Solvent Liquidations
When to contact us?
  • You are looking to retire and want the funds from the Company distributing to you in a tax efficient way
  • The Company is starting to struggle and you want to exit the business whilst there are funds to distribute to shareholders
  • You are looking to sell part of the Company or form it into smaller units
  • You are considering reorganising a Group of Companies
Initial meetings
Initial meetings are free of charge and are held in strictest confidence.

The meeting will make you aware of the options available, the pros/cons of each option and the costs involved. 

With a Members Voluntary Liquidation early planning is key. It is normal to agree several months prior to the liquidation commencing a strategy for work to be undertaken in advance of the liquidation. 

Members voluntary liquidations
A solvent liquidation is known as a members voluntary liquidation (‘MVL’). 

The MVL process is initiated by a directors meeting. The directors have to swear a Declaration of Solvency to evidence that the Company can settle its creditors in full plus statutory interest. A shareholders meeting is then held to formally place the Company into MVL.

The liquidator deals with realising any remaining assets, settling creditors and then distributing funds to the shareholders.

Fees and timescales are agreed prior to commencing work.

Strike off
An alternative to an MVL is for the shareholders to extract surplus funds from the Company as a dividend and then apply to the Registrar of Companies for the Company to be ‘struck off’ the register.

Legislation allows under certain circumstances for a Company to distribute a limited amount to shareholders and for that distribution to be treated as a capital distribution (see below).

Tax treatment on the shareholder
A distribution to shareholders from a liquidation is treated as a capital distribution and is taxed as a capital gain. A dividend from a strike off is chargeable to income tax. The tax payable by shareholders can be lower under capital gains tax, although the costs of liquidation need factoring in.

Existing advisors
We do not provide tax or accountancy advice and in all cases we work with the Company’s existing advisors.

Further information 
We have guides on the above procedures and can e-mail these upon request.