London Company Liquidation

A Guide to the Different Types of Company Liquidation

Are you looking for insolvency companies in London to help you either bring an insolvent company to a close, or wind up a solvent company so you can benefit from Business Asset Disposal Relief? As licensed insolvency practitioners, Insolvency Online can assist with both. Read on to understand the differences, and the processes involved with each.

Solvent and Insolvent Voluntary Liquidation: the Differences Explained

There are various reasons why you may wish to engage the services of company liquidation specialists. London wide, unprofitable companies may be seeking to bring things to an end, so that the directors can have closure and move on.

On the other hand, the directors of solvent companies in London may be looking to wind the business up so that they can take advantage of Business Asset Disposal Relief, formerly known as Entrepreneur’s Relief.

So, which voluntary company liquidation process is right for your London business? And what is the difference between voluntary company liquidation, and compulsory liquidation?

Compulsory vs voluntary company liquidation

Compulsory liquidation is a process forced upon an insolvent company by its creditors who are seeking ways to get paid. Instead of the directors voluntarily taking action to wind the company up and open up potential for assets to be realised so that creditors can be paid, as would be the case with a voluntary insolvent liquidation, in the case of a compulsory liquidation, directors have no choice in the matter.

Solvent voluntary company liquidation is something completely different. This is the process by which solvent companies can choose to cease to trade formally, whilst extracting the proceeds from the business in a tax-efficient manner courtesy of Business Asset Disposal Relief.

Summing up, with compulsory company liquidation, directors have no choice but to enter into the process. However, with voluntary company liquidation, solvent or insolvent, it is the directors that make the decision to start the process.

Now let’s look at both solvent and insolvent company liquidation in more detail, so that you can be clear on which London liquidation services you need, and how they work.

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London Company Liquidation

Creditors’ Voluntary Liquidation (CVL)

A Creditors’ Voluntary Liquidation (CVL) is a formal insolvency procedure. It involves the directors of an insolvent company volunteering to wind it up. More often than not, a company will enter into a CVL once they have tried other ways of bringing the business back into profit without success.

For insolvent companies in London, company liquidation via a CVL is often the best way forward when it has become impossible to pay creditors. A CVL can only be entered into when a company can be deemed officially insolvent. That means it is either unable to settle its debts when they become due, or when it has a negative balance sheet.

When entering into a CVL, it is necessary to appoint official liquidators. In London, companies will find that because this is a voluntary process, there is no need for court or official receiver intervention, so it is quicker than a compulsory liquidation. It is also beneficial to directors, because it demonstrates that they have taken the appropriate steps to resolve matters, making it less likely for them to be held personally liable for the company’s debts.

Learn more in detail about Creditors’ Voluntary Liquidation (CVL)…

Members’ Voluntary Liquidation (MVL)

A Members’ Voluntary Liquidation (MVL) is used by solvent companies to allow directors to extract funds tax-efficiently via Business Asset Disposal Relief (BADR) before closing their business.

BADR, formerly known as Entrepreneur’s Relief, reduces the rate of Capital Gains Tax due on profits of up to £1 million when a business is shut down or sold. The savings are significant, seeing the tax liability come down from the highest rate of 20%, to just 10%.

Whether you are closing or selling all or part of your business, or are selling shares or securities, there are various criteria that need to be met in order to be eligible for BADR. What’s more, once the business has ceased trading, it will need to go through an MVL.

MVLs must be carried out by company liquidation specialists. London wide, Insolvency Online, in the capacity of licensed insolvency practitioner, acts as official company liquidator, ensuring capital distributions are made in a timely manner, and that tax clearance is obtained from HMRC.

Learn more in detail about Business Asset Disposal Relief and Members’ Voluntary Liquidation (MVL)…

London Company Liquidation
London Company Liquidation

How can Insolvency Online help with London company liquidation?

Insolvency Online is a trusted firm of corporate recovery specialists and licensed insolvency practitioners. Based in the heart of London, company liquidation is one of our areas of expertise, and we have a proven track record in navigating businesses out of financial distress.

We are widely renowned for guiding directors through all types of company liquidation, and our company liquidation specialists in London make it their business to find the right solution for each individual business they represent.

If you are seeking advice on liquidating your business, whether it’s solvent or insolvent, and you are looking for respected insolvency companies in London to guide you through the process, we welcome you to get in touch.

You may also be interested in…

Insolvency Online offers a solution-finding approach to all types of London company liquidation, business rescue, personal financial difficulties, financial restructuring and recovery matters. If we can assist you in any way, please do not hesitate to get in touch.

Administration

Company Voluntary Arrangement

Creditors’  Voluntary Liquidation

Members Voluntary Liquidation

Individual Voluntary Arrangement

ER

Entrepreneurs’ Relief

020 8549 9915

enquiries@insolvency-online.co.uk

Unit 2 Spinnaker Court, 1C Becketts Place, Hampton Wick, Kingston upon Thames KT1 4EQ

Frequently Asked Questions

Who is responsible for the fees in a Creditors’ Voluntary Liquidation?

As director, you are responsible for covering the voluntary company liquidation fees. With a CVL, in a lot of cases, the fees can be deducted from the company’s assets. Also in these situations, as many directors are classed as employees of the company, they will therefore be entitled to a redundancy payment. Director redundancy works mostly in the same way as it does for employees, and can be very helpful for a director who is struggling financially due to their company becoming insolvent.

How do I claim Business Asset Disposal Relief (BADR)?

You can claim BADR either through your Self-Assessment tax return, or by completing Section 1 of the Business Asset Disposal Relief helpsheet. The online tax return must be submitted by midnight on 31 January in the year following the tax year in question. You will also need to take your company through a Members’ Voluntary Liquidation (MVL) process, which must be carried out by company liquidation specialists. London based Insolvency Online is licensed to act in such a capacity.

What are the alternatives to London company liquidation?

Once you appoint an insolvency practitioner, they will assess your individual situation and put forward a range of options. These could include a business rescue plan, restructuring, or measures such as Administration, or a Company Voluntary Arrangement which are designed to protect your business from further creditor action until such times as you have turned the business around,

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Get in touch today to arrange a free, confidential consultation to discover how we can assist you and your company in navigating its way out of financial difficulty. Whether you wish to rescue the business, or simply want to know more about Essex and London liquidation procedures, our experts are on hand to help.