Guide to Members Voluntary Liquidations
Our London office team has put together this easy to use infographic that takes you through the processes that are involved in members voluntary liquidations – or solvent liquidations, as they are sometimes called. As the graphic says, we have successfully implemented hundreds of MVLs since our foundation in 1997. Take a look at some of our testimonials for members voluntary testimonials from satisfied clients.
What Happens to the Members Voluntary Liquidation if the Company Proves Not to be Solvent?
A members voluntary liquidation can only be used to close down a solvent company in which all of the creditors can be paid within 12 months of the formal start of the process. The directors need to totally sure of this solvency because if, after the start of the process, the liquidator (normally an Insolvency Practitioner) discovers that the reality is that the company is insolvent, then he is obliged to convert the MVL into a Creditors Voluntary Liquidation.
How can a Company that ‘Looks’ Solvent Turn Out to be Insolvent?
This can and does happen. Directors might think that their balance sheet is healthy, but it is very important for directors to also consider contingent creditors when deciding on the solvency if a company. These include: termination charges on leases, any guarantees that have provided, pension liabilities and potential redundancy costs on staff terminations. Liabilities such as these can turn a healthy balance sheet into an insolvent one.
A Final Word – A Change in Corporation Tax Payments for Members Voluntary Liquidations
A recent new policy from HMRC in how they tax corporation tax payments arising out of Members Voluntary Liquidations means that they will claim statutory interest at 8% per annum, starting from the date of liquidation, even if the normal due date for corporation tax hasn’t yet passed. This is quite a hike from their previous position. Click here for our article on this topic along with advice on how best to mitigate statutory interest.
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