Blog post

Understanding Financial Document Retention

Robin Maxwell

August 28, 2022

It’s important for all businesses to understand the rules around financial document retention. Shredding/deleting records during the statutory retention period can last companies in serious trouble. With that in mind, here is a quick guide to the rules around financial document retention.

What is the safest approach to document retention?

The safest approach is to keep documents indefinitely. Financial documents are highly unlikely to be covered by GDPR. Even if they are, personal details can be redacted as necessary. This means that, in principle, you could choose to keep it indefinitely.

If you were going to go down this route, then you would probably want to use offline storage rather than cloud storage. This is because the cloud works on the basis that you pay for what you use. You could therefore end up with a high cloud-storage bill to keep documents you were very unlikely to need.

On the other hand, paying for archival storage in the cloud might be worth it for the reassurance it could offer. It may be worth noting that there is no statute of limitations on investigations into deliberate tax evasion.

Keeping your financial documents indefinitely could, therefore, be an economical form of insurance against future investigations. If this seems excessive, then remember that investigations can be started for many different reasons. These include claims made by ex-employees.

How long should I keep statutory books?

Statutory books do need to be kept indefinitely. Limited companies do need to keep up-to-date and accurate statutory registers for as long as they continue to trade. These are in addition to the records deposited at Companies House.

Employers’ Liability policy

It’s advisable to store Employers’ Liability policy certificates indefinitely. The deadline for bringing a personal injury claim against a former employer is based on the date the employee became aware of the issue. This can be many years, even many decades after they left their employment. The safest course of action, therefore, is to keep Employers’ Liability policy certificates indefinitely.

How long should I keep my documents safe?

Keeping documents for 12 years is a safe option. Contracts under seal (or deed) do need to be kept for 12 years. All other documents need to be kept for a maximum of 10 years. This means that keeping all documents for 12 years would ensure that you met the minimum retention periods for all document types. For private companies, the statutory retention period is 3 years, and 6 years for public limited companies.

If, however, you wish to delete records as soon as possible the current statutory retention periods are as follows.

10 years

  • Statutory records for companies that have ceased to trade
  • Minutes of board meetings and resolutions.
  • VAT MOSS (Mini One Stop Shop) records

6 years

  • Tax records for limited companies
  • VAT records (for both limited companies and sole traders)
  • Accounting records
  • Contracts not under seal or deed

5 years

  • Tax records for sole traders

4 years

Most government grant schemes have a document retention period of four years. This includes the Bounce back Grant scheme. With that said, you should always check the conditions of the grant for the exact details.

3 years

  • Payroll/PAYE records
  • NB: payroll/PAYE records must be kept for three years regardless of whether or not the employee remains with the company.

Storing financial records

Most financial records can be stored digitally and/or on paper. It can be useful to do both as a precaution against loss or destruction. If documents are lost or accidentally destroyed within the statutory retention period, then you must inform HMRC immediately. You must also note the loss on your Company Tax Return.

Robin Rogers spencer
Robin Maxwell

Robin Maxwell is a partner of Rogers Spencer and has been working with us since 2003. Robin specialises in Accountancy Solutions, Audits and Tax and VAT. Find out more about Robin here.

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