HMRC has very recently updated its corporation tax manual with useful guidance on the tax implications of directors’ loan accounts and distributions in Members’ Voluntary Liquidations (“MVLs”).

We have published the link to this guidance on our website.

HMRC have confirmed in its manual that the distribution in specie of the loan account does constitute repayment and that the distribution in specie will be taxed as capital rather than income.

HMRC have provided a worked example but we would recommend that you review the application of this updated guidance on a client by client basis.

https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm61559