MVL Shareholders Beware

Posted by amandaireland - May 17, 2018 2:57 pm MVL’s – Shareholders beware!

Following HMRC’s decision last year to charge interest on Corporation Tax in a solvent liquidation even if it is paid before it is due, it seems they are clamping down even harder on shareholders.  We understand that HMRC is to be charging an in specie distribution of an overdrawn directors’ loan account as income rather than capital.  The income distribution will cause entrepreneurs’ relief to be lost and result in an increase in tax liability.  It is therefore likely to be significantly more beneficial for directors to repay any overdrawn loan accounts prior to winding up.