Members Voluntary Liquidation (MVL)
A Members Voluntary Liquidation, or MVL, is the formal way to close a solvent company, one that can pay all its debts, where there is retained profit to distribute to shareholders. It is different from the other liquidation routes because it is used by healthy companies, not insolvent ones, typically when a director is retiring, the business has served its purpose, or a contractor is moving to permanent employment. The attraction is tax efficiency: distributing the company's reserves through an MVL means the funds are usually treated as capital rather than income, which can mean a lower tax rate and access to Business Asset Disposal Relief for those who qualify. An MVL must be carried out by a Licensed Insolvency Practitioner, and the directors must swear a declaration of solvency confirming the company can pay its debts within twelve months. If the company is not solvent, an MVL is not available and a Creditors Voluntary Liquidation is the correct route instead. Insolvency Service; gov.uk
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At a glance
| Route | For | Why |
|---|---|---|
| MVL | A solvent company with significant retained profit | Distributions usually treated as capital; possible Business Asset Disposal Relief |
| Strike off (DS01) | A solvent company with little or no retained profit | The cheapest close once its affairs are settled |
| CVL | A company that cannot pay its debts | The correct route when an MVL is not available |
Solvent only
The dividing line is solvency. If the company can pay all its debts within twelve months and has reserves to distribute, an MVL is often the most tax-efficient close. If it cannot, the correct route is a Creditors Voluntary Liquidation. Check with the insolvency tests if you are unsure.
The numbers behind this
See the live official figures on our insolvencies by type breakdown. Solvent MVLs against insolvent routes, in the official numbers. All figures come from named official sources on our UK business distress data hub.
Common questions
Is an MVL worth it?
For a solvent company with significant retained profit, an MVL is often more tax-efficient than a strike off, because distributions are usually taxed as capital. The savings need to outweigh the practitioner cost, so it suits larger reserves.
Can a members voluntary liquidation be reversed?
An MVL is generally not reversed, because it is used to close a solvent company and distribute its reserves. If, after it begins, the company turns out to be unable to pay its debts within the twelve months declared, the liquidator must convert it into a Creditors Voluntary Liquidation instead.
How much does a members voluntary liquidation cost?
An MVL must be handled by a Licensed Insolvency Practitioner, so it costs more than a simple strike off. The practitioner sets the fee based on the work involved. It suits companies with enough retained profit for the tax saving to outweigh that cost; a practitioner will quote before you commit.
MVL or strike off, which should I use?
For a solvent company with little or no retained profit, a strike off via DS01 is the cheapest close. For a solvent company holding significant reserves, an MVL is usually more tax-efficient because distributions are treated as capital. The size of the reserves is what tips the decision.