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Drawings spiked - HMRC attention

If drawings spike suddenly in a year will HMRC wonder why

Didn't find your answer?

2017/2018
Assets £150k
Liabilities £90k
Opening Cap £40k
Cap Intro £0
Drawings £70k
Profit £90k
Closing Cap £60k

2018/2019
Assets £155k
Liabilities £90k
Opening Cap £60k
Cap Intro £0
Drawings £75k
Profit £80k
Closing Cap £65k

2019/2020
Assets £140k
Liabilities £110k
Opening Cap £65k
Cap Intro £0
Drawings £120k
Profit £85k
Closing Cap £30k

Always positive capital but I took far more drawings last year. No particular reason, just lived the high life for a while. Any reason for HMRC to be interested? Doing my own tax return and hoping I'm worried about nothing.

Replies (11)

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RLI
By lionofludesch
15th Oct 2020 20:57

Doubt it.

Will you be able to deal with an enquiry? If there is one........

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By Lee11_1989
15th Oct 2020 18:53

You don't have to send a balance sheet. Although it could be questioned if it was suddenly omitted.

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Replying to Lee11_1989:
RLI
By lionofludesch
15th Oct 2020 19:01

Quote:
Although it could be questioned if it was suddenly omitted.

Just my thought. Could be a bigger, redder flag.

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Red Leader
By Red Leader
15th Oct 2020 20:35

Stop submitting the balance sheet.

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Replying to Red Leader:
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By Tax Dragon
16th Oct 2020 08:00

HMRC is fully entitled to see the figures and if you're using the full form it asks for you to give them if you have them. The OP has them and there is zero reason not to supply them.

In case you've forgotten, tax is based on profit, not drawings - see Matrix.

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By Youareatit
15th Oct 2020 22:41

Quote:

2017/2018
Assets £150k
Liabilities £90k
Opening Cap £40k
Cap Intro £0
Drawings £70k
Profit £90k
Closing Cap £60k

2018/2019
Assets £155k
Liabilities £90k
Opening Cap £60k
Cap Intro £0
Drawings £75k
Profit £80k
Closing Cap £65k

2019/2020
Assets £140k
Liabilities £110k
Opening Cap £65k
Cap Intro £0
Drawings £120k
Profit £85k
Closing Cap £30k

Always positive capital but I took far more drawings last year. No particular reason, just lived the high life for a while. Any reason for HMRC to be interested? Doing my own tax return and hoping I'm worried about nothing.

Yes. Yes. You should worry.

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My photo
By Matrix
16th Oct 2020 06:37

I don’t understand, what is the issue here? If your have paid tax on your profits then you can freely draw. Drawings are not taken into account.

If you are concerned your tax is incorrect or don’t want to deal with HMRC directly, then engage a professional.

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By bernard michael
16th Oct 2020 09:17

2019/2020
Assets £140k
Liabilities £110k
Opening Cap £65k
Cap Intro £0
Drawings £120k
Profit £85k
Closing Cap £30k

(140-110+85+65-120)
I make the closing Capital £60K but then I never was very good at maths that's why I became an accountant

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Replying to bernard michael:
Hallerud at Easter
By DJKL
16th Oct 2020 09:28

Bernard, you are mixing up the signs on your debits and credits, I make your sum zero as you have added together all the parts of both sides, in effect squared the TB.

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Replying to DJKL:
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By bernard michael
16th Oct 2020 09:35

Quote:

Bernard, you are mixing up the signs on your debits and credits, I make your sum zero as you have added together all the parts of both sides, in effect squared the TB.

I wondered if anyone would spot my error. I checked it and found out the problem. I told you I was bad at maths

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By whitevanman
16th Oct 2020 09:35

Many years ago, when a return / accounts were filed with HMRC, a carbon-based lifeform would actually look at them.
If we assume that no longer happens, when and how do you think it will be noticed let alone matter?

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