It is the responsibility of all companies, regardless of their business structure to ensure that they are able to produce at least 6 years of accounting records, from the end of the last company financial year, on request. At the same time, if you are an employer, you must also keep all PAYE records for 3 years.
Failure to produce these records when requested by HMRC can result in serious penalties being imposed, which can quickly accumulate to thousands of pounds.
With this in mind, if you’re a Limited company, a sole trader or self-employed, it’s crucial that you recognise the importance of managing your accounts and retaining accurate records.
Why do HMRC check your records?
HM Revenue and Customs regularly request and check financial records to ensure that companies of all shapes and sizes are complying to the correct amount of tax. .
Gov.uk state that you must keep details of the following:
- Directors, shareholders and company secretaries
- The results of any shareholder votes and resolutions
- Promises for the company to repay loans at a specific date in the future (‘debentures’) and who they must be paid back to
- Promises the company makes for payments if something goes wrong and it’s the company’s fault (‘indemnities’)
- Transactions when someone buys shares in the company
- Loans or mortgages secured against the company’s assets
- You must tell Companies House if you keep the records somewhere other than the
- Company’s registered office address.
What must you keep details of?
If HMRC carry out a compliance check, you must be able to produce the following accounting records:
- All money received and spent by the company, including grants and payments from coronavirus (COVID-19) support schemes
- Details of assets owned by the company
- Debts the company owes or is owed
- Stock the company owns at the end of the financial year
- The stock takings you used to work out the stock figure
- All goods bought and sold
- Who you bought and sold them to and from (unless you run a retail business)
- You must also keep any other financial records, information and calculations you need to prepare and file your annual accounts and Company Tax Return
Failure to produce these records can result in a fine of £3,000 by HMRC. You could even be disqualified as a company director if you do not keep accounting records.
What happens if business records aren’t retained?
If your business records have been lost or stolen, you should inform HMRC straight away as financial penalties of up to £3,000 can be applied if you fail to produce your records when requested.
If you struggle to stay on top of your accounting records and need support, it’s worthwhile enlisting the help of a qualified accountant.
Why choose EasyPaye?
Here at EasyPaye, we are payroll and PAYE specialists. If you have any questions about how much PAYE you should be paying, or if you’re currently paying your income tax via self-assessment and you’d like to convert to a PAYE system, please get in touch.
Call us on 01438 747144 or email info@easypaye.org.
We provide our payroll services
across Belfast, Birmingham, Bradford, Bristol, Cardiff, Coventry, Edinburgh, Glasgow, Leeds, Leicester, Liverpool, London, Manchester, Nottingham and Sheffield.
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https://easypaye.org/paying-paye-a-guide/
https://easypaye.org/how-much-paye-should-i-pay-updated-for-2022/
