The purpose of a members’ voluntary liquidation (MVL) is to wind up a solvent limited company and to distribute the assets to the shareholders as capital rather than income, therefore incurring preferential personal tax rates.
Understandably, shareholders are often keen for such distributions and company dissolution to take place as soon as possible following the appointment of an insolvency practitioner (IP). Here we examine how long this typically takes, what needs to happen to enable this, and how accountants and company directors can help to speed this process up.
Assuming that all liabilities have been settled prior to the appointment of an IP, and all required information provided, distribution of company assets to shareholders can take place as soon as 21 days (the minimum time given for creditors to submit claims following liquidation).
The time estimated for case closure and subsequent dissolution is more uncertain, however, as it is dependent upon HMRC clearance. As a guide, we have historically estimated three months from appointment, but recently it has taken longer.
Directors, shareholders, and company accountants will be provided with an information request list once the IP has been engaged to assist with carrying out the liquidation process. This will include things such as HMRC references, details of assets and liabilities, bank details, and identification documents. The shareholders will be required to swear a declaration of solvency in the presence of a solicitor.
How to speed the process up
The liquidation process, including asset distribution and closure will run more smoothly if the following has taken place prior to the appointment of an IP:
- Information request list answered in full;
- All HMRC returns and liabilities have been calculated, submitted, and paid;
- All other liabilities settled;
- Appointment with solicitor arranged to swear declaration of solvency
- Company Bank balance transferred to IP’s client account following engagement as banks can take months to process a transfer once notified of the liquidation
To find out more about the liquidation process, take a look at our liquidation advice online.
Contact the Insolvency experts
For more information regarding the voluntary liquidation process, and how our team of experts can support your business, please get in touch. You an call our office directly on 0339203308 or contact us online.