Members’ Voluntary Liquidation (MVL)

Discover the tax-efficient way to close your solvent company.




What is a Members’ Voluntary Liquidation?

A Members’ Voluntary Liquidation is an excellent procedure for directors looking to wind up their solvent company. It offers a streamlined method of closing a company, and has an outstanding level of tax efficiency, to name two of the more prominent advantages. But Members’ Voluntary Liquidation has more to offer, especially for companies with a good chunk of value retained within.

If you are considering Members’ Voluntary Liquidation for your company, there is a lot to consider. The procedure has advantages, disadvantages, and a set process to follow.

A Members’ Voluntary Liquidation (MVL) is a formal procedure for the winding up of a solvent company and its operational affairs. The main aim of the procedure is to ensure the company is efficiently closed, with shareholders receiving the largest possible value of their share in the company.

Note that an MVL is not an option for insolvent companies, which cannot repay their debts and other liabilities within 12 months. Instead, solvent companies with more assets than debts can only use the procedure.

How does a Members’ Voluntary Liquidation work?

The MVL process is an effective method of closing a solvent company. Once specific eligibility criteria are met, it can be initiated by a company’s shareholders or members. Namely, a company must be solvent, not have any outstanding legal cases, and not have changed its name within three months. Shareholders must also swear a Declaration of Solvency, which is a legal document that qualifies a company to undergo Members’ Voluntary Liquidation.

By swearing a Declaration of Solvency, directors confirm that their company is solvent and capable of repaying its debts and other liabilities within 12 months. Falsifying a Declaration of Solvency is a severe offence, and will likely result in a series of penalties for guilty directors. Note that this declaration must be sworn in front of a solicitor in order to take effect.

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Assuming a company meets the eligibility criteria and its directors have sworn a Declaration of Solvency, then it can be entered into an MVL. Directors will be entitled to appoint an insolvency practitioner of their choosing to carry out the procedure. This insolvency practitioner will assume the role of liquidator, and will be responsible for most of the duties required under an MVL.

Once appointed, the liquidator will first prioritise the repayment of outstanding creditors. Any outstanding debts will have a statutory interest rate of 8% above base, regardless of the rate before the MVL. As such, ensuring all debts are repaid before entering the procedure is generally beneficial. Additionally, the liquidator will publish a notice for further creditor claims, should any creditors have been overlooked. This notice will last 21 days, after which the liquidator will shift priorities from creditors to shareholders.

Alongside the repayment of any creditors, the liquidator will identify the company’s physical assets, intangible assets, and anything else that contributes value to the company. These assets will then be sold off for the highest possible price, with the proceeds being distributed amongst shareholders. Unlike other methods of closing a company, these proceeds will be taxed under Capital Gains rates, rather than Income Tax rates. This will result in a smaller tax bill, which can be compounded by Business Asset Disposal Relief (BADR).

If necessary or desired, the liquidator may make distributions in specie, which sees an asset transferred in its current form, rather than as an equivalent cash sum. This can be helpful for directors who intend to open a new company, and wish to carry over certain important assets.

Once all assets have been liquidated or distributed in specie, the liquidator will obtain approval from HMRC to formally close the company. At this point, the company will be removed from the Companies House register and cease to exist as a legal entity.

MVL Cost

The tax benefits of a Members’ Voluntary Liquidation

Members’ Voluntary Liquidations gain their tax benefits predominantly from two sources – a Capital Gains categorisation for realised profits and Business Asset Disposal Relief.

Capital Gains Tax rates will apply to any funds distributed during the procedure. This includes funds raised from the sale of assets, the emptying of accounts, and anything in between. As Capital Gains Tax rates are considerably lower than Income Tax rates, this can help shareholders save significantly on their tax bill. However, this is not the only factor influencing the tax efficiency of the MVL process.

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Business Asset Disposal Relief

Business Asset Disposal Relief, or BADR, is a relief commonly used by shareholders of companies undergoing Members’ Voluntary Liquidation. Formerly known as Entrepreneurs’ Relief, it allows eligible shareholders to enjoy further tax deductions, bringing the overall tax bill down to a mere 10%. While certainly a strong relief, it is important to note that BADR has a lifetime limit of £1 million. Any gains in excess of this amount will still be taxed under Capital Gains rates, but will not benefit from the additional deductions afforded by BADR.

The eligibility criteria for BADR depends on precisely what you are selling, and your relation to the company in question. If directors intend to sell a part or all of their business, they must either be a sole trader or a registered business partner, and have occupied this position for at least two years. These conditions also apply to the liquidation of a company. Additionally, the sale of assets must be completed within three years of the company’s closing in order to qualify for relief.

