A members’ voluntary liquidation (MVL) is the most tax efficient way of closing a company and the shareholders realising the assets when the company has ceased to trade.
For example, the directors/shareholders have decided to retire and it is not possible to sell the business. Or, the IR 35 rules are forcing a director/shareholder into direct employment. Using the MVL procedure the assets (typically liquid funds) can be distributed to shareholders as a capital distribution and because of Entrepreneurs’ relief any gain is only taxed at 10 per cent.
In recent years some anti avoidance legislation has been introduced which disallows the relief if the director/shareholder starts a similar trade again.
It was widely thought that this generous relief would have been discontinued in the budget in March earlier this year – thankfully for retiring entrepreneurs, it wasn’t.
But how long will it be before this relief becomes history? Given all of the government spending on the present Covid 19 crisis at some point inevitably there’s going to be an almighty increase in taxes and this relief would be a fairly easy measure to bring to a close.
Any director/shareholder thinking about retiring in the next couple of years should bear this in mind.
In the meantime, we’ll be pleased to help any of your clients close down their company using this procedure. Just call or email, at any time, for a quote or chat about the process. We’d be pleased to help.
Here’s our contact details –
Tim Corfield –
07786 965 009
tim.corfield@griffinandking.co.uk
Janet Peacock –
07545 806 531
janet.peacock@griffinandking.co.uk or janetpeacock@iresource.co.uk
Office Tel: 01922 722205
