The first test here is; is the company solvent? Is the company balance sheet solvent and is the company able to pay its creditors when they are due?
If the company has passed the first test then please carry on reading, otherwise take a look at the “Options for Insolvent Companies” section.
Members’ Voluntary Liquidation MVL
A Members’ Voluntary Liquidation MVL is a shareholder-led process, which is a tax efficient method for distributing or restructuring the assets and/or trade of a company.
A Members’ Voluntary Liquidation MVL can be used to distribute liquidated assets (cash), assets in specie (non-cash assets) or of shares in newly formed companies, which then hold the assets of the liquidated company.
A Members’ Voluntary Liquidation MVL is an Insolvency Act procedure which will need a Licensed Insolvency Practitioner to act on the case.
Tax advice should always be taken when considering a Members’ Voluntary Liquidation. We are able to provide such advice through our partner network or are always delighted to work with you existing advisors to provide the regulated part of any such restructuring.
Members Voluntary Winding Up
Members Voluntary Winding Up is a term used to refer to a Members Voluntary Liquidation.
Members Voluntary Winding Up is a form of company liquidation used to close down a solvent company and distribute its assets to the shareholders (also known as members) of the company.
Section 110 Insolvency Act Reconstruction
S.110 refers to S.110 of the Insolvency Act.
Section 110 is used to as part of a Members Voluntary Liquidation MVL process.
Broadly speaking the use of S.110 within a Members Voluntary Liquidation MVL allows for shares in a subsidiary company to be distributed to the original shareholders of the holding company.
For example a company which holds property of assets and a trading business could be split into two companies one holding the trade and one holding the property assets.
Tax advice should always be taken when considering S.110 within a Members’ Voluntary Liquidation. We are able to provide such advice through our partner network or are always delighted to work with you existing advisors to provide the regulated part of any such restructuring.
Extra-Statutory Concession C16
In general terms this applies when a company is being dissolved under S.652 of the Companies Act.
Extra-Statutory Concession C16 is a HMRC concession that with their approval will allow for a distribution to shareholders though classed as an income distribution to be treated for tax as a capital distribution for tax purposes.
Company dissolution -Beware Bona Vacantia
The term “Bona Vacantia” literally means vacant goods and is the legal name for ownerless property, which by law passes to the crown.
Bona Vacantia will usually apply to any assets left in a company once it has been dissolved.
If dissolution is being considered as an end of life solution for a company, care must be taken is in relation to the level of share capital left in a company. Take a look at the website of the Treasury Solicitor and this will explain the £4,000 cut-off level.