Liquidating a business
When you are considering liquidating a company due to financial problems, take the time to compare all of the available options.
There are other courses of action that may be available to companies in financial difficulty, so consider exploring these before you decide to close the company via liquidation.
An MVL may be considered if you have a solvent company that you want to close as part of your business plan and reduce taxation.
Your company may have outlived its purpose and be heading towards a natural end of trading, or you may wish to extract the value of cash and assets from the company in a tax efficient manner.
For an MVL, the directors must sign a declaration stating that there are no remaining creditors.
One example of a creditor could be tax arrears with HMRC for VAT or PAYE, so this need to be considered before going into liquidation.
This procedure is often used to wind up your business as a last resort by disgruntled creditors after failed negotiations over missed payments.
The role of a liquidator encompasses various responsibilities which include, but are not limited to: The most important thing for directors to realise when liquidating a company is that their responsibilities undergo a marked shift if the company becomes insolvent.
Where this is not the case, the director becomes open to charges of Liquidation and ‘winding-up’ are often used in the same context.
Both of these terms refer to liquidating a limited company; either because the company has cash-flow problems, or because there are cash and assets, such as property, that the directors and shareholders would like to extract.
are usually initiated by a creditor that is looking to force a company into closure via a court order application.
The process is usually instigated with a winding up petition and once it is heard at court, it can become a winding up order.