Company in Dissolution
If you no longer require your solvent Limited Company or LLP or you want to exit your business as cleanly and tax efficiently as possible then our options will help you achieve this.
What type of company in dissolution?
Members Voluntary Liquidation (MvL)
A members voluntary liquidation is for solvent Limited Companies or LLP’s. It is one of the most tax-efficient methods of closing down your company and could result in a capital gain tax bill as low as 10%.
Informal Voluntary Liquidation (with Entrepreneurs Relief)
An IVL (Informal Voluntary Liquidation) with Entrepreneur’s Relief is for solvent Limited companies or LLP’s. It is a tax-efficient way of closing down your company if it qualifies for Entrepreneurs’ Relief
Informal Voluntary Liquidation
An IVL (Informal Voluntary Liquidation) option is ideal for your Limited Company or LLP if it does not qualify for Entrepreneurs Relief. It is a straight forward and clean way of closing down your company.
more about closing down your company
Your Limited Company or Limited Liability Partnership (LLP) is considered to be solvent when the business assets are greater than the business liabilities. This can be established from the balance sheet, also known as the statement of financial position.
Only if your company is in a solvent position can it take advantage of the 3 options above. In a solvent liquidation, it is almost always a voluntary event, in so far as the directors are not compelled to liquidate their company. This would be the case in an insolvent situation.
When a solvent company is liquidated, once all creditors (organisations and people your business owes money to) are paid, any remaining assets (including liquid cash) is distributed to the shareholders. This distribution (when done correctly) can be very tax efficient and be subject to less than 10% in personal taxation on the shareholders. Schedule a call today if you want to discuss your company dissolution options.
FAQ's on Company Dissolution UK
There are two positions of liquidation, first being an insolvent company liquidation and secondly a solvent company liquidation.
The former is almost imposed upon you as a company director. It is at the point your company can no longer pay its creditors in full or on time and either you re-structure your terms with your creditors or you put your company in dissolution.
If your company is solvent and can meet all it’s creditor obligations, then to liquidate your company is a voluntary choice. You may do this because you are no longer trading and earning revenues or your company may have been dormant for a period of time.
If you have made the choice to liquidate your solvent company voluntarily, then you can get started swiftly with our help. We will establish your accounting and tax position, and check that your company is indeed solvent. If your company is PAYE and VAT registered, then both schemes will need to be wrapped up and closed before your company is put into dissolution. If you want to get started, please schedule a call with us where we can advise further.
Your business is classified insolvent if it is unable to meet creditor payments in full or on time. Your company will have a net liability position.
If your company is able to meet its creditor payments in full and on time, and it is in a net asset position, then it is considered solvent.
If you are putting your company in dissolution and have fixed assets (such as laptops, hardware etc) then essentially an ascertainable market value at the point of liquidation needs to be established. You can then either sell the assets to a 3rd party or to yourself personally as the business owner. If there is no ascertainable market value or the assets have been depreciated to a nil value, then the assets have no further useful life and you as the business owner can just take them.