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HMRC internal manual

Enquiry Manual

Recalculating Profits: Private Side - Pattern of Cash Withdrawals

If it is claimed that cash is not taken from the business, but that a cheque or standing order is paid into the private bank account, all personal cash needs will have to be met from the private accounts. You should ask whether any other accounts or methods are used to withdraw cash and what private cash is usually on hand at any time. You should then note down the dates and amounts of cash withdrawals. These can be identified as round sum amounts, often taken from automated cash dispensers.

However many people do not get cash directly from banks at all instead using supermarkets, garages etc. These cash withdrawals will be part of larger transactions paid by debit card and may not be identified on bank statements.

Given what you know of expenditure, does the amount of cash withdrawn seem adequate? Much will depend upon how much routine expenditure is met by cheque or credit card, and whether there are other sources of cash. Even if the actual amount might be adequate, an analysis might show a very irregular pattern of withdrawals, which leaves periods when no cash appears to have been available. Alternatively, there may be no fluctuation in the amounts withdrawn to cover expensive periods like Christmas, holidays etc.