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Business Receipts: How long to keep them?
6 Answers
Running a business, receipts have to be kept in case of Inland Revenue audits.
How many years do receipts have to be kept?
What is the furthest back the Inland Revenue can investigate?
How many years do receipts have to be kept?
What is the furthest back the Inland Revenue can investigate?
Answers
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A number of laws exist which set out the periods for which records and corroborating evidence such as receipts must be kept.
Companies
The Companies Act 2006 (Sections 386 and 388) sets out the accounting records a company must keep with a 3 year retention period for private companies and 6 years for public companies.
The VAT Act 1994 (SCH 11 PARA 6) sets out the VAT records that should be kept and specifies a 6 year retention period.
Employment and Sub Contractor Regulations which deal with PAYE and the Construction Industry record keeping specify a 3 year retention period.
Individuals
All individuals may be requested to complete a Self Assessment form. The various Finance Acts and Self Assessment regulations stipulate that everyone must keep records to enable a complete and correct return to be made:
Business Taxpayers - records kept for at least five years and ten months after the end of the tax year to which they relate.
Non-business Taxpayers - records kept for at least 22 months after the end of the tax year to which they relate.
Technically HMRC have no time limit in reclaiming a debt "to the Crown" but tend to follow the "standard" time limit of 6 years for non fraudulent enquiries (VAT is treated differently in that it has a specific 6 year limit).
Companies
The Companies Act 2006 (Sections 386 and 388) sets out the accounting records a company must keep with a 3 year retention period for private companies and 6 years for public companies.
The VAT Act 1994 (SCH 11 PARA 6) sets out the VAT records that should be kept and specifies a 6 year retention period.
Employment and Sub Contractor Regulations which deal with PAYE and the Construction Industry record keeping specify a 3 year retention period.
Individuals
All individuals may be requested to complete a Self Assessment form. The various Finance Acts and Self Assessment regulations stipulate that everyone must keep records to enable a complete and correct return to be made:
Business Taxpayers - records kept for at least five years and ten months after the end of the tax year to which they relate.
Non-business Taxpayers - records kept for at least 22 months after the end of the tax year to which they relate.
Technically HMRC have no time limit in reclaiming a debt "to the Crown" but tend to follow the "standard" time limit of 6 years for non fraudulent enquiries (VAT is treated differently in that it has a specific 6 year limit).
To make it factual for you all records both business and private should be kept for six years. But HRMC seem to have a habit of popping up with a question just after you think that the six years have ended so keep them for seven. The furthest back they go is twenty years, but in agreeing a figure with you they will say that the money must have been there before then and will not settle until you add on another year of what might be due.
A penalty up to �3,000 may be charged for each failure to keep or to preserve adequate records in respect of a return or in respect of a claim made other than in a return. For this purpose there can be only one failure for each return or for each claim.
Penalties will only be sought in the more serious cases, where, for example, records have been destroyed deliberately to obstruct an enquiry or where there has been a history of record keeping failures.
On the first occasion that a failure to light and it is not a provable, deliberate destruction of records, a written warning should be sent.
Penalties will only be sought in the more serious cases, where, for example, records have been destroyed deliberately to obstruct an enquiry or where there has been a history of record keeping failures.
On the first occasion that a failure to light and it is not a provable, deliberate destruction of records, a written warning should be sent.
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