Shareholders selling assets or shares may also benefit from BADR. Shareholders may be eligible for BADR if they had the option to purchase the shares at least two years prior to liquidation, and have at least 5% of both the total shares and voting rights in the company. If a shareholder’s total ownership falls below 5% due to the issuance of new shares, they may still be entitled to BADR.

How long does an MVL take?

The duration of an MVL is quite flexible, varying dramatically from company to company. For some companies, the MVL process will be swift and smooth. This can be the case for companies with fairly simple affairs that the appointed Insolvency Practitioner can quickly bring in order. Directors who collect all the necessary information beforehand, such as accounts, asset records, and other information, and repay all liabilities, will also help quicken the process.

On the other hand, the MVL procedure can be greatly slowed by complexity and lack of readiness. These often go hand in hand, as companies with complex situations are seldom able to pull together all the necessary documentation before involving an insolvency practitioner. This being said, we find most companies settle somewhere in the middle of these two extremes, with a rough duration of around three months. However, your company’s procedure could fall on either side of this estimate.

Is My Company Insolvent

When will shareholders receive their money?

One of the main questions we are asked by shareholders about the MVL process is: when will we get our money?

With Clarke Bell, when you get your money depends on which of our MVL options you choose.

1. You always remain in control of your money – this is where the company’s only asset is an Overdrawn Directors Loan Account

2. You receive your funds (in full) within 35 days from the date of liquidation – this is where the company’s only asset is Cash at Bank, and directors transfer the company’s bank balance to a named client account under our control shortly before our appointment.

3. You receive your funds (in full) after 35 days from the date of liquidation – this is where the company’s assets include Cash at Bank, and upon our appointment, we contact the company’s bank to request the closure of the account and the transfer of the money to a designated, named client account.

The timeline

The timeline of a Members’ Voluntary Liquidation will follow the same general framework. Assuming a company’s directors prepare adequately beforehand, this timeframe begins with the consultation and appointment of a licensed insolvency practitioner. If it is decided that an MVL is the best course of action, then a Declaration of Solvency can be sworn, and the procedure can begin in earnest.

Payment of liabilities

Following the appointment of an insolvency practitioner, and the swearing of a Declaration of Solvency, if not already done, payment of liabilities will be the next step. This can be done prior to the appointment of an insolvency practitioner if directors are able. If not, then the appointed insolvency practitioner will focus on the payment of liabilities, contingent liabilities, and disbursements. This can become more costly than directors may initially expect, making it good practice to have a comfortable reserve of value to avoid unexpected insolvency. Payments of this nature can contribute heavily to the duration of an MVL, depending on complexity and the preparedness of directors beforehand.

Winding up resolution

With the payment of liabilities completed, the insolvency practitioner will next file a resolution to wind up the company. This must be done within five weeks of swearing a Declaration of Solvency, and at least 75% of members must vote in favour of the resolution. Once a resolution to wind up the company has been approved, the insolvency practitioner will post a notice in the Gazette within 14 days of the resolution. This informs the public of the upcoming liquidation, and allows relevant parties to lodge an objection. For example, unpaid creditors may make a claim, or outright object to the MVL entirely.

If a company is found to be insolvent at this stage, its attempt at liquidation will be stopped, and directors may be viewed as attempting to escape debt. This can have far-reaching implications that are best avoided. If you are looking to close an insolvent company, it is best to consider insolvency procedures such as a Creditors’ Voluntary Liquidation. This stage of paperwork and protocol is an unavoidable time sink, as the Gazette notices must expire before the procedure can continue.

Sale of assets and distributions to shareholders

With the aforementioned documentation complete, the sale of assets and distribution of proceeds comes next. The liquidator will dispose of all company assets, and make any distributions in specie, if applicable. The funds raised through the liquidation of company assets will then be distributed amongst shareholders. As we mentioned, the MVL procedure is extremely tax efficient, and these distributions will benefit from both BADR and the lower Capital Gains Tax rates. Again, this part of the procedure can vary greatly from company to company. This is largely down to two factors: the number of assets a company owns, and the number of potential buyers. Assuming a company has few assets and plenty of willing buyers, sales and distributions can take mere days.

Removal of the company from the Register of Companies

The final part of the MVL timeline is the removal of the company from the Companies House register. This may take place once the liquidator has filed the final documents with Companies House, effectively wrapping up the company’s affairs. A final notice will then be posted in the Gazette, and the company will be removed from the Register of Companies. This marks the official end of the company as a commercial entity.

