I know this one has came up before but I would like some advice..
We have a customer who has taken drawings from his Capital account. These drawings have been deducted from the total of last years and this years profits.
I know the guidance manual advises that they should be ignored if they have not been deducted from the Gross Profit, however we have added them back in as income and this has now been challenged.
Is it right to say that because the drawings have came from money coming into the business e.g. (net profit) it is right to add them back in as income?
Any legal standing to back this up as anything I have looked at is a bit vague?
Thanks in advance