Big increase in solvent liquidations for tax planning
We have seen a steady increase in the number of solvent liquidations or Members Voluntary Liquidations (MVLs) in recent months. The number of solvent liquidations nationally has increased dramatically in the last 12 months.
We have seen a steady increase in the number of ‘solvent’ liquidations or Members Voluntary Liquidations (MVL) as the overall number of MVLs nationally has increased dramatically in the last 12 months.
In the 12 months to the end of September 2016, there were a total of 10,576 MVLs across England and Wales compared with 7,571 in the previous year.
Some of the increase can be traced to a change in the tax rules which was introduced in April 2016, which potentially increased the tax burden for some business owners on the sale of their business.
However, four years ago the government put a £25,000 cap on the amount that could be deemed a capital gain. This boosted the popularity of MVLs as a tax efficient means of distributing the assets of solvent companies in certain circumstances. The numbers of MVLs have tripled since 2011-12 when 3,634 companies entered into solvent liquidation.
The rise in the number of MVLs reflects the fact that solvent liquidations can provide a tax efficient way of returning capital to shareholders when a business has run its course and is no longer required. Specialist tax advice is always required to ensure that an MVL is the right advice for the client. We work with accountants, tax advisors and specialist tax lawyers to provide cost efficient liquidations to their clients as part of an exit strategy.
We offer a low cost fixed fee MVL package including fixed cost disbursements, making it easier to analyse the cost and potential benefits of using an MVL for your clients. To find out more, call us today on 0114 285 9500.