There are quite a few steps in the MVL timeline, each affected by a range of variables. This causes a significant distinction from one MVL to the next, with the complexity of a given case as the main factor. As such, estimates are difficult to give without knowing the details of your company. For a more precise idea of how long an MVL might take for you, contact our team for an in-depth look at how the procedure would unfold for your company.

How much does a MVL cost?

The cost will also vary depending on the complexity of the case. Clarke Bell offers a highly affordable MVL service compared to other providers.

Members' Voluntary

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Client testimonials

The whole team at Clarke Bell is very prompt and helpful. The liquidation process for my company was very smooth and hassle-free. Look no further...

Umesh Singh

I needed to dissolve my company at short notice and approached Clarke Bell on the recommendation of my accountant. They were good communicators at all...

Robert Raine

Quick to respond, efficient and friendly. Just the service I wanted for my MVL. Their process guided me through the paperwork and actions I needed...

Eric Lomas

I'm very happy with the service I received from Clarke Bell in handling my Member's Voluntary Liquidation (MVL). They communicated clearly with me throughout, always...

Mark Whitaker

I used Clarke Bell Ltd following a recommendation from another accountant as a specialist for the liquidating work I required undertaking for my business, Fior...

Noel Kenny

I recently used their services to liquidate my company via MVL. The whole process was quick and easy (lot's of digital paperwork tough as that...

Gyula Borbély

Excellent service, staff have been brilliant in guiding us through this process. Any questions we had were answered clearly and quickly. The team are all...

Clive Hastings

We have a wealth of experience in MVLs:

Since 1994 Clarke Bell have helped more than 4,500 directors put their company through the liquidation process


Total number of MVLs


Total cash distributed

What are disbursements in an MVL?

When considering the cost of an MVL, it is important to consider how disbursements contribute to the overall total. In the context of an MVL, a disbursement is a payment separate from an insolvency practitioner’s fees or other costs incurred by the company. Here, a disbursement refers to payments charged by a third party while the insolvency practitioner is carrying out the MVL procedure, and can include several different costs.

There are two disbursements that need to be paid in the MVL process.

Gazette notices are applicable to all companies entering the MVL procedure. Insolvency practitioners will need to post three Gazette notices, and will add the cost of these to the cost of the liquidation.

The payment of statutory bonds is the second disbursement that needs to be paid. Statutory bonds exist to offer protection to shareholders and their funds, once the liquidator controls their company. These bonds safeguard the assets and funds held within the company, and offer a form of recourse should the liquidator engage in any malpractice. Although this disbursement is commonly paid by companies entered into an MVL, the exact price varies. Statutory bonds are priced according to the value and amount of assets held by a company.

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Important information...

The distribution to shareholders

We distribute 100% of the funds after 35 days from the date of liquidation.

In cases where a client has withdrawn the funds prior to our appointment – thus creating an Overdrawn Director’s Loan Account (ODLA) – this would be distributed ‘in specie’ after 35 days.

This has the advantage of the funds being kept in the control of the clients, which is a preferable option for some of our clients.

Additional fees will be charged if the company’s assets include:

  • a property which needs to be distributed in specie. Solicitors will need to be appointed.
  • a Deed of Assignment (e.g. for Premium Bonds or Fixed-Term Savings Accounts). Solicitors will need to be appointed.
  • a pension. Trustees will need to be appointed. The cost of this will depend on the number of members in the pension scheme.

If your company has any of these assets or any not listed above, just contact us and we will let you know the additional costs.

Why would a company be placed into Members’ Voluntary Liquidation?

There are many reasons why a company might be entered into Members’ Voluntary Liquidation. While the end goal of liquidating the company is always the same, the reasons for reaching this goal can be quite different. Some directors may want to liquidate their company to fund a new venture, while others may simply wish to enter retirement. Regardless of the reason, an MVL offers all directors and shareholders an effective, tax-efficient means of winding up a solvent company. This is especially true for large companies with considerable retained profits, as they can benefit the most from the tax benefits afforded by an MVL.

MVL Cost

Is there a difference between an MVL and a CVL?

Although Members’ Voluntary Liquidation and Creditors’ Voluntary Liquidation are both forms of voluntary liquidation, they are decidedly different procedures. The two procedures have a range of distinctions, with eligibility being chief among them. Companies must be solvent in order to be eligible for an MVL, while a CVL requires a company to be insolvent. Given this difference in eligibility, the funds will be distributed according to different priorities. However, despite this core difference, the procedures are still voluntary, and both allow for the appointment of a preferred insolvency practitioner.

