Published 2nd of May 2018

It’s hard to deal with financial documents properly. For individuals (and businesses) who are required to fill out a tax return, it’s important to keep hold of most documents detailing your income and expenses. However, these documents can be very sensitive - the kinds of things that you wouldn’t want to fall into the wrong hands. How do you balance security with your duties as a taxpayer? That’s the question that we’ll attempt to answer in this article.

The tax return deadline for 2018

The end of the 2017-18 tax year fell on Thursday 5th April, which means that now is the time to start getting your documents together to fill out individual tax returns. If you’re required to do so, you’ll receive a notice from HMRC to remind you.

If you’re reading this in April, you still have plenty of time to get your paperwork in order. The deadline for individuals to file their tax returns is Wednesday 31st October 2018. If it’s your first time filling out a tax return, now’s the time to make sure that you have all the documents you need to provide evidence of the figures you record. If, on the other hand, you’ve filled out a few before, the more natural question might be around whether you still need to keep the documents from previous years. We’ll address these topics in the following sections.

Documents you need for your tax return

In order to fill out your tax return accurately, you’ll need to find and retain some or all of the following documents (depending on your current circumstances) in either physical or digital form:

  • P45 - this is relevant if you’ve left your job at some point in the 2017-18 tax year. It shows the pay you’ve received and any tax paid on that income over the course of your employment in the last tax year.
  • P60 - if you’re in employment at the end of the tax year, you’ll need this form to show an up to date record of your salary and the taxes you’ve already paid on it.
  • P11D - if you receive any benefits in your employment on top of your regular salary, this form will provide the details.
  • Certificates for Taxed Award Schemes
  • Information about redundancy or termination pay
  • Record of tips
  • Employment benefits that aren’t directly from your employer
  • Any lump sum or incentive payments that you’ve received - this is common when starting many jobs.
  • Records of any expenses you’ve claimed over the tax year
  • Records of any benefits received - including statutory sick pay and maternity/paternity/adoption pay.
  • Income received from a share scheme and related benefits - this information should include not only the financial details, but also any documents relating to changes in your shares and additional shareholder benefits.

Having these documents to hand will not only help you to fill out your tax return, but will also need to be produced if HMRC opens an investigation into your taxes. Even if you’re confident that everything in your tax return is correct, you should keep hold of all the documents you used to complete it. HMRC may open an investigation as a result of a small irregularity or even just a spot check, so it pays to be on the safe side.

Government guidelines on presentation and clarity of records

If this is sounding like a lot of paper that you’re going to need to keep hold of, don’t start worrying just yet. Government regulations allow you to keep your records in either physical or digital formats. The only requirements regarding their format is that they’re clear and readable.

This means that, if you don’t want to keep hold of paper records or you don’t have them in the first place, you can safely scan and digitise any that you have. It almost goes without saying that there are different risks associated with different document formats. Paper documents are easier to lose and more susceptible to accidental damage, while digital documents are at risk of cyber crime.

Whatever format you settle on, security should be at the forefront of your mind. Paper documents should be organised and kept in a secure location - locked away, if necessary. Digital documents, on the other hands, should be stored on a suitably secure hard drive or cloud storage space, with appropriate passwords in place and reliable antivirus software. It’s also useful to have duplicate copies of both physical and digital documents, giving you redundancy if one of your copies should ever become lost or compromised.

How long you need those documents for

It’s always best to err on the side of caution. If you suspect that your old documents will need to be referred to in the future, then you should keep hold of them. However, there are official guidelines in place as a default:

  • If you sent your tax return on or before the deadline you should keep your records for at least 22 months after the end of the tax year. So, for the 2017-18 tax year, you should keep your records until the start of February 2020.
  • If you sent your tax return after the deadline you should keep your records for at least 15 months after you sent it. For example, if you send your tax return in December 2018, you should hold on to your records until March 2020.

If you go through this time period without hearing anything from HMRC, you’re within your rights to securely destroy the documentation if you don’t want to keep it for your own purposes. Bear in mind, however, that HMRC can sometimes investigate back a number of years, so should they open up an investigation in the future, you may want to have those older documents to hand.

The decision, ultimately, is up to you. It depends on your requirements and how easy it is for you to securely store and organise a growing number of documents. If you have a large store of paper building up, digitisation could be a preferable option for the long term.

Company tax returns

This isn’t the place to talk at length about company tax returns, but many of the considerations are similar, if not identical. If you’re concerned about the security of these financial documents, the Shredall SDS Group can help, with document shredding, storage and scanning services. Get in touch with us to find out more.