Need Accountant - Will HMRC investigate me if my drawings increase significantly?

bris

SeagullFTB said:

Grumpy_chap said:

SeagullFTB said:

capital reserve of around £90,000.
When I started the business, I borrowed some money from a family to get started. £50,000 to be exact. It was a long term, interest free loan with no repayments. However, I now need to pay them back.
could I take a business loan of £50,000 out to repay the loan? I wouldn't get a personal loan this size.

Why do you want to take a business loan of £50k to repay the family loan of £50k?
Why not simply repay the family loan from the £90k reserves, leaving £40k reserves, which is equivalent to around a whole year of business so a suitable operating buffer?
Taking a loan on which you pay interest just to hold that money on deposit not earning interest does not seem logical.

At a practical level, it may be worth talking to the local branch before making the transfer as, if you suddenly make an online transfer of £50k to the account of a private individual, this may look like you are being scammed and the bank may freeze account temporaily.

Unfortunately the 90k capital reserves isn't liquid. Only 10k is. The rest is tied up in debtors and fixed assets. I need the business loan to get some liquid cash to repay the family member.

Thats not what you said in the OP, in fact you made it very clear that you wanted to know if drawing out 80k would attract attention from HMRC.

If your going to make up stories at least remember what you said in the first place.

warby68

Are you sure its HMRC you're worried about or whether the Bank will be concerned if you immediately withdraw its £50k loan to repay another debt? Are you thinking of a Bounce Back Loan as its nice and cheap which makes it a convenient time to repay/replace the family loan?
If its replacing one loan with another that would probably be OK as its really no change other than source of loan and  its terms might be  better for the business but what I suspect is that the loan was made to you personally and it shows in your business as your initial capital injection so taking it out again does look like you are withdrawing capital rather than repaying debt and so your business will suddenly be worth £50k less and have a new £50k loan to repay. It may raise a question.