Both procedures follow the same general framework of liquidation. An insolvency practitioner will be appointed as liquidator, documentation will be filed, assets will be liquidated, and funds will be distributed amongst certain parties. During an MVL, the liquidator will distribute funds amongst shareholders, assuming all liabilities are paid. During a CVL, funds will instead be distributed amongst outstanding creditors. This marks a key difference in the purposes of the two procedures.

Another core difference is the requirement of an investigation during a CVL. Insolvency practitioners are obligated to investigate director conduct and company finances to ascertain why the company fell into insolvency. While director conduct is not always a factor, purposeful misconduct can certainly push a company into failure, and result in creditors unfairly losing their loan. This is not a factor for Members’ Voluntary Liquidation, and no such investigation will be necessary.

To summarise, the key differences between an MVL and a CVL are in purpose. The MVL procedure is solely concerned with helping shareholders withdraw as much capital as possible from a solvent company, through efficient sales, tax reliefs, and any other means available. On the other hand, the CVL procedure aims to ensure directors fulfil their legal obligations and creditors receive as much of their outstanding debts as possible.

Which procedure should I use?

This depends on your company’s situation. If your company is solvent, then it may be eligible for Members’ Voluntary Liquidation. This could be a viable option for you if your company has sufficient retained profits to benefit from the notable tax advantages afforded by the procedure. However, smaller solvent companies may wish to pursue other procedures, such as company dissolution.

If your company is insolvent, then the best option may be a Creditors’ Voluntary Liquidation. This can be an especially good option for companies in terminal insolvency, or companies without a viable business model. Entering into a CVL can help directors, both by stopping the issue from spiralling further, and meeting their obligations to creditors. However, if your company has a viable business model underneath its financial problems, then alternatives such as a Business Rescue Plan could be better for you.


When is the best time to do an MVL?

Finding the best time to enter your company into an MVL has two main requirements: the desire to wind up your company, and the ability to benefit from the procedure’s tax advantages. In other words, once you’ve achieved a measure of success with your company and you no longer need it, and you want to move on to something new, this is probably the best time to use an MVL.


Why might contractors consider an MVL?

Contractors use an MVL for the same reasons as any other director. Contractors can use an MVL for a wide range of reasons, including switching to an employee role (maybe due to IR35), moving on to a new venture, or retirement. By using an MVL, contractors can ensure their company is closed smoothly, and that they enjoy the procedure’s tax benefits.


Can I reclaim the VAT in an MVL?

It is possible for VAT-registered companies to reclaim VAT in an MVL. Directors can ask their insolvency practitioner to make a VAT claim, should they wish, which can increase savings somewhat.


Will my money be safe during the MVL process?

By using a licensed insolvency practitioner, you are assured that your money is in safe hands. Clarke Bell are regulated by the ICAEW – and we adhere to high professional standards and hold client security as an absolute priority. For additional security, a statutory bond must be taken out as part of the MVL process. This bond acts as security for a company’s shareholders while assets are under the care of an insolvency practitioner.


When will shareholders receive their money?

The two main questions we are asked are: how much does an MVL cost, and when will we get our money?

Clarke Bell provide three options in our MVL service:

Option 1: you always remain in control of your money

  • Overdrawn Directors Loan Account (ODLA) only.
  • Directors withdraw all the cash from their company bank account shortly before we are appointed. The Statutory Adverts then run for 21 days.
  • Assuming no creditors lodge a claim, the ODLA is distributed (in specie) between day 22 and day 35 from the date of liquidation. (This is, essentially, a ‘paper exercise’, as the funds always remain in your control.)
  • From £995 (+VAT +disbursements).


Option 2: you receive your funds (in full) within 35 days from the date of liquidation

  • This is where the company’s only asset is Cash at Bank.
  • Directors transfer the company’s bank balance to a named client account under our control shortly before our appointment.
  • There is no delay caused by waiting for the company’s bank to send us the money.
  • Upon our appointment, we transfer these funds to a designated, named client account.
  • From £1,245 (+VAT +disbursements).


Option 3: you receive your funds (in full) after 35 days from the date of liquidation

  • This is where the company’s asset includes Cash at Bank.
  • Upon our appointment, we contact the company’s bank to request the closure of the account and the transfer of the money to a designated, named client account.
  • The length of time this takes depends on your bank. Some banks are quick, and some are slow. As a result, we cannot control the speed at which your company’s assets are distributed to the shareholders. However, it will typically be 35 days or more after the date of the liquidation.
  • From £1,495 (+VAT +disbursements).


Some insolvency practitioners do offer an earlier distribution of a proportion of the funds. However, in such situations, the remainder of the funds can take about 6 months to be distributed.

The clients who we deal with prefer to get 100% of their distribution at the same time.