How Long Should I Keep My Records?
Directors and individuals have a legal responsibility to retain documents and records relevant to their accounting and tax affairs.
- With trading or rental income need to retain their records for five years and ten months after the end of the tax year.
- Otherwise, individuals need to keep their records for twenty-two months after the end of the tax year.
Limited Company Directors
- Need to retain their records for six years from the end of the last accounting period they relate to.
- For example, if your accounting period runs to 31st March 2018, you need to retain your records for that period until at least 1st April 2024.
What about electronic storage?
With the recent advances in technology, it is now possible to store historic information digitally, in the cloud. Making Tax Digital aims to move all returns online, though it will still be necessary to ensure you make your own back-ups.
Moving information to the cloud brings its own issues including data security, damage, corruption, loss, or theft, and paying the ongoing subscription fees to ensure you can access the information at any time in the next six years.
All this needs to be considered very carefully as the current HMRC penalty for failing to produce historic records is up to £3,000 per year missing. You could also be disqualified as a director if you are found to have not met your responsibilities.
What’s the bottom line?
Ensure you keep your accounting records for at least six years. Take back-ups of the information and ensure it is kept securely and encrypted, with subscriptions paid up to date. Equation offer a secure data storage area as part the monthly accounting package. Speak to us about how you can join.