MVL question

[matlob]

Hi

Looking for some advice

I have a two director company with no other emplyess and we are looking to do an MVL to close it down

I have a problem in that we want to do this before april as the % increases to 18% I believe, but I have a savings account for the business that is locked with no withdrawals until the end of April 2026

Is it possible to compete the MVL but retain funds in the business until they are then available?

So...
Complete MVL and complete everything before April and submit as 14% interest to pay.
Wait until the end of April for the saving account to complete and withdraw funds

I'm guessing this is not possible but the savings account are saying the money can't be released early.

Also, how long does an MVL usually take?

Many thanks

 

[Elliot Green]

The question is whether it is legally possible to distribute in specie the rights to the savings account, instead of waiting for the account to enable withdrawals. I have no idea. You might want to speak to a lawyer on such matters.

There's no particular time limit on MVLs. Every case depends on its own facts but a simple case can potentially be done and dusted well within 12 months.

 

[Daybooks]

The question is whether it is legally possible to distribute in specie the rights to the savings account, instead of waiting for the account to enable withdrawals. I have no idea. You might want to speak to a lawyer on such matters.

There's no particular time limit on MVLs. Every case depends on its own facts but a simple case can potentially be done and dusted well within 12 months.

Presume percentage is referring to the Business Asset Disposals Relief.

Could you consider staged distributions or the beneficiaries to pay sufficient monies in to cover the expected interest payments such that the Insolvency Practitioners are not at risk?

Does your twelve months factor in the need to consistently badger/chase/complain in order to get the IP to do anything as they seem financially incentivised to take as long as possible?

 

[Elliot Green]

Presume percentage is referring to the Business Asset Disposals Relief.

Could you consider staged distributions or the beneficiaries to pay sufficient monies in to cover the expected interest payments such that the Insolvency Practitioners are not at risk?

Does your twelve months factor in the need to consistently badger/chase/complain in order to get the IP to do anything as they seem financially incentivised to take as long as possible?

An MVL, may for many SMEs be confined to a simple cash distribution or distribution in specie and an IP's fees *may* be a fixed fee. You would have thought in such instances an IP might wish to distribute and close with reasonable alacrity, subject to regulatory and statutory considerations.

There are issues going through at the moment following a recent court decision (NOAL SCSP & Ors v Novalpina Capital LLP & Ors [2025] EWHC 1392 (Ch)) that is understood to be subject to appeal which may cast a shadow over some MVLs. Complications *may* arise over the 12 month payment of creditor position, culminating in the need perhaps for some MVLs to go the insolvency route instead.

However, the desire of members to close a company with haste may in general terms for any MVL case, have to be tempered due to a range of considerations such an pre liquidation unfiled tax returns that may warrant awaiting HMRC recognition, notwithstanding that it no longer affords formal clearance. Ultimately, once the case goes into liquidation, the members neither control the speed of the process and nor should they. If the members want to retain control of a limited company through winding up, then they are perfectly at liberty to do so through deployment of the voluntary strike off procedure but should perhaps be warned that in doing so they could conceivably sacrifice certain *potential* tax advantages that MVL *might* enable.

 

[numbersrule]

My understanding is that when you initiate closure with companies house, all bank accounts are closed.

After that you would have to restore the company to get your bank account back.

So, is the 4% saving by going early worth more than the value of the unbreakable deposit?

If the unbreakable deposit is large, then might the interest on the deposit be worth more than the 4% increase in Tax?

 

[Daybooks]

An MVL, may for many SMEs be confined to a simple cash distribution or distribution in specie and an IP's fees *may* be a fixed fee. You would have thought in such instances an IP might wish to distribute and close with reasonable alacrity, subject to regulatory and statutory considerations.

There are issues going through at the moment following a recent court decision (NOAL SCSP & Ors v Novalpina Capital LLP & Ors [2025] EWHC 1392 (Ch)) that is understood to be subject to appeal which may cast a shadow over some MVLs. Complications *may* arise over the 12 month payment of creditor position, culminating in the need perhaps for some MVLs to go the insolvency route instead.

However, the desire of members to close a company with haste may in general terms for any MVL case, have to be tempered due to a range of considerations such an pre liquidation unfiled tax returns that may warrant awaiting HMRC recognition, notwithstanding that it no longer affords formal clearance. Ultimately, once the case goes into liquidation, the members neither control the speed of the process and nor should they. If the members want to retain control of a limited company through winding up, then they are perfectly at liberty to do so through deployment of the voluntary strike off procedure but should perhaps be warned that in doing so they could conceivably sacrifice certain *potential* tax advantages that MVL *might* enable.

Presumably the crux of the issue in the case you mention is establishing that the balance sheet liability is indeed supported by the creditor. Sounds like a schoolboy error on their part.

Do IP’s have their own definition of ‘fixed price’?

 

[matlob]

Thanks all

All, I think to make things simpler I will just leave the money in the business for now

I wanted to extract the money to buy a property but I think getting a mortgage will be more cost effective in terms of interest payments over the withdrawal costs.

Can I leave a business as trading but do very little or nothing in terms of work/income but still draw a salary and divs each year to deplete the money within the business?

 

[Elliot Green]

Presumably the crux of the issue in the case you mention is establishing that the balance sheet liability is indeed supported by the creditor. Sounds like a schoolboy error on their part.

Do IP’s have their own definition of ‘fixed price’?

A fixed fee shouldn't be ambiguous.

 

[Lisa Thomas]

Yes, you can put the company into MVL before the fixed term ends on the bank account. I believe we could also do a 'distribution in specie' prior to the April increases kicking in, enabling you to claim BADR on the distribution, assuming you fit the criteria etc.

 

[eteb3]

we could also do a 'distribution in specie' prior to the April increases kicking in, enabling you to claim BADR on the distribution, assuming you fit the criteria etc.

The difficulty with the locked account is that the contents and the right to repayment belong to the company. The company is prevented by the terms of the account from accessing the money. Unless the bank allows the account to be transferred into the names of the members, I don’t see that the right to repayment is a specie thing that could be distributed.

A theoretical way round could be for the company to distribute the contents of the account beneficially by declaring itself trustee for the members. Trust property doesn’t go as bona vacantia, so the account could in theory remain open post dissolution. The members would then appoint a new trustee.

But it is probably against the terms of the account to use it for trust funds, and besides, the paracetamol and yoga fees needed while corresponding with the bank to explain the situation will probably outweigh any savings.