Readers’ forum: Muddy waters?

I act for a married couple who have owned a holiday cottage in the Lake District through a limited company for two years. The company previously owned two butchers’ shops that were rented out to a third party for 15 years. The shops were sold and the proceeds less outstanding loans were used to buy the cottage.

The cottage has been rented out as a furnished holiday letting for two years and it fully meets the conditions to qualify as a furnished holiday letting in that it is available for letting for more than 210 days a year with actual lettings exceeding the 105-day threshold that also applies.

My clients own the shares jointly and have asked about the possibility of liquidating the company with a members voluntary liquidation (MVL) and then transferring the property to themselves as a final distribution that qualifies for business asset...