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Members' Voluntary Liquidation (MVL)

This type of restructuring is often used to dissolve a company that is no longer needed. For groups, this process can improve its overall value. In both cases, it allows funds to be returned tax efficiently and increases shareholder returns. There are also additional types of restructuring procedures that can be used to simplify a group structure.
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Members' Voluntary Liquidation (MVL)

There are various procedures, which can be deployed to achieve the objectives agreed with the shareholders of a single or a group of companies, including:

Members’ Voluntary Liquidation (MVL)

This is a formal procedure under the Insolvency Act 1986 requiring the appointment of a licensed Insolvency Practitioner. Benefits include the formal agreement of creditor claims. All payments to shareholders are treated as a realisation of the investment and not as dividend income, which may give tax savings and possibly attract Entrepreneurs’ Relief, now known as Business Asset Disposal Relief, resulting in a tax rate of 10%.

If you are ready to close your business through a MVL, complete the questionnaire which will be sent directly to our MVL team who will then send you a Letter of Engagement for you to sign before any work commences. Alternatively, if you would like to speak to one of our team first, please call 0121 222 4140.

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There are a number of other processes that can be used to restructure:

Corporate Simplification and Value Extraction

The simplification of a complex corporate structure or the extraction of value for shareholders is a highly technical area, requiring careful analysis and consideration of a whole range of legal and tax considerations.

The type of projects involved in this work can include:

  • Simplifying a group’s structure
  • Improving a company’s balance sheet where there are negative reserves arising from trading losses, enabling dividends to be paid from future profits
  • Freeing up and repaying funds tied up in share capital or eliminating excess share capital
  • Restructuring and partitioning a group’s activities either for sale, retirement planning or more efficient trading
  • Removing unwanted companies from the Company House Register by the most cost efficient way

Capital Reduction

A simplified procedure under the Companies Act 2006 enabling alteration of the capital structure of a company. Benefits include the elimination of negative balance sheet reserves enabling dividends to be paid, or the buying back of shares, which otherwise would not be permitted.

HMRC Extra Statutory Concession C16

An allowance given by HMRC allowing payment from a company to the shareholders as if there had been a Liquidation. Benefits include lower costs through avoiding a liquidation process. It is restricted to a maximum of £25,000 capital value.

Dissolution

The removal of a company from the Companies House Register through a direct application made by the directors. Benefits include substantially lower costs than with a formal liquidation procedure.

Advice on Members’ Voluntary Liquidation (MVL)

For more information on Members’ Voluntary Liquidation, we offer an initial free consultation to review the situation and make recommendations on the best way forward. If we think that a Members’ Voluntary Liquidation is the best route forward, our specialists can support the business at every step of the way through the process.

Contact our Head Office on +44 (0) 20 3326 6454 to arrange a no obligation and confidential call with one of our Partners.

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