How long does the process of voluntary liquidation of members take?


The answer to the question of how long voluntary liquidation of members (MVL) may take to complete from start to finish depends on a number of factors. However, the short answer is that one could be finished in as little as three weeks. What is the MVL process, why might it be a procedure to consider, and what can you do to speed one up? Keep reading to find out.

Photo by Ben Rosett on Unsplash

Who are MVLs for?

MVLs are for businesses, not individuals. They primarily cater to businesses that are still in business but the owner – or owners – would like to liquidate for some reason. Sometimes it’s to focus on other business interests but, again, retirement is another common reason to seek one. Basically, MVLs are not an appropriate process to seek out when a business is insolvent. In short, they are formal processes designed for solvent companies that have enough assets – liquid and fixed – to repay all their debts.

What is an MVL?

To obtain an MVL, all interested parties – members or shareholders – of the company must be notified. If the members agree, an insolvency practitioner should be appointed to oversee the liquidation process. According Salient insolvency, a licensed company that provides MVL services in the UK, the main advantage of undertaking this form of liquidation is due to its tax rate. Shareholders are subject to a 10% tax following an MVL, as opposed to the usual rate for a simple dividend.

That said, some people sue them simply because the company involved has fulfilled its contractual obligations and the owner simply wants it to be formally dissolved. To obtain this status, a document called a declaration of solvency must be drawn up with a notary. The insolvency practitioner arranging the MVL will also need to have access to bank and HMRC records, directors’ identification documents and all company financial records.

How long will a typical MVL take?

Following the aforementioned declaration of solvency, a minimum period of 21 days is required to allow any debtors to come forward and claim payment from the company in liquidation. The designated liquidator must announce the fact that the company is in liquidation. Since liquidators are often faced with additional debts or bad debt claims, an MVL will sometimes take longer than three weeks. Ten to twelve weeks is more realistic, but this will depend on individual circumstances and how quickly HMRC approves the process.

Tips for speeding up an MVL

Go straight from reporting creditworthiness to publishing a notice of the MVL in the London Gazette. Ideally, you will have settled all of the company’s debts before that anyway, so that there are no complications with further payment requests. Likewise, company accounts must be up to date and any tax issues with HMRC will be resolved. This way it is much more likely that the MVL will take place without undue delay.


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