If you are self-employed as either a sole trader, or are a partner in a business partnership it is important you keep all records of business income and expenses for your Tax Return. You also need to keep copies of other paperwork that helped you to fill in your return, such as copies of dividend vouchers or bank interest statements.
There are no rules on how you should keep your records; they can be on paper, disc or computer. However, you may be charged a penalty if your books are inaccurate or are not complete and legible.
A simple way to keep your records safe is storing them in a box or folder, and marking it with the date so you can easily keep track. If your records are destroyed, stolen or lost and cannot be replaced, you will have to recreate them, so make sure you keep them safe. If you do have to recreate your records, if you are using estimated or provisional figures when filing your Tax Return, you need to tell HM Revenue and Customs.
You must keep your records for at least five years from the 31st January following the tax year that the tax return relates to. If you submitted your tax return late then you will need to keep them a little longer.
If you operate as a Limited company, you need to keep your records for at least 6 years, from the end of the financial year.
You might need to keep records for longer for a few reasons, such as if a transaction covers more than one accounting period, if your company has bought an item that is expected to last longer than 6 years, for example specific equipment, if a tax return is sent in late, or if HM Revenue and Customs have started a compliance check into your Tax Return.
Therefore make sure to keep your books and records safe once they have returned from the accountants and wait the allotted years before you think about having that bonfire!