Some people just can’t bring themselves to get rid of anything others are ruthless at clearing out unused bits and pieces.

At times the choice is made for us. If you are a self-employed trader, how long must you keep your business records supporting your tax return?

The answer: 5 years after the 31st January filing deadline for the year in question. For example records relating to the year ended 5th April 2017 must be kept until 31st January 2023.

For some this could represent a lot of papers, taking up lots of space and causing clutter, something we would rather do without. So what could the penalty be if we decided to just clear them out early? HM Revenue & Customs have the power to charge a penalty of £3000 for failure to keep business records. On second thoughts maybe they aren’t taking up to much space after all?

We don’t have to give up on the idea of regaining some of that space and clearing out that clutter so easily.

Although we have to keep those records, we don’t have to keep them on paper. It’s perfectly acceptable to keep the records electronically.

How can this be achieved?

A first step would be to review our bookkeeping process. At the point of writing up our records receipts could be scanned. Some bookkeeping packages make this very simple, taking a picture with a smart phone and linking it to the entry in the software. If we prefer to keep our records in Excel we may need to develop a way that works for us. Possibly scanning to PDF or snapping a picture with the phone and saving it through cloud storage. Whichever way we chose we would want to make sure that we could easily locate the receipt for a particular line of expenditure in our records if called upon to do so.

If we are really keen to clear out those old records we could even scan or photograph previous years and, if satisfied that the electronic version is complete, reclaim the space and destroy the papers.

If you would like to discuss business records and methods of retention please give me a call or send a message.