Thank you for taking the time to read my question and I was hoping somebody is able to point me in the right direction.
A director (100% shareholding) had an overdrawn balance for Sep 2019 accounts and the S455 Tax liability that arose remains unpaid to this date. (DLA balance was 70k)
The DLA has become overdrawn further to £105k for Sep 2019 Accounts and S455 tax is due outstanding for Sep 20 Accounts (as well as previous S455 liability to HMRC).
The client is looking to do a MVL where the distributable reserves of the company presently equate to £95k and the MVL has advised they can do a distribution in specie which will offset the DLA and the Director will make the shortfall payment to clear the DLA Balance.
The query which has been raised is does the client first need to pay the S455 tax to clear down the liabilities which are due to HMRC and then subsequently receive refund from HMRC or do HMRC offset the S455 tax liability and the repayment which now falls due. I have tried looking in the HMRC manual but I have not been able to locate this. I will be grateful if somebody is able to point me in the right direction?