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Is the End Near for Members Voluntary Liquidation?

Exploring the potential changes ...


Posted by Helen Beaumont on 20/12/2023 @ 8:00AM

Members Voluntary Liquidation (MVLS) is a popular insolvency procedure in the UK, often used by businesses looking to wind up their operations in a controlled and efficient manner ...

The General Election may affect Members Voluntary Liquidation!

The General Election may affect Members Voluntary Liquidation!

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However, recent discussions in Government have raised concerns about the potential scrapping of Members Voluntary Liquidation. This has left many business owners and tax advisers like me wondering about the future of this procedure and its implications.

"The Insolvency Service has proposed changes to insolvency laws including the scrapping of MVLS!"

The reason for this proposal is to reduce the number of 'phoenix companies' that arise from the misuse of MVLS. These are companies that are placed into liquidation only to re-emerge under a new name, often with the same directors and shareholders. This practice is a form of tax avoidance and is seen as unfair to honest businesses.

If the proposal goes ahead, it would mean that businesses would no longer be able to use MVLS to wind up their operations. Instead, they would have to use a creditors' voluntary liquidation (CVL), which is a more complex and expensive procedure. This could have significant implications for businesses looking to close down.

Many in my industry have expressed concerns about the potential scrapping of MVLS. We argue that the procedure is a legitimate way for companies to wind up their operations and distribute their assets to shareholders!

By removing this option, businesses may be forced to use more drastic and costly measures, such as bankruptcy. This could harm the economy, as well as hurt the individuals and families who rely on these businesses for employment.

Furthermore, Members Voluntary Liquidation is often used by family-owned businesses as a way to pass on assets to the next generation without incurring significant tax liabilities. Without this option, these businesses may have to pay higher taxes, making it more difficult for them to continue. This could lead to a decline in the number of family-owned businesses.

However, those in favour of scrapping MVLS argue that it is being misused and that stricter regulations are needed to prevent abuse. They also suggest that alternative procedures, such as solvent reconstructions or members' voluntary arrangements, could be used instead of MVLS. These options would still allow businesses to wind up their operations, but with tighter controls to prevent misuse.

"I'm sure whoever wins the next General Election will have their own thoughts on MVLS!"

While the proposal to scrap it has raised concerns, it is important to remember that it is still in discussion and may never come to fruition. It is also important to stay updated on alternative procedures that may be available in case Members Voluntary Liquidation is no longer an option.

Until next time ...



Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more about Members Voluntary Liquidation, it may be a great idea to give me a call on 01908 774323 and let's see how I can help you.

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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.