How long do you need to keep corporate tax records?

Keeping company records is an important part of business practice, and essential if you have a corporate tax liability.

You must keep records about the company itself, as well as financial and accounting records, for at least six years from the end of the last financial year. You may need to keep some records for longer under certain circumstances. These include:

• Transactions that cover more than one of the company’s accounting periods
• Your company has brought something that it expects to last more than six years (machinery or equipment)
• You filled your CT return late
• HMRC has started a compliance check into your company tax return.

There are both financial and non-financial records that must be kept for corporation tax purposes.

Non-financial records

• Names of directors, shareholders, and company secretaries
• The result of any shareholder votes and resolutions
• Promises for repayments of loans (specific date and who this is payable to- debentures)
• Promises for payments if something goes wrong (indemnities)
• When someone buys shares in the company
• Loans or mortgages secured against the company’s assets
• The minutes of board meetings and resolutions
• Company’s statutory books

Financial records

• All money received and spent by the company, including 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
• Stock takings used to work out stock figures
• All goods brought and sold
• Who you bought and sold them to (unless for a retail business)

What to keep as an employer

• PAYE records kept for three years from the end of the tax year
• Notice of tax codes
• Payments to employees
• Details of employee sickness and leave
• Any taxable expense or benefits

Records of ‘People with significant control’

Records of ‘People with significant control’ must also be kept. These are people who:

• Have more than 25% shares or voting rights within the company
• Can appoint or remove a majority of directors
• Can influence or control company

You must also keep any other financial records, information, and calculations you need to prepare and file your annual accounts and company tax return (including, receipts, petty cash books, orders, delivery notes, invoices, till rolls, contracts, bank statements etc.)

The consequences of bad record-keeping can be significant for your company. You can be fined £3,000 by HMRC or disqualified as a company director if you do not keep accounting records.

If your records are lost, stolen, or destroyed you must do your best to recreate them, tell your corporation tax office straight away, and include this information in your company tax return.

Due to the importance of managing company records properly, seeking expert advice may help your company avoid fines and penalties.

For the corporate tax experts at Gerald Edelman, good practice for efficient record-keeping includes:

• Keeping personal and company bank accounts separate so you know which transactions are related to your company
• Reconciling accounts often to ensure they match up to your financial statements
• Creating and maintaining an efficient filing system
• Records can be kept both digitally and physically, many companies choose to keep them digitally as this is more space-efficient.

For more information and advice on corporate record-keeping, speak to our tax team today. Or, to learn more, dive into our related article: How is corporation tax calculated?