Members’ Voluntary Liquidation (MVL) Versus Strike Off
Closing a company that you’ve worked so hard to establish and make profitable is not always an easy decision.
Knowing the options available will help you choose the most appropriate option for your circumstances.
If your company is solvent, but you’re ready to close the company, perhaps for retirement, other personal choices, or to go in a different direction vocationally, you could consider voluntary liquidation.
Two options available for solvent companies are Members’ Voluntary Liquidation (MVL) and Strike Off.
In considering liquidation versus strike off, it’s prudent to do your due diligence, as what may seem the simplest, most cost-effective or quickest option, is not always the case.
A professional insolvency practitioner can guide you and your board on the financial and legal implications of voluntary liquidation.
UK company directors have an obligation to close their companies with the same fiscal and legal responsibility with which they operated while trading.
Professional advice from insolvency experts can make the difference between a smooth and tax-efficient exit from your business and avoidable drawn-out legal disputes with creditors.
| Members’ Voluntary Liquidation Versus Strike Off | ||
|---|---|---|
| MVL Liquidation | Strike Off | |
| Eligibility | Solvent company which:
|
Solvent company which:
|
| Legal Considerations | MVL is a formal legal process governed by the Insolvency Act | Strike off is governed by Part 31 of the Companies Act 2006 |
| Conducted by | A licensed insolvency practitioner (the liquidator) | Company directors, who are responsible for legal and financial outcomes |
| Cost | Legal and professional fees and disbursements | £44 Companies House fee (plus any professional fees if hired) |
| How to start | Contact a licensed insolvency practitioner. Then:
|
Conduct due diligence. Then:
|
| Creditors / Interested Parties | The liquidator must publish the MVL in the Gazette to notify creditors | Directors must notify interested parties within 7 days of application. Companies House:
Creditors may apply for reinstatement to take legal action |
| Division of Assets | Assets are realised, creditors paid, and remaining assets distributed to directors/shareholders (not as dividends) | Any remaining assets become property of the Crown |
| HMRC | Outstanding taxes must be settled. Three months after, company is struck off. MVL allows CGT instead of income tax on distributed assets | HMRC obligations must be settled before application. Dividends taxed as income, not CGT — generally not tax-efficient |
| Time | Approximately six months total. Creditors have 4–6 weeks to respond | May take as little as 2 months, but objections can extend this to years |
| Reinstatement | Possible within 6 years by court appeal, but unlikely due to legal thoroughness of MVL | Creditors can reinstate the company to recover debts |
| Who is this best for? | Solvent companies with significant assets | Companies with few assets and no creditors |
With voluntary liquidation, the UK Government advises that if directors of a company are not certain of their responsibilities in closing their company, they should seek professional insolvency advice.
Contact the professional team at Irwin Insolvency today for tailored guidance on members’ voluntary liquidation and strike off implications for your solvent company.
I would like to indicate my appreciation of the polite and professional manner in which business was conducted. Thank you to you and the team.
Mr. B D
Great Guys. Very Competent. Sat down with me and explained the law and all the proceedings without rushing me. Kept me up to date with everything. Great Service and would not hesitate to use again. 5 Stars !
Mr. Adam G
Thank you for all your help in the liquidation. I will always pass on your details and recommend you.
Mr. J M
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