How much does a Members' Voluntary Liquidation cost?

What are the Costs and Fees Associated with Members' Voluntary Liquidation

Members' Voluntary Liquidation (MVL) can be used as an effective way to close down a company and convert its asset into cash that can be distributed amongst shareholders. A company can only enter an MVL if the directors swear a Declaration of Solvency – a document which states that the assets and liabilities of the company have been reviewed and the directors have concluded that company is able to repay any existing and contingent liabilities (including statutory interest) within 12 months.

The main benefit of an MVL is that it allows the shareholders to extract the value of the business as cash in a cost-effective and tax-efficient manner. This is because the funds distributed via the MVL process are taxed as Capital Gains and not as income; this means there is a significant tax saving in comparison to withdrawing the value of the business in the form of dividends outside of a liquidation.

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Cost of Disbursements - Gazette Notices, Search Fee, and Bond

Other than the liquidator's fee the main Members' Voluntary Liquidation fees are the disbursements, which include several Gazette notices, a search fee, and a bond with a variable premium which varies in cost but is dependent on the company's asset value.

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Liquidator Fees and Overall Cost of Members' Voluntary Liquidation

The cost of an MVL will vary depending on a several factors, including whether the company has been prepared as a “cash shell,” the value of the company's assets, and the liquidator appointed to carry out the procedure. Generally speaking, Members' Voluntary Liquidation will cost around £4,000 in liquidator fees and disbursements.

The liquidator charges fees for carrying out the process of drafting and submitting the appropriate forms and facilitating the rest of the procedure. If the company is indeed solvent then these fees should be nominal in comparison to the amount of money that will be distributed to shareholders.

The liquidator also has to handle filing accounts and all of the other technicalities. Your role as a company director during the MVL process is minimal and would typically be limited to co-operating with the appointed insolvency practitioner and providing any requested information. 

If you're interested in initiating a Members' Voluntary Liquidation or you have questions about the cost of doing so, feel free to send us an email or call us for free confidential advice. With 100+ offices across the UK, you’re never far away from expert and confidential advice.