HMRC can ask to see the records behind a tax return for years after you send it, so the law sets how long you keep them. The period depends on whether you are a sole trader or run a limited company.
Sole traders
Keep your business records for at least 5 years after the 31 January online filing deadline for the tax year they belong to.
If you send a return more than 4 years after its deadline, keep the records for 15 months after you send it. If records are lost and cannot be replaced, gov.uk says to do your best to provide figures, and tell HMRC whether they are estimated or provisional.
Limited companies
A company keeps its records for 6 years from the end of the last company financial year they relate to, or longer if:
- they show a transaction that covers more than one of the company’s accounting periods
- the company has bought something it expects to last more than 6 years, such as equipment or machinery
- the Company Tax Return was sent late
- HMRC has started a compliance check into the Company Tax Return
HMRC can fine a company £3,000, or disqualify its directors, if it does not keep accounting records.
What to keep
For a sole trader, gov.uk’s list of proof includes receipts for goods and stock, bank statements and chequebook stubs, and sales invoices, till rolls and bank slips. Your records must be accurate, and you must be able to identify your business transactions.
Keeping them digitally is allowed; our guide to keeping receipts digitally explains how. PencePal keeps every receipt with its expense, and you can download all of it as one file at any time.