Members Voluntary Liquidation (MVL) - Insolvency Case Studies

Members Voluntary Liquidation (MVL) – Company Case Study

Tax efficient company closure through a Members’ Voluntary Liquidation.

We have created a scenario, based on our experience with real clients in similar circumstances, to demonstrate how a Members’ Voluntary Liquidation can provide a tax-efficient and orderly closure for a solvent company. Insolvency client case studies can help directors understand the options available when a company has ceased trading but retains significant assets.

Background

The director of a management consultancy business approached Umbrella.UK Insolvency after deciding to cease trading. The company had traded for approximately three years and had done so profitably throughout.

At the time of the enquiry, the company was solvent and able to pay all of its debts in full. There were only two creditors: the company’s accountants and HMRC in respect of Corporation Tax and VAT. The business held approximately £350,000 in cash, leaving net distributable funds of around £300,000 after liabilities.

The director, who was also the sole shareholder, had secured an employed role elsewhere and wished to formally close the company while extracting the retained funds in the most tax-efficient manner.

Seeking Assistance

The director sought tax advice from his accountant, who outlined several options for closing the company. These included a limited company solution and applying to Companies House for the company to be struck off.

While a strike-off would have required all creditors to be paid in full and the remaining funds distributed as dividends, this option was not considered tax efficient for a higher-rate taxpayer. Dividend distributions would have been subject to income tax at 32.5 per cent, compared with a significantly lower rate if the funds were distributed through a Members’ Voluntary Liquidation.

Umbrella.UK Insolvency explained the MVL process in detail. After taking further tax advice, the director concluded that an MVL represented the most appropriate and tax-efficient solution for both him and the company.

The MVL Journey

Through a Members’ Voluntary Liquidation, the company could be formally wound up while ensuring that all creditors were paid in full through the liquidation process. The director’s tax advisers confirmed that funds distributed via an MVL would be treated as a capital distribution rather than income.

As a result, the shareholder qualified for Entrepreneurs’ Relief on the distribution, reducing the effective tax rate to 14 per cent on the £300,000 extracted from the company.

Umbrella.UK Insolvency was instructed to administer the MVL, including preparing the statutory declarations of solvency and completing the formal liquidation appointment.

Outcomes

Shortly after the liquidation commenced, funds were distributed to the shareholder in accordance with the MVL process. All creditors were paid in full and the company was formally and efficiently wound up.

This case study highlights how a Members’ Voluntary Liquidation can provide directors of solvent companies with a compliant, structured and highly tax-efficient method of closing a business when trading has ceased.

What our clients tell us

Tom Fox was incredibly helpful as I prepared to liquidate a couple of companies - clear advice, a respectful approach to both myself as director and the creditors, and a reasonable fee structure vs many of the national IP's I spoke to whilst researching who to work with.

Mike S

I engaged Umbrella accountants to oversee a Members Voluntary Liquidation for the small consultancy business I've been running. The team talked me through the MVL process, steps and requirements. The paperwork involved was well explained and straightforward, with the initial disbursement of funds handled very quickly and professionally under tight deadlines.

Brendan N

I extend my appreciation of your professional efficiency in handling my company business and herewith say thank you.

Maxine R

Umbrella.UK Insolvency guided me as sole Director of my small limited company, and the shareholders, through every step of a Members Voluntary Liquidation in a very efficient manner. The steps required were clearly laid out and proactively managed by their licensed practitioner. From first meeting through to an interim distribution of funds to shareholders took only a few days in our case. Thereafter, Umbrella will be managing all of the downstream actions required to complete the process with HMRC and Companies House, through to the final discharge of the company.

Alex O

I'd just like to thank Tom for your help with the closure of my company. You have been highly efficient and very professional throughout. Thank you.

Tony D

First of all, I would like to say a BIG Thank You for all of your assistance over the past year. I would not be in the positive state of recovery without Umbrella Insolvency. Your care and assistance at the application stage last summer, along with the advice throughout the year, has been great. I would not hesitate to tell anyone in my negative situation where to turn to.

