Tom D'Arcy

Quick! Time is running out…….

With the end of the tax year only one month away, now may be the time to consider putting a company through a solvent restructure otherwise known as a Members’ Voluntary Liquidation (MVL).

Where the company has assets in excess of £25,000, by using the MVL process, shareholders can gain advantageous rates of tax on distributions received from the liquidation which are treated as capital not income.  In certain circumstances, shareholders can also take advantage of Entrepreneurs’ Relief bringing the tax rate down to 10%.

Where there is a significant amount of cash to distribute, we can make distributions either side of the tax year end giving shareholders an additional tax saving.

Providing the company is a “clean” company we will ensure our fees are competitive.  A clean company is one where the sole asset is cash at bank and there are not any unpaid liabilities.  Following recent case law, HMRC now requires payment of statutory interest on any outstanding tax and VAT from the date of liquidation to the date of payment, even if the payment date is before the tax falls due under HMRC rules.  Statutory interest is charged at the rate of 8% per annum so it is essential all liabilities due to HMRC are paid prior to liquidation.

The liquidation process is relatively straightforward.  The process starts with a board meeting which is then followed by a meeting of shareholders.  Providing a company’s articles are in standard form and the company has a simple structure, the board and shareholders’ meetings can be held on the same day at the convenience of shareholders.  In most cases, the meetings are held remotely and we provide the necessary paperwork by email.

Once the company is in liquidation, we take possession of the company’s funds and then distribute the same to the shareholders usually within one week of the process commencing.

If you or your clients have a company with significant assets and want to take advantage of the MVL process, please contact us here at White Maund and we will be delighted to assist.