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Where Taxpayers and Advisers Meet

Members Voluntary Liquidation (MVL)

Posts: 9
Joined: Sun Feb 07, 2010 6:33 pm

Members Voluntary Liquidation (MVL)

Postby businessmind » Wed Oct 09, 2019 8:32 am

I wonder whether I could get a view from the forum on the following as I seem to be receiving differing views from accountants.

Just some context. I set up a business (100% in my ownership) three years ago providing consultancy services to multiple clients. I employed my partner on a part time basis in an administrative capacity to which she was paid a market level salary (PAYE). I only took minimal dividends as have a number of other sources of income and was planning on building the business. It would now seem that the businesses two main clients will not require its services come the end of the year. Due to other interests I am considering closing the company which has circa £300k of cash in it. I believe a Members Voluntary Liquidation (MVL) may be the most tax efficient way to do this as the distribution is potentially a capital one and thus I would pay Capital Gains Tax (CGT) and could benefit from Entrepreneurs Relief (ER). I understand the conditions under the TAAR.

Am I able to get clearance from HMRC that the treatment would be capital before undertaking the MVL? I’m getting differing views on this from two accountants although both seem to agree that subsequent clearance for ER cannot be sought as this is a matter of fact.

May I have you views?

Posts: 259
Joined: Tue Sep 26, 2017 6:28 pm

Re: Members Voluntary Liquidation (MVL)

Postby AdamS93 » Wed Oct 09, 2019 8:59 am

The TAAR relates to events after the MVL HMRC cannot give clearance even if they wanted too.

As for ER, the large cash balance could mean the trading requirement for ER is not met. I believe you can get clearance for s165 TCGA 1992 (gift relief) for which the definition of trading company is the same.

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