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Personal bank statements again!


Whilst been discussed many a time on here I'd just like to run our situation through with others for opinions, feedback, thoughts, arguments etc.

We're a small accountancy practise (two man pship) and an enquiry is being made into our partnership return (10/11), all records have been provided by hand to the inspector per his detailed request, which match the figures on the return. Our records are, in my opinion at least, perfect, as should any accountancy practice be.

Now we've received a letter back stating that because we didn't bank the cash income declared he wants to see our personal bank statements, credit card etc in our own names. In response I've replied cash wasnt banked due to bank charges plus it was used to buy business expenses (of which a full analysis was provided with supporting invoices). Also told the inspector he's being unreasonable and that there are no rules that stipulate cash income must be banked, as long as its declared.

Have yet to hear back but can assure we will fight tooth and nail with HMRC on this one for the general privacy and rights of decent tax payers.

Anyone who can share similar experiences be appreciated.



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24th Dec 2011 22:31


HMRC can only request private statements when they have demonstrated a weakness in record keeping or their is a deficiency of cash, lack of drawings etc.

They have a habit of asking for private statements without following their own guidelines in the enquiry manual.

Do not reject the request, rather ask for them to justify their approach. When in cases like this they request private statements they have to demonstrate a particular weakness and a general answer is not acceptable.


Look into the enquiry manual on HMRC website and there is a section which states exactly this.


Good luck.

Thanks (1)
26th Dec 2011 13:35

Things have moved on

since HMRC could in effect do what they liked and the Commissioners would support them.

Enquiry Inspectors are now required to justify their approach and share their "risk assessment" with you. Unfortunately, most of them just stick to what they have always done.

You need to be proactive and drive along this enquiry yourselves by knowing more about the approach that the Inspector is required to take than this one apparently does. Also, never be afraid to go to the FTT if needs be: it is there to be used and seems to be refreshingly independent of the views of HMRC.

And Good Luck!

Thanks (1)
By Locutus
28th Dec 2011 20:54

Agree with above

Since you say you have accounted for all of the cash received (presumably there wasn't much of this anyway) then I cannot see how the Inspector can justify extending the information request to all of your personal bank statements.  What evidence does he / she have to suspect your records are inadequate?

There is an article in a taxation magazine covering this sort of unreasonable request.  I will send you a link by personal message, as putting the link on here may by in breach of copyright.

If this happened to me then I think I would fight the request on principle - if necessary taking it to a Tax Tribunal hearing.

Should the Inspector wish to see your personal bank statements then they have the power to do this by launching an enquiry into your personal tax returns.  However, my view is that if the Inspector wants this information then he / she needs to go through the proper process and raise enquiries into the partners' personal returns.

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