Record Keeping for Tax Returns
Accurate records support the figures reported to HMRC. They help demonstrate business income, allowable expenses, tax already paid and claims for relief. Without them, a tax return may be incomplete and difficult to defend during an enquiry.
What Records Should You Keep?
Depending on the taxpayer and business, records may include:
- Sales invoices and till reports
- Purchase invoices and receipts
- Business bank and credit-card statements
- Mileage and travel records
- Payroll and pension information
- CIS deduction statements
- Loan and hire-purchase agreements
- Dividend and director’s loan records
- Property income and expense documents
- Details of savings, investments and asset sales
A bank statement confirms that money moved, but may not explain the business purpose or show whether VAT was charged. Keep the underlying invoice wherever possible.
How Long Should Records Be Retained?
Self-employed people generally keep business records for at least five years after the 31 January filing deadline for the relevant tax year. Limited companies normally retain accounting records for six years from the end of the financial year.
Longer retention may be necessary where returns are late, transactions cover more than one period or HMRC has opened an enquiry. Certain company, payroll and asset records have separate requirements.
Digital Records
Readable digital copies are generally easier to organise and search than boxes of paper. Name documents consistently, attach them to the relevant transaction and keep secure backups.
Making Tax Digital requires qualifying taxpayers to maintain specified records digitally. A photograph is only useful when it is readable and connected to the correct entry.
Avoid Year-End Problems
Update records weekly or monthly and reconcile bank accounts. Review unpaid invoices, personal transactions and missing information while the details are still familiar.
Where a receipt is missing, do not invent evidence. Our missing receipts guide explains the practical options.
Records should be protected from loss, alteration and unauthorised access. Use secure storage, appropriate user permissions and backups. If software is changed, make sure historic data and documents remain available for the full retention period.
Good bookkeeping reduces errors, supports valid claims and makes tax liabilities easier to forecast.
GMS Accountants helps businesses and individuals in Cambridge and Nottingham organise records and prepare accurate tax returns. Contact us for support.
