How It Works

Prior to a Liquidator being appointed:

• – Final accounts must be completed to the date of cessation.
• – Final PAYE and VAT returns must be completed and any final corporation tax liability must be calculated by your accountant.
• – You will need to instruct a licensed insolvency practitioner (IP), who will guide you through the next stages and help you place your company in an MVL.
• – It is advisable to pay all outstanding tax liabilities to avoid the statutory interest charge of 8% p/a.

Day

Board of Directors Meeting & Shareholders Meeting ^(N1/N2*)

• Prior to the Board of Directors’ Meeting, a Statutory Declaration of Solvency is sworn. This is a statement confirming that the Company will pay all debts (plus statutory interest and costs) in full within 12 months together with a statement of assets and liabilities.
• At the Board of Directors’ Meeting, resolutions are passed to start the MVL procedure.
• At the Shareholders Meeting, the Liquidator is appointed and the Company is placed into Liquidation.

Day

First Distribution Payment ^(N3*)

• The Liquidator makes payment of an interim distribution. This will be circa 75-100% of the company’s net assets held (less liquidation costs and anticipated creditors’ claims), but the exact amount is dependent on the case.

Notice of Appointment Sent & Filed

• Notice of appointment must be sent to Registrar of Companies and to creditors within 14 days and 28 days respectively, but we look to complete within the first week. Creditors are given at least 21 days to claim any amounts owed.
• Notice of appointment must be advertised in the Gazette within 14 days, but we look to complete this within the first week.
• The Declaration of Solvency must be filed at Registrar of Companies within 15 days, but again, we aim to complete this within the first week.

Month

Liquidator Agrees Any Creditors Claims & Seeks Tax Clearance

• After the 21 day period for creditors to submit their claims, the Liquidator will look to agree and pay them. The Liquidator has 2 months to do so, however he will typically undertake this in short order, subject to receipt of any complex claims being received. Statutory interest at 8% pa is also payable. The Liquidator seeks confirmation from HMRC that there are no outstanding tax matters. This can take up to around 6 months to obtain.

Month

Interim Distribution Payment ^(N3*)

• In the event that the initial capital distribution is up to 80% then once any creditors have been paid in full and the only outstanding matter is receipt of tax clearance, a further payment of 50% of the company’s assets being held are distributed to shareholders.

Month

Interim Distribution Payment ^(N3*)

• Once confirmation has been obtained from HMRC that there are no outstanding tax matters, any remaining company assets being held will be distributed to the shareholders.(N4)
• Once any remaining funds have been distributed, a proposed final account and report are issued to members.
• 8 weeks later, a final copy is sent to the members and to the Registrar of Companies and the Liquidator is released from office. This 8-week period can be shortened, if all members give consent in writing.
• We are then able to close the liquidation and the company is dissolved 3 months after.