Automotive

A Members’ Voluntary Liquidation (MVL) is a formal liquidation procedure that facilitates the tax-efficient closure of solvent businesses. If you want to close an automotive business with retained profits, an MVL can facilitate this seamlessly and tax-efficiently.  An MVL is a valuable exit tool that allows you to quickly release cash under the guidance of a licensed insolvency practitioner.

A Members’ Voluntary Liquidation is a suitable option for solvent automotive businesses that are no longer required. This may be due to retirement, supply chain challenges, rising labour costs, material shortages, adverse market conditions or as you are pursuing a new venture. An MVL allows you to dispose of a solvent business and extract company profits in a highly efficient manner due to the tax treatment and available tax reliefs.

A Members’ Voluntary Liquidation is suitable for solvent companies, therefore, the company must be able to settle company liabilities within 12 months, including rolling credit with suppliers used to purchase stock and any lending products taken out on behalf of the automotive business, such as asset finance.

The company must have retained profits over £25,000 for the liquidation procedure to be cost-effective. If the company falls short of this requirement, an alternative route may be better suited to maximise returns.

Company strike off, or dissolution is suitable for companies with no liabilities, assets and retained profits. While this route is often quicker and cheaper, businesses with substantial retained profits must seek a formal liquidation procedure, such as a Members’ Voluntary Liquidation to protect their financial position.

The typical timeline for closing an automotive business includes:

Appoint licensed insolvency practitioner – Your appointed insolvency practitioner will handle the Members’ Voluntary Liquidation and act as company liquidator.

Sign declaration of solvency – The document authenticates the solvent state of the business and must be signed as part of a Members’ Voluntary Liquidation.

Liquidation process commences – The relevant parties will be notified, and the appropriate documents prepared and submitted. The liquidation will be advertised in the Gazette to invite creditors to submit their claims.

Company profits distributed – Once creditor claims are settled (if any), capital distributions are made. The company will be dissolved and removed from the Companies House register.

If you want to close your automotive business, get in touch with Solvent Liquidations specialist to discuss how to extract company profits safely and close your business.