – ie able to pay all its debts in full, including any statutory interest. It can be a tax-efficient way of distributing accumulated profits to shareholders, particularly for single-purpose companies, since distributions can be made as capital rather than as income. An MVL may be used to overcome a temporary cash flow problem as long as you can pay all debts plus interest within 12 months. MVLs are commonly used to dispose of companies which have become dormant due to group reorganisations.
As of 1 March 2012 the ESC 16 concession was replaced by a statutory instrument governing the limits allowed to be distributed on company dissolutions which means that the MVL route is probably the most tax efficient method of shareholders withdrawing funds.
If you require any MVL advice, information or assistance, please contact us.