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TAAR: targeted anti-avoidance rule.
https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm36305
No published limits on what is reasonable. HMRC interprets the rules as it sees fit, not worth fucking with them. Of course they only go after small businesses, Berkshire H would no doubt cut a sweet deal with them if it were here.
As TW says, it only really matters when you apply for the tax relief after closure, they'd look at it then. I don't expect they look at it as a matter of routine. This scenario may be irrelevant for the person who first raised it, but just mentioned it as I've recently become aware of it.
frank9755
ChasnotRobert
Interesting. Are HMRC in a position to advise on working capital requirements?
I'd have thought not, maybe it depends on the scale of the cash pile.
A while back my father fell out with his business bank and as result moved to working capital rather than borrowing to run his firm (by minimising dividends and other cash outflows). He's not mentioned HMRC not liking it.
Edit: also has anyone told Berkshire Hathaway about this? :)