Members Voluntary Liquidation
What is MVL?
Is a MVL right for my business?
MVLs are an ideal process for solvent companies to end their affairs, however they are not suitable for every business. If a company has little profit it may be best to dissolve the company rather than go through a MVL. If the business has over £25,000 in retained profits, then a MVL will usually be the most suitable process to extract any proceeds.
For a company to qualify for a MVL they must be solvent and able to deal with any liabilities within a 12-month period. If a company is insolvent alternative processes such as Administration or a CVL (creditors’ voluntary liquidation) should be considered.
Dissolving a Company vs a MVL?
Dissolving or ‘striking off’ a company is quite a straightforward process where a DS01 form is submitted to Companies House along with a (at present) £10 fee. The intention to dissolve the company is then advertised in the Gazette and if no objection is received the company is struck off after 2 months.
If your company owes money to HMRC and/or creditors you are unable to pay, it is likely you will have an objection filed against the dissolution and the application will be suspended. Should this happen it might be best to consider alternative closure methods (CVL or Administration).
It is important to note that once a company is dissolved any assets left in the business are automatically transferred to the ownership of the Crown. These can be claimed back after paying a reverse strike off fee. As such it is recommended that all assets are extracted from the business before the strike off process begins.
MVLs involve a licensed Insolvency Practitioner (IP) and as such are more expensive than dissolving a company. If there is a large amount of money that needs to be distributed it is absolutely vital that it is handled correctly, especially if the company’s affairs are complicated. A knowledgeable IP will ensure the business is closed down in the most cost-efficient manner possible.