How long do you need to keep corporate tax records in the UK?

Maintaining appropriate tax records is an important responsibility for businesses. These records not only support the preparation of accurate tax returns, but also enable businesses to respond effectively to enquiries from HMRC.

Failure to keep adequate records can result in significant fines from HMRC, and in some cases, may result in the company directors becoming disqualified, if there is a failure to keep accounting records.

What tax records do you need to keep?

The type of records a business is required to keep depends if the business is a sole trader or a limited company.

Tax records for sole traders

Sole Traders (or those self-employed) are required to keep the following tax records:

• All sales and income.
• All business expenses.
• VAT records if you’re registered for VAT.
• PAYE records if you employ people.
• Records about your personal income.
• Your grants, if you claimed through the Self-Employment Income Support Scheme.

While you do not need to send your records to HMRC when you submit your tax return, it is important to keep a copy of these records so you can show them as proof if requested by HMRC.

Tax records for limited companies

Limited companies are required to keep the following non-financial and financial records for corporation tax purposes.

Non-financial records

• Names of directors, shareholders, and company secretaries.
• The result of any shareholder votes and resolutions.
• Promises for repayments of loans (specific date and who this is payable to- debentures).
• Promises for payments if something goes wrong (indemnities).
• When someone buys shares in the company.
• Loans or mortgages secured against the company’s assets.
• The minutes of board meetings and resolutions.
• Company’s statutory books.

Financial records

• All money received and spent by the company.
• Details of assets owned by the company.
• Debts the company owes or is owed.
• Stock the company owns at the end of the financial year.
• Stock takings used to work out stock figures.
• All goods brought and sold.
• Who you bought and sold them to (unless for a retail business).

Records of ‘People with significant control’ must also be kept. These are people who:

• Have more than 25% shares or voting rights within the company.
• Can appoint or remove a majority of directors.
• Can influence or control company.

Limited companies still need to keep a record even if there are no people with significant control.

What other business records do you need to keep?

You must also keep any other financial records, information, and calculations you need to prepare and file your annual accounts and company tax return (including, receipts, petty cash books, orders, delivery notes, invoices, till rolls, contracts, bank statements etc.)

If you are an employer it is also important to keep a record of the following information:

• PAYE records kept for three years from the end of the tax year.
• Notice of tax codes.
• Payments to employees.
• Details of employee sickness and leave.
• Any taxable expense or benefits.

The consequences of bad record-keeping can be significant for your company. You can be fined £3,000 by HMRC or disqualified as a company director if you do not keep accounting records.

How long do you need to keep Tax records?

You must keep records about the company itself, as well as financial and accounting records, for at least six years from the end of the last financial year. You may need to keep some records for longer under certain circumstances. These include:

• Transactions that cover more than one of the company’s accounting periods.
• Your company has brought something that it expects to last more than six years (machinery or equipment).
• You filled your CT return late.
• HMRC has started a compliance check into your company tax return.

FAQs

Can I access my tax records online?

Yes – You can access your tax records online via HMRC online portal. If you have an agent or accountant, they should have online access to your HMRC portal.

What happens if you lose your tax records?

If your records are lost, stolen, or destroyed you must do your best to recreate them, tell your corporation tax office straight away, and include this information in your company tax return.

How should I dispose of old tax records?

Provided you are no longer required to keep any tax records (i.e. after six years from the end of the accounting period). The records should be securely disposed of:

• Paper records should be shredded to ensure documents are unreadable.
• Electronic records should be deleted securely using software designed to permanently erase the data.    

How can Gerald Edelman help?

Due to the importance of managing company records properly, seeking expert advice may help your company avoid fines and penalties.

For the corporate tax experts at Gerald Edelman, good practice for efficient record-keeping includes:

• Keeping personal and company bank accounts separate so you know which transactions are related to your company.
• Reconciling accounts often to ensure they match up to your financial statements.
• Creating and maintaining an efficient filing system.
• Records can be kept both digitally and physically, many companies choose to keep them digitally as this is more space-efficient.

For more information and advice on corporate record-keeping, speak to our tax team today. Or, to learn more, dive into our related article: How is corporation tax calculated?