The quick answer
There are three costs associated with a Members’ Voluntary Liquidation (or shortened to an “MVL”); the liquidator’s fee, a bond and the statutory advert placed in the London Gazette. Liquidators can agree to fix these fees and costs. The exact cost depends on the financial situation of the business, as well as the value and category of assets held.
An MVL is a solvent liquidation used to close a limited company that has assets. It is a tax efficient way of turning company reserves (such as cash at the bank) into capital gains and thereby paying just 10% tax on them.
In more detail
The costs of Members Voluntary Liquidation
A Liquidator should be able to quote you a fixed fee to liquidate your company using an MVL. It will be based on:
- The value and complexity of the assets held.
- How much is unpaid and owed to creditors.
- How many shareholders there are to pay out.
The simpler you can make the company before instructing the liquidator the better. It is usually best to have sold all of the assets and have them in a bank account as well as having paid off all the creditors.
It is obvious really – the simpler you can make it, the less the liquidator will charge. There is no need to prepare the annual accounts from the last year end to the date of liquidation (but the tax on any profit needs to be paid).
We charge a fixed fee to act as liquidator of your limited company.
The fees are based on the assets:
Assets up to £100,000 we charge £1,500.
Assets up to £250,000 this goes to £2,000.
Assets up to £500,000 this goes to £2,500.
Assets up to £1,000,000 this goes to £3,000.
Above this level is by individual quote.
If all liabilities cannot be paid in full such as tax bills or perhaps redundancy costs then the usual method of closure is a Creditors Voluntary Liquidation, also known as a CVL. The cost varies depending on the size of the company but typically the cost is £5,000 plus VAT to put a company into liquidation.
If there are not enough funds left to pay the costs of a liquidation then the company can be left in a very difficult situation. It can still be pursued by creditors who are demanding payment or Companies House who are chasing to have annual documents filed. VAT and PAYE returns are still due.
In this case it may be worth the directors paying the funds personally to have the company liquidated.
Statutory advertising in a members voluntary liquidation
A liquidator is under a statutory duty to file papers with Companies House (who make no charge) and send copies of resolutions and notices to the London Gazette.
The London Gazette charge for this statutory service which is typically £325 per case. It includes filing the resolution showing the date the liquidation has happened, who the liquidator is and how anyone should make a claim.
A notice will also be filed when the company liquidation has come to an end.
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If you have any questions about the MVL process please get in touch with me.