Q. How long must I retain my books and records?

A. According to HMRC rules, if you are in business, you must keep records of all sales and income, all business expenses, VAT records if you’re registered for VAT, PAYE records if you employ people, and records about your personal income.

It might sound a lot to keep on top of, and alongside the requirement to retain certain records for differing lengths of time can become confusing.

VAT records must be kept for six years although sometimes HMRC will allow a shorter period. Any request made to keep records for a shorter period must be accompanied by an explanation of why it is not considered practical to keep the records. For PAYE, HMRC recommends that payroll records be kept for at least three years after the income tax year to which they relate.

Tax records for individuals and partnerships, if related to property income or self-employed income, must be kept until at least the fifth anniversary of the filing date for the tax return. Income relating to employments and investment income must be kept for at least one year after the normal filing date.

For company records, under Corporation Tax self-assessment rules, accounting records must be preserved for six years from the end of the accounting period. For Government grants, documents relating to Government grants must be kept for four years from receipt of the grant. Where grant monies are still being received, no documents should be destroyed without consent from the relevant Government department.

* For more advice go to www.chw-accounting.co.uk or contact Nicola Roby on 01204 534031 or via email at Nicola.roby@chw-accounting.co.uk