If you own or manage an organisation, it is crucial to know how long you have to keep business records. Any enterprise – big, small and everything in between – has and must keep records. These include things such as invoices, agreements, employee contracts and manufacturing data logs, to name just a few.
In the UK, the rule of thumb for how long records should be kept is at least six years from the end of the relevant financial year. Let’s take a company with a financial year running from the beginning of October to the end of September. If you created a record in March 2023, you must safeguard that documentation until the end of September 2029.
This is a general guideline. There are, however, different rules for different types of businesses. In this article, we examine these record-keeping requirements, the exceptions to the rule, penalties for non-compliance, and compliant document storage solutions.
Contents
Business records for a limited company
Business records if you’re an employer
Business records if you’re self-employed
Special circumstances & exceptions
What happens if I don’t keep my business records?
Secure disposal is essential
Outsource your storage with Shredall SDS Group
Business records for a limited company
A limited company is a legal entity in its own right. This structure protects the personal assets of owners should the business encounter choppy financial waters. In this setup, document storage is paramount, as every scrap of paper, from establishing the organisation to the smallest sale, is important. These include founding documents, statutory registers, day-to-day business records, financials and HR files.
How long should records be kept? You need to retain some records for six years and some for 10 years. Documents concerning sales, expenditures, income, VAT, PAYE, and grants claimed should be kept for at least six years. The 10-year retention includes the agendas and minutes of board meetings and VAT Mini One Stop Shop (MOSS) records. You should safely store the company’s statutory documents for as long as the company does business.
Business records if you’re an employer
At its core, a business is the people who own it, manage it, and work for it to achieve the overarching goals. As an employee, you may wonder how long a company can keep your data in the UK. The short answer is anything between three and six years, depending on the type of human resource information.
Worker agreements and any changes to these must be retained for at least two years. You must keep PAYE (Pay As You Earn), parental leave, and time sheets for a minimum of three years from the end of the relevant financial year. Health and safety records must stay on file for at least four years, while minimum wage and pension data must be retained for no less than six years. In a nutshell, this data includes payments made to employees, employee leave and sickness absence, tax code notices, taxable expenses or benefits, and payments to HMRC. It is a lot of paperwork. Use document scanning services to optimise your company’s information safety by having digital and physical copies.
Business records if you’re self-employed
If you are self-employed or part of a partnership, you must also generate or receive documentation about your operations, income and expenditures. Many self-employed individuals wonder how long documents should be kept, or have more specific questions such as how long should records of checks be kept?
You must retain your records for at least five years after the 31st January submission deadline of the relevant tax year. These include a host of different things, such as statements of sales, revenue, expenses, receipts, invoices, VAT and PAYE information, and bank statements. Keeping track of all this is tricky, but document management software makes record-keeping significantly easier. It provides a single, easy-to-access platform where all your data is securely kept and organised.
Special circumstances & exceptions
There are instances where you must keep records for longer than the rules prescribe. If you deal with ongoing transactions or agreements over multiple years, you must retain complete information on all the payments made during that time.
The same goes for fixed and movable assets, including buildings, that have a lifespan of more than six years. Remember, this even includes the time after these were sold. In the case of late tax returns or HMRC compliance enquiries, your business must keep all records until HMRC confirms that its investigation is complete.
What happens if I don't keep my business records?
Not keeping complete records for the prescribed periods can have costly and stressful consequences. If you fail to recreate or submit the requested data, HMRC can fine you up to £3,000. Plus, this can trigger further investigations into your tax returns, as this failure may be interpreted as an attempt to pay less tax.
Secure disposal is essential
Now that you know how long a company can keep your data and for how long you should keep records, it is time to spotlight secure disposal. Once the relevant retention periods are in the rearview mirror and you can finally start culling mountains of paperwork, this should be your top priority.
Secure disposal, such as document shredding, not only protects your brand property and reputation but also ensures that you comply with the UK GDPR and do not compromise sensitive data.
Outsource your storage with Shredall SDS Group
Document management is a mammoth, time-consuming yet crucial task. It not only requires you to keep accurate records for lengthy periods but also demands secure disposal. Outsourcing these functions lessens the load and gives you peace of mind.
Backed by decades of award-winning, recognised experience, Shredall SDS Group is your top choice when it comes to document storage services and document shredding services. We protect your confidential and sensitive information while ensuring that your company complies with all the applicable regulations.
Streamline your document management system from generation to disposal by contacting us today.
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