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Members Voluntary Liquidation (MVL)

A Members Voluntary Liquidation (also known as a MVL) is a suitable option for Directors and Shareholders of solvent Companies seeking the most expedient and tax efficient way in which to deal with the closure, demerger or exit from the business in which the company operates. The MVL solvent liquidation procedure allows for a quick appointment of an Insolvency Practitioner and distribution of funds to the shareholders in line with the terms of the Company’s articles of association.

A Liquidator is appointed when a resolution of shareholders is passed to that effect at a meeting of the members convened for that purpose. The same meeting can pass resolutions to distribute the assets “in specie” (i.e. distributed it its current form, rather than sold and the proceeds distributed instead).

There are a range of typical scenarios where a MVL is appropriate, including:

  1. Retirement of the owners/directors

  2. Closure of the business or exit from markets in which the business operates

  3. Group reorganisation or simplification programmes

  4. Mergers / demergers, including resolution of owner disputes

Benefits of a MVL with Parker Andrews:

  1. We can work with you and your accountants to plan the procedure from start to finish, making the appointment quickly and allow distributions of the Company’s assets to be made as soon as possible.

  2. We operate a competitive fixed fee structure

  3. You will know the likely total distribution in advance of a Liquidator being appointed

  4. Speed – if handled correctly prior to a MVL appointment, early distribution of cash and assets can be achieved in days, not weeks or months

  5. Tax planning & efficiency – Distributions made by a Liquidator via a MVL may be treated as capital distributions, significantly lowering the potential tax liability to the recipient. These distributions can be planned in advance to make use of any deadlines or tax periods as you may wish. Advantage may also be made of any Entrepreneurs’ Relief to further lower any potential tax liability, further information on which is provided at the end of the page.

Contact this office for a no obligation, confidential and free discussion on your scenario. We can identify the appropriate solution and agree a plan of action to suit your needs.


  1. Free no-obligation discussion

  • Contact this office for a free, no obligation discussion about your requirements. We will outline the procedure and the information we require, particularly the last unabbreviated accounts and copies of the last VAT and Corporation Tax retunrs. A fee basis will be agreed at this point. Throughout we are happy to converse with both you and your appointed agents.

  1. Engagement

  • Once the MVL procedure has been agreed, a formal engagement will take place by way of a letter outlining the services we provide and the requirements from both sides. Further accounting and tax information may be required at this point whilst we prepare the paperwork for the meetings.

  1. Convene meetings of Directors (Board Meeting)

  • Meetings of the board of directors and shareholders will be convened for a mutually agreed date. In practice these can usually take place on the same day and at short notice, depending on the Company’s articles and the number of shareholders.

  1. Declaration of Solvency

  • In order to place the Company into solvent liquidation, a full statement comprising the Company’s assets and liabilities will be prepared and presented to a meeting of the Company’s shareholders. This is to be agreed and sworn by the majority, if not all, of the Company’s directors, together with a statement that the Company’s debts can be settled in full within 12 months.

  1. Hold Board Meeting

  • A board meeting is held to consider that the members should place the Company into MVL. A general meeting of the members is then convened for that purpose.

  1. Hold General Meeting

    • Formal meetings of the board and shareholders are held and resolutions passed to place the Company into Members Voluntary Liquidation, appoint a liquidator, approve the fee basis agreed and method of distributing the Company’s remaining assets and capital. A Liquidator is formally appointed at this meeting and the powers of the Directors cease at this point.

NB: In most circumstances, the initial meetings of the Directors, Board Meeting and General Meeting can all be held on the same day and significantly reduce the time required to make an appointment.

  1. Post-appointment

    • Within 48 hours of appointment, contact will be made with your banking provider to release funds. Formal notice of the appointment will be advertised and provided to Companies House. HM Revenue & Customs will be contacted to confirm the correct position.

  2. Distribution & Indemnity

    • Initial distributions can be made from the Company’s assets upon receipt of the same in the Liquidation estate. An indemnity may be sought from the recipients in the unlikely event that any unforeseen claims should arise after the Liquidator’s appointment.

MVL versus striking-off from the register

A common concern of Directors and Shareholders is that it appears unnecessary to appoint a Liquidator when the funds can simply be distributed and the Company removed from the register. However, there are a number of pitfalls that a MVL can help alleviate:

  1. Risk – in short, the Company is required by the Companies Act to maintain its capital and only pay dividends from profits. It cannot therefore make capital distributions in the ordinary course of business. These stipulations continue to apply when distributing the remaining funds prior to a “strike-off” procedure. They do not apply in a MVL.

    When the Company is then dissolved, any assets remaining become property of the Crown. Claims for these distributions in contravention of the Companies Act may form such an asset and the Treasury Solicitor may seek to recover the payments.

    Section 1030A of the Corporation Tax Act 2010 provides that where under £25,000 is to be distributed, the claims will not be pursued. It is therefore imperative that in circumstances where more than £25,000 remains, a solvent liquidation is utilised instead to negate this risk.

  2. Peace of mind –whilst the striking-off procedure is quick, it should be noted that the Company can be restored to the register for up to 6 years following the Company’s dissolution. If a claim arises in that period, the Company can be returned to the register and recovery action taken. The liability of every Director and Shareholder continues.

Please note that Parker Andrews Limited is unable to provide tax advice with regards to your specific circumstances. We are however more than happy to work with your chosen tax advisors for the best outcome for all parties.

Further reading:

Entrepreneurs Relief:

S1030A Corporation Tax Act 2010 (as amended):

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