If your company is liable for Corporation Tax you must keep and retain adequate business and accounting records.
You have to do this even if your company is not currently trading or no longer trading.
These records include:
- a record of your company’s assets; the purchase and sale of these assets
- a record of your company’s liabilities
- a record of your company’s income and expenditure
- details of any stock on hand at the end of your financial year
In detail, these are:
- annual accounts: your profit and loss statement and balance sheet
- bank statements and paying-in slips & cheque book stubbs
- a cash book and any other account books you keep
- a petty cash book
- purchases and sales day books/ purchase & sales ledgers
- invoices and any record of daily takings such as till rolls
- order records and delivery notes
- other relevant business correspondence
The business records must:
- be complete and up to date
- allow you to work out correctly the Corporation Tax you owe to HMRC, or can reclaim from HMRC
- allow you to file an accurate Company Tax Return
- be easily accessible if HMRC asks to see them during an enquiry into your Corporation Tax affairs
You must normally retain your company ‘s business and accounting records for at least 6 years from the end of your Corporation Tax accounting period.
You don’t need to keep the vast majority of your records in their original form. You can keep a copy of most of them in an alternative format. For example:
- scanned PDF
- files saved on a CD-ROM
- files saved on an optical imaging system
Whatever alternative format you choose, your records must be legible and you must be able to produce them in a readable format if you need to.
But there are certain records that you must keep in their original form.
- dividend vouchers
- bank interest certificates
- Construction Industry Scheme (CIS) vouchers.
More Than 6 Years:
In some circumstances, your company may need to keep records for longer than the normal six years from the end of your Corporation Tax accounting period.
- Business records that cover more than one accounting period
- a loan agreement where you claim your interest payments as a deduction over several Corporation Tax accounting periods
- an insurance premium that straddles two Corporation Tax accounting periods
2.Records for capital expenditure – assets kept for more than six years
Your company must retain records of capital expenditure from the date any asset is purchased until at least six years after the date it’s sold, transferred or otherwise disposed of. This may be more than six years from the date you acquired the asset.
If your company does not keep adequate records for Corporation Tax purposes, or does not retain records for long enough, you may be charged a penalty of up to £3,000.