How Long Do You Need To Keep Corporate Tax Records?

As every business knows, it’s important to keep company records as part of a business practice and liability. How long you keep these records will depend on the type of business you run and the type of records you keep.

What Records Should Your Business Keep?

Your business should keep company, financial and accounting records for at least 6 months from the end of the last financial year. In general, you should retain any records that you received that are needed to complete your Company Tax Returns or Self Assessment Tax Returns. The type of records that you keep depends on the type of business that you have – read on for more information.

How Long to Keep Self Employed Records

Firstly, let’s look at the records that self employed sole traders should keep:

  • Sales and income
  • Self-employed expenses
  • VAT records (if you’re VAT registered)
  • PAYE records if you have employees
  • Details of personal income

You need to keep your records for a minimum of 5 years after the 31st January deadline of the relevant tax year. This includes all sales documentation, business expenses, personal income, VAT and PAYE information (if relevant), purchase invoices and money paid into and withdrawn from your business. What’s more, if you have received a government grant you will need to retain this documentation for 4 years from the date of receiving the grant.

More information on self employed record keeping from here.

How Long to Keep Limited Company Records

Limited Company directors have more responsibility with record keeping due to the complex legal structure. As a minimum, you need to keep your records for 6 years from the end of the last company year that they relate to.

Not only do you need to keep financial records, but you will also need to keep more records, such as:

  • Directors, shareholders and company secretaries
  • Loans and mortgages against the company’s assets
  • Shareholder votes
  • Debentures
  • Indemnities
  • Transactions when people buy shares
  • Assets owned
  • Stock the company owns at the end of the financial year
  • Tax reliefs and reductions

It is important to note that if you don’t keep your records in the same place as your registered address, you must inform Companies House.

There are a few circumstances where you would need to keep records for longer than the minimum 6 years, if:

  • Records show a transaction covering more than one of the company’s accounting periods
  • The company has bought something that should last more than six years such as machinery
  • Minutes of board meetings
  • You submitted the company tax return late
  • HMRC is investigating your company tax return

More information on self employed record keeping from here.

What About PAYE Records?

PAYE records relate to tax codes, payments to employees, payments to HMRC, details of employee leave and sickness, NICs and taxable benefits & expenses. You must keep PAYE records for 3 years from the end of the tax year to which they relate.

Record Keeping Penalties

If your business fails to keep the correct records, you could be fined up to £3,000 or you may be disqualified as a company director. If any records are lost, destroyed or stolen you must inform HMRC – who may request that you recreate the documents.

Record Keeping Support

It can be difficult to keep track of your records, and, therefore, we recommend that you seek expert advice to help your business avoid fines and penalties. We are specialist accountants who can help your business stay compliant and increase efficiency. Contact our experts today to see how we can help.