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Knowledge centre

We’ve created our downloadable guides and easy to understand FAQs to help you decide whether an MVL is the right path for you. If you have more questions, call our solvent liquidation practitioners on 0800 054 6564 or request a call back

Knowledge centre

Downloadable guides

A simple guide to liquidation

Get out while the going’s good


How do I know if my company is solvent?

There are two tests you can do right away to see if your company is solvent.

1. The cash-flow test
This is an audit of your cash flow. You’ll first need to list out the different incomes that your business has, then list out the expenses. If you can pay your employees, suppliers, HMRC, creditors and everyone else on time in the long term, then your business is solvent.
For help creating your cash-flow forecast, download our guide.

2. The balance-sheet test
This weighs your assets against your liabilities. Calculate all your assets (stock, premises, equipment, monies owed, cash in the bank…) against your liabilities (debts to suppliers, your bank or other creditors).
When you’re doing this, don’t underestimate or overestimate your assets and liabilities. You’ll need an accurate picture of your company’s position to decide the right course of action. It’s at this stage that a licensed insolvency practitioner can help you decide on the best solution for your business. If you’re ready to go, contact us .

What is solvent liquidation?

Solvent liquidation is also known as Members Voluntary Liquidation or MVL. Rather than taking place because a company cannot meet its financial obligations through insolvency, an MVL is only for solvent companies. An MVL might be used if the company owner is retiring and there is no-one to take over, the business no longer has a purpose, or if a contractor is ‘winding up’ their company to take a full-time role. There are tax benefits to ‘winding up’ a company through an MVL. To discuss your solvent liquidation, contact us .

What is a Members’ Voluntary Liquidation (MVL)?

Members Voluntary Liquidation, or MVL, is a way to close a solvent company. It’s a formal legal process used when there are no debt liabilities but the directors and shareholders want to ‘wind up’ the company. You can learn more about MVL in our free downloadable guide .

What is a liquidator?

A liquidator is a person appointed to formally close a company. A liquidator must be an insolvency practitioner who’s licensed to act by a professional regulatory body. Only a licensed Practitioner may act as liquidator of a company.

What does a liquidator do?

The liquidator will prepare and file all of the official forms for your MVL, call any meetings and work to release and distribute the funds as quickly as possible.

How long does an MVL take?

The legal process of going into an MVL can be quick and easy with planning. The assets that will be in the company at the point of liquidation, the number of shareholders and directors are there in the company and how quickly your accountants can produce your company accounts all come into play here. Once the planning all comes together, moving the company into liquidation can be done in as little as a week.
With tax advice in place, we’re one of the few companies that can extract the funds from the company before the liquidation starts. Alternatively, it could take up to 4 to 6 weeks.

How much does an MVL cost?

Our competitive fees start at £995.00 + VAT and legal costs

What’s the difference between an MVL and a CVL?

A Members’ Voluntary Liquidation or MVL is used when a company is solvent – it has enough assets to meet any debt obligations in the long-term).
A Creditors’ Voluntary Liquidation or CVL is used when a company is insolvent – it doesn’t have enough assets to cover its debts, either in the short or long term.
If you’re still unsure, contact us to talk about your situation.

Which is best – an MVL or a ‘strike off’?

Unless you use a Members’ Voluntary Liquidation (MVL), the amount taken from the company will be treated as income, if it’s more than £25,000, and you’ll have to pay Income Tax on it. An MVL will usually trigger capital tax treatment and may allow the use of Entrepreneurs’ Relief.
So although ‘striking off’ the company can be the cheapest way to close, an MVL may be the most tax-efficient method depending on the amount of funds for distributing to shareholders. The tax saving will often be far greater than the cost of the liquidation process.

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