Solvent Liquidation Services (MVL)

What is a Solvent Liquidation?

A solvent liquidation, formally known as a Members Voluntary Liquidation (MVL), is a tax-efficient way to close a company that has sufficient assets to settle all its debts. This process is often used by directors who are:

• Retiring and closing the business
• Reorganising a group structure
• Extracting profits in a tax-efficient manner
• Completing a successful project or business lifecycle

Unlike insolvent liquidations, an MVL confirms that the company can pay all its creditors in full—usually within 12 months.

Why Choose a Members Voluntary Liquidation (MVL)?

An MVL is the preferred option for directors looking to close their company while:

• Ensuring a clean break from future obligations
• Accessing Entrepreneurs’ Relief or Business Asset Disposal Relief, often resulting in reduced tax liabilities
• Distributing assets efficiently among shareholders
• Ending the business in a structured, compliant, and dignified way

The MVL Process Explained

1. Declaration of Solvency

The directors must make a formal declaration stating that the company is solvent and can pay all debts in full within 12 months. This includes a full statement of assets and liabilities.

2. Shareholder Resolution

Once the declaration is sworn, shareholders pass a special resolution to place the company into liquidation and appoint a licensed insolvency practitioner as the liquidator.

3. Realisation of Assets

The liquidator takes control of the company’s assets, realises them, and pays all outstanding liabilities. This step also includes the preparation of final tax returns.

4. Distribution to Shareholders

After creditors have been paid, the remaining funds are distributed to shareholders - often benefiting from capital gains tax treatment rather than income tax.

5. Final Meeting & Dissolution

The liquidator calls a final meeting of shareholders, presents the closing accounts, and files for dissolution. The company is then formally struck off the register.