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Keeping the right records is essential and is also a legal requirement. It makes it much easier to manage your business and if they are organised accurately are correctly it will cut down your time and costs if an enquiry is made into your tax return.
The general requirements for keeping the records are as follows:
For unincorporated businesses, the basic requirement is to keep records for 5 years from 31st of January following the tax year for which a tax return is made. For example the deadline for holding records related to the accounts declared on the tax return for the year ended 5th April 2007, is 31st January 2013. The tax return is due to be filed by 31st January 2008 and 5 years from this point is 31st January 2013.
For limited companies, you need to keep records for 6 years from the end of the accounting period to which the records relate.
If those who have to fill in a tax return, but are not running a business (for example if you receive rental income) you only need to keep records for one year from the filing date of the tax return, but if you are declaring capital gains the record keeping deadline is extended to match the unincorporated business deadlines.
In addition to this, an error and mistake claim can be submitted for up to 5 years from the anniversary of the filing date if changes are subsequently needed to be made to the tax return so it may be prudent to keep records for the same length of time as for someone with an unincorporated business.
If you are VAT registered, your records need to be held for 6 years from the date of the records.
If you have an open tax enquiry, all records held at that time should be held onto until the enquiry is closed even if the above time limits have passed. If forms are filed late, the record keeping deadline is extended.
If you would like to get further information please email janice@a4gsolutions.co.uk or alternatively speak to your client manager.
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