What’s an MVL and why would I need to use one?

Before deciding to close your company, you should speak to a licensed insolvency practitioner. They can assess your company’s financial position and make valuable suggestions. In this article, we’re answering the question, what is an MVL and why would I need to use one?

Members voluntary liquidation (MVL)

An MVL is also known as a member’s voluntary liquidation. When entering this form of liquidation, you still have to appoint a licensed insolvency practitioner. This is to ensure that everything is completed correctly.

You must also be able to pay off all company debts within 12 months. If this is not possible, then a members voluntary liquidation will not be your best option. You’ll need to request a final tax return from your accountants to assess your situation.

There are a few common reasons why people might choose to close a company even though it is solvent. These can include wanting to retire or simply not wanting to run the company anymore.

Before solvent companies can be closed, at least 75% of the company’s shareholders must agree. As with other liquidation processes, you must have an appointed liquidator. You must inform them of any finance agreements the company is involved with. Once you decide to enter the members voluntary liquidation (MVL) process, the liquidator takes control, and you must cease trading.

A members voluntary liquidation is often completed sooner than other options due to having minimal or no outstanding creditors.

A members voluntary liquidation enables you to claim business asset disposal relief, this used to be called entrepreneurs relief. This means you will pay reduced capital gains tax when selling assets or shares.

Personal services company, 1 man/1 woman band

Let’s imagine you run a personal service company, can afford to pay off all your debts, and still have some money left over. An MVL would allow you to take that last remaining money out of the bank in the most tax-efficient way possible.

Like all other forms of liquidation, an MVL is not free. However, you may find that it costs slightly lower due to less paperwork.

To make things easier, an MVL is usually the same price everywhere you go. Our best advice in this situation is to go online and find the best quote that meets your needs. As we advise with all insolvency practitioner appointments, you must get all costs in writing upfront. This can help to prevent nasty surprises further down the line.

Members voluntary liquidation process

Declaration of solvency

The first step to consider when you enter a members voluntary liquidation (MVL) is that you must make a declaration of solvency. This allows you to have an accurate view of your company’s assets and any money you owe.

The director or directors of a company must sign the statutory declaration. The declaration of solvency allows the company’s directors to gain a better understanding of your company’s affairs.


As with other forms of liquidation, a meeting is held for the MVL process. For MVLs, the meeting is made up of the company’s shareholders. Everyone present at the meeting must agree to the MVL taking place for the business in question. If everyone agrees to the liquidation, an advertisement should be posted in the London Gazette. This allows any creditor claims to be assessed.

Once the specified time has passed since the advertisement was published, the company can be closed and removed from the Companies House register.

company asset valuation

Company’s assets

Part of the insolvency practitioner’s role is to find ways to pay back company creditors. One way they might do this is through the sale of company assets. An independent valuation company should be appointed to identify asset value.

After the company’s assets have been sold at a fair price, the licensed insolvency practitioner will use the money to pay off any creditors. You can find out more about the order of payments in a liquidation.

Closing a company with debts

If your business has debts you cannot afford to pay back, you cannot use an MVL for company closure. These debts can include bounce-back loans, income tax, corporation tax or other company debts.

Another method that may be more suited to your needs is a creditors voluntary liquidation. This method is suitable for an insolvent company, one that cannot pay debts when they fall due. This form of liquidation is usually viewed positively as the director has chosen to enter the liquidation rather than being forced into it. This, therefore, shows compliance with director responsibilities.

In contrast, some directors choose to wait until they are forced into compulsory liquidation. This formal process opens the door to more director scrutiny due to you not acting quickly and within the interest of your company’s unpaid creditors. Not acting soon enough will leave you facing a winding-up resolution.

A winding-up petition involves being sent a court date, and if debts aren’t paid by this date, you will lose full control of the company’s affairs.

Closing a company using an MVL has many benefits, such as having the ability to formally close down a business without spending a lot of money. In addition, due to taxation benefits, you are also able to access money in a more tax-efficient manner.

Please don’t hesitate to contact us for a free no obligation consultation. Our team of business rescue experts are always happy to help.

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I'm Chris Worden, Managing Director at 1st Business Rescue. With over 7 years of experience, I help UK directors navigate the complex world of UK corporate insolvency. We offer free and independent advice to UK directors and advise them about what options may be available to them if their limited company starts to struggle.

I am passionate about helping other directors overcome their business challenges and get back on their feet, as I was once in the same position as them. I had a business that became insolvent, and the advice out there was confusing and overwhelming. I am here to provide honest and valuable advice to UK directors. 

I am proud to say that we are one of the only 5-star corporate insolvency companies on Trustpilot with hundreds of 5-star reviews, and we publish videos weekly on our YouTube channel. Our channel is designed to educate UK directors about insolvency and debt advice. Check it out here:

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