Alternatives to a Members Voluntary Liquidation (MVL) Costs, Benefits & Options

Before you choose which way to extract your cash from your limited company it is important to seek professional advice so that you can discuss the benefits that arise from a Members Voluntary Liquidation, or MVL, as contrasted with other alternatives. After all you want to withdrawn your money out of company with the minimum of costs involved, and in such a way that no party can upset the distribution at a later date.

Such a discussion will ensure that the best route of action is taken for the company.

It may be more cost effective not to pursue a Members Voluntary Liquidation but instead, in appropriate cases, to consider alternative courses of action to achieve the same end. Those alternatives could include:

• applying to the court for a "reduction of capital" and to release excess cash that way, or,

• paying an income dividend, or,

• obtaining Inland Revenue sanction (under what is known as an Extra Statutory Concession Number 16) for a "capital dividend" followed by the strike off of the company under Section 1003 of the Companies Act 2006.

There are pros and cons for each of these alternatives to a Members Voluntary Liquidation concerning benefits, risk and cost.  

Purnells have developed a Guide to Members Voluntary Liquidation, and should hopefully assist your understanding.