Retention of accounting records
As we are well and truly living in the digital age, we are offering up a quick reminder that, regardless of whether your organisations accounting records are kept in a manual or electronic format, they still need to be retained for a specific amount of time.
Limited companies and Limited Liability Partnerships (LLPs) are legally required to retain these records for three years after the date at which the accounts are filed at Companies House (compared to six years for Public Limited Companies (PLCs)). However, UK tax law requires private companies to retain any records that are used to complete the company tax returns for six years from the end of the accounting period to which that return relates. As it is also stipulated that VAT records should be retained for six years, our advice would be to follow this six year rule.
Broadly, accounting records incorporate the following:
- Sales and purchases invoices
- Expense receipts
- Orders and delivery notes
- Bank statements, cheque and paying in book stubs
- Cash books
- Sales, purchases and expenses day books
- Sales, purchases and nominal ledgers
- Supplier statements
- Credit card statements
- VAT records
- PAYE records
- Stock listings
- Fixed asset registers
If HMRC have notified you of a company tax enquiry, the period for which the associated accounting records should be retained for will be extended. Please speak to us as soon as possible if you have received such a notice from HMRC.
Some documentation may have significant importance to an organisation and should therefore be retained on a sensible basis. Loan agreements, contracts, leases, deeds and records of major refurbishment work for example. Company statutory records and registers should be retained whilst the entity is active and for at least three years following formal dissolution.
The cost of retaining records is an important issue. The longer records need to the kept, the more expensive it is for your organisation. Offsite and electronic storage and archiving should be considered. Suitable protection of such information coupled with appropriate access is paramount in making this decision.
For advice on the retention of company records, please contact Lindsay Reed.