Mr TM

Before I came to Umbrella.UK Insolvency I was in a bad place mentally due to debt because I believed I would be in my current situation for a long time to come. Umbrella.UK Insolvency walked me through my options and helped me pick the best one. I am genuinely amazed at what they managed to do for me and can now afford to live comfortably, and without the constant worry of debt looming over me.

I engaged Tom to arrange an IVA for me after I ran into financial difficulties as a result of the closure of my company. He introduced me to Sarah and both of them as a team worked tirelessly through Lockdown to get the best outcome for me and my family. Both Sarah and Tom were patient, thorough and incredibly compassionate for our situation. They attained the best outcome for us and I couldn't speak more highly of them. Thank you to you both, Amazing work.

Thank you very much for your assistance in a successful proposal. We are ever so grateful as this is a chance to transform our lives; or rather you have given us a second chance to have our lives in order. Thank you for your patience and perseverance throughout that you showed.

Thank you so much for your help with my IVA. As an ex-company Director my life took a downward spiral when creditors from my liquidated company called upon my personal guarantees. I had been treading water for months, ran up credit card debts and borrowed from family. When a creditor instigated bankruptcy proceedings against me I thought I was going to lose my house. I contacted Umbrella.UK Insolvency who stopped all the phone calls and threatening letters. Umbrella.UK Insolvency explained things in a way I could understand. They negotiated with creditors and my IVA went through, now I can sleep at night again and I kept my home. Thomas Fox was extremely knowledgeable and I truly thank him and his team.

Paul G

Following a personal recommendation, we appointed Umbrella.UK Insolvency to handle the voluntary liquidation of our business (MVL). Tom and his team were excellent, keeping us well informed throughout and working effectively with the company's accountants to ensure all documentation was produced and filed on time. I have since recommended Umbrella.UK to friends looking for similar services and I have no hesitation in recommending them more widely.

Kevin B

I engaged Umbrella .UK Insolvency to oversee a Members Voluntary Liquidation for the small consultancy business I've been running. The team talked me through the MVL process, steps and requirements. The paperwork involved was well explained and straightforward, with the initial disbursement of funds handled very quickly and professionally under tight deadlines.

Brendan N

Thank you to Tom Fox at Umbrella Insolvency for helping me close my limited company after being forced to close it due to IR35 issues. Tom clearly has a lot of experience doing MVLs to help limited contractors like myself caught by IR35. I was surprised by how much money I was actually left with. Very impressed, thank you!

David G

I had the pleasure of working with Umbrella.UK for an insolvency matter. Their compassionate approach, coupled with their expertise, helped me find the right solution for my company's financial difficulties. I highly recommend their services.

M Harris

Umbrella.UK's team of insolvency practitioners demonstrated exceptional knowledge and professionalism throughout our engagement. Their ability to provide clear solutions and communicate complex matters made the CVL insolvency process much more manageable.

Emma D

As a director facing company financial difficulties during covid, I was overwhelmed and unsure about the next steps. Umbrella.UK stepped in and guided me through the options for helping my business recover with patience and expertise. I cannot thank them enough for their exceptional service and my company is in a much healthier situation.

Mark T

I am extremely grateful to Umbrella.UK for their prompt and effective insolvency assistance. Their deep understanding of the insolvency process and dedication to helping struggling businesses saved us from a dire situation. Thank you!

S Johnson

Tom Fox at Umbrella.UK provided invaluable guidance and support during a challenging time for our business. Their team of experts helped us navigate through insolvency with professionalism and efficiency. Highly recommended.

John S

Members Voluntary Liquidation (MVL) – Company Case Study

Background

Seeking Assistance

The MVL Journey

Outcomes

What our clients tell us

Get free business closure, rescue or debt advice today*

Contact Us

Our Address

Office hours

Socials

Get a FREE business insolvency consultation today today.
All enquiries are strictly confidential.