IR35 Contractor – Close Your Solvent Company with an MVL for Tax Efficiency
26th February 2025
When a business faces insurmountable financial difficulties, Creditors Voluntary Liquidation (CVL) can be the best option for directors looking to close their company responsibly. A CVL is a formal insolvency process that enables a company to shut down in an orderly manner while ensuring creditors are treated fairly.
What is a Creditors Voluntary Liquidation (CVL)?
A Creditors Voluntary Liquidation is a legal process initiated by a company’s directors when the business is no longer solvent and unable to pay its debts. This allows the company to be closed in a controlled way, preventing further financial difficulties and ensuring creditors receive as much repayment as possible.
Unlike a compulsory liquidation, where creditors force the business into closure through a court order, a CVL is a voluntary decision made by directors to wind down the company. This process is overseen by a Licensed Insolvency Practitioner who ensures legal compliance and creditor fairness.
Learn more about CVL and company closure options
Why would you choose a CVL?
There are several reasons why a company might enter into a Creditors Voluntary Liquidation:
- Mounting debts that cannot be repaid
- Pressure from HMRC or suppliers
- Declining cash flow and unsustainable trading conditions
- The directors’ desire to avoid wrongful trading accusations
“Directors often feel overwhelmed when facing insolvency, but a CVL provides them with a structured and legal way to close the business while minimising personal risk,” says Tom Fox, Head of Insolvency at Umbrella.UK.
CVL in Action – A real case study
One of our clients, a small IT consultancy, faced financial difficulties after losing a major contract. With mounting debts and creditor pressure, the directors approached Umbrella.UK for advice. After assessing the situation, we guided them through the CVL process, ensuring employees received redundancy payments and creditors were treated fairly.
The result? The directors avoided personal liability, and the business was closed in an orderly manner, allowing them to move forward with new opportunities.
Read more Insolvency Client Case Studies
The CVL process explained
- Decision to liquidate – Directors recognise the company is insolvent and seek professional advice.
- Appoint a Licensed Insolvency Practitioner – A licensed expert oversees the CVL and ensures legal compliance.
- Shareholder & creditor meeting – Approval is obtained from shareholders and creditors are informed.
- Liquidation begins – Assets are sold, and funds are distributed to creditors.
- Final closure – The company is removed from the Companies House register, concluding the process.
How Umbrella.UK Insolvency can help
At Umbrella.UK Insolvency, we provide expert insolvency advice and a straightforward CVL process for directors in financial distress.
Our team will:
✔ Assess your company’s financial position
✔ Handle all legal requirements and creditor communications
✔ Ensure a smooth and stress-free liquidation process
✔ Help directors move forward with confidence
“Many directors feel isolated when dealing with company insolvency. Our role is to provide support, guidance and legal expertise to help them make the best decision,” adds Tom Fox.
Get expert help today
If your business is struggling with debt and you’re considering Creditors Voluntary Liquidation, don’t wait until it’s too late. Speak with our insolvency experts at Umbrella.UK for confidential and professional advice.
Contact us today to discuss your options and request a FREE INITIAL CONSULTATION.
For further reading, check out our CVL guide.