Taxpayers must now retain records which substantiate the entries on tax returns.
A business taxpayer is required to maintain records which include the following:
- Receipts and expenses
- Sales and purchases
- Other supporting documents
for five years after the filing deadline and for six years for companies.
The penalty for failure to maintain proper records is a maximum of £3,000 which is usually only sought in the more serious situations, such as deliberate destruction of records.
HMRC Manuals state the following as far as record keeping is concerned – “The records that a person keeps will generally reflect the size and complexity of their affairs. They may range from the most simplest of manual records for a sole trader to the most sophisticated computerised system for a multi-national company.”
HMRC’s views on records are that they should:
- Allow the person to make a correct and complete return
- Allow the person to calculate the correct amount of tax
- Enable them to check the figures reported on the tax return
Please therefore bear all of the above in mind when maintaining your personal and business records.
If you would like our help to understand the implications in more detail for your specific situation, call us today on 02394 003600 or contact me on firstname.lastname@example.org.
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