When a company reaches the end of the road, stakeholders sometimes demand a return on their investment over the years. Dains can help with this process, called Members Voluntary Liquidation (MVL) – essentially an exit route for shareholders.
A key reason for doing this is to enable a distribution of the share capital which would otherwise have to be paid to the Crown. MVL also enables the company to utilise certain tax benefits, which can be more advantageous than just applying to strike off a company.
The Inland Revenue will treat the distribution as if it is a capital distribution provided that the following assurances have been given to the Inland Revenue:
- The company does not intend to trade or carry on business in the future
- It intends to collect its debts, pay off its creditors in full and distribute any balance of its assets to its shareholders (or has already done so)
- It intends to seek or accept striking off and dissolution
Also, the company and its shareholders must agree the following:
- They will supply such information as is necessary to determine and will pay any Corporation Tax liability on income or capital gains
- The shareholders will pay any Capital Gains Tax liability (or Corporation Tax, in the case of a corporate shareholder) in respect of any amount distributed to them in cash or otherwise as if the distributions had been made during a winding-up
Dains always advises that confirmation or agreement is obtained in writing from the Inland Revenue that the concession will apply before the decision is taken to proceed with the formal dissolution.
A condition for an MVL is that the company is able to pay all of its debts in full within a period of 12 months.
Dains Business Recovery Limited - Registered Company number 10115314. Registered office St. Johns Court, Wiltell Road, Lichfield, Staffordshire, WS14 9DS. Registered in England and Wales.
Dains Group Limited - Registered Company number 06327495. Registered office St. Johns Court, Wiltell Road, Lichfield, Staffordshire, WS14 9DS. Registered in England and Wales.
Martin FP Smith and Nicola J Meadows are licensed in the United Kingdom to act as Insolvency Practitioners by the Institute of Chartered Accountants in England and Wales
When acting as Receivers, Administrative Receivers or Administrators they act as agents only, without personal liability and when acting as Administrators, the affairs, business and property of the company are being managed by them.