HM Revenue and Customs (HMRC) state that accurate records must be kept for all businesses, regardless of the size of the company. You must keep a record of all sales, takings, purchases and expenses. Other records, dependent on the type of business, include cash books, mileage records, payroll records and bank statements. You should be aware of the retention periods for records in the event that your business closes down.
Self-employed records should be kept for five years after the online tax return deadline of January 31st. For example your records for the deadline in January 2013 should be kept until January 2018. If you send your tax return back late, you will need to keep your records for the later of the January 31st deadline or 15 months after the date you submitted your return.
Companies that are liable for corporation tax must keep records until the latest of three dates: 1.The sixth anniversary of the end of the accounting period in which the business closed. For example if a company closed in the accounting period ending 31st March 2012, records would have to be kept until 31st March 2018.
The date that an enquiry into a tax return is completed.
The date on which the enquiry window for a return closes. This is dependent on the accounting period and whether the company is a singleton company or member of a small group.
The specified period for retention of VAT records is six years although HMRC may specify a shorter period. Records must be kept regardless of whether you or your company remain registered for VAT.
You should let HMRC know if you lose your records after your business has closed. Try and recover missing information, for example by contacting your bank for copies of statements. HMRC are more likely to be sympathetic if they are made aware of the situation than if you tell them you have lost records in the middle of an enquiry into your tax returns.