The HMRC Record Keeping 6 years Period is the period that HMRC will keep documents relating to registered businesses. The period begins six years from the last time an entry is made in the records with all records being deleted after one more year. Both HMRC and any third parties who work with HMRC must abide by this timeframe unless there is a legitimate reason for keeping records beyond this period.
In this article, we will explain why the period exists, the benefits of HMRC keeping records and their retention and disposal responsibilities.
What is the Default HMRC Record Keeping Period?
Simply put, the default record period is how long HMRC retains the records of businesses after they have stopped making entries (when the business has stopped operating). The period is usually six years from the last entry date with all records being disposed of after one additional year. This is why the period is referred to as being 6 + 1 year.
The rationale for this timescale is that it covers the majority of enquiries and investigations which may be made about a business. For example, if there is an enquiry about the tax affairs of a business, the records will likely be needed to resolve that enquiry. By keeping records for this period of time, HMRC can be sure that they will have the information required to answer any questions which may arise.
HMRC needs to have a good reason for not destroying records once the default period is over. However, some records may be kept beyond the period if HMRC believes they have legal, regulatory, statutory or security significance. In this case, they may be kept up to 20 years from the last entry plus one more year.
Why is it Important?
There are numerous benefits to businesses of having their records kept by HMRC:
– Protection of important records: by keeping records for six years, businesses can be sure that their important documents will not be lost or destroyed. This means that if there is ever a need to refer back to these records, they will be readily available.
- Easy access to information: as the records are kept electronically by HMRC, businesses can easily retrieve any information they need without having to search through paper records. This saves time and is more efficient.
- Regulatory compliance: businesses are required by law to keep certain records for a minimum of six years. By having HMRC keep these records, businesses can be sure that they are compliant with the law.
- Reduced risk of audit or investigation: as HMRC keeps records for six years, it is less likely that a business will be audited or investigated as there will always be a record of their activities.
- Reduced storage costs and requirements: businesses do not need to worry about storing records for six years as HMRC will take care of this. This reduces the costs associated with storage and the amount of space required.
Which Records does HMRC Keep?
HMRC’s purpose is to support the government’s economic and social objectives by collecting taxes and duties and administering related benefits and schemes.
HMRC keeps records relating to:
- Individuals: personal information about taxpayers, including their contact details, employment history and tax affairs.
- Companies: information about companies, including their financial affairs and the people who work for them.
- Trusts: information about trusts, including their beneficiaries and the people who manage them.
- Charities: information about charities, including their finances and the people who work for them.
HMRC keeps records of businesses for a variety of reasons. The main reason is to comply with the law, which requires certain records to be kept for a minimum of six years. These include:
- Accounts and audit reports
- Tax returns
- VAT returns
- Payroll records
- Records of assets and liabilities
What is HMRC’s Line of Business?
HMRC’s Line of Business is the part of HMRC which is responsible for the management of records and information. The Line of Business is made up of five teams:
- The Records Management Team: This team is responsible for the day-to-day management of records, including the development and implementation of policy and procedures. This is very important because it makes sure that records are kept in a consistent and standardised way.
- The Information Management Team: This team is responsible for managing information across HMRC. This includes the development and implementation of policy and procedures, as well as training staff in how to use information effectively.
- The Audit and Compliance Team: This team is responsible for auditing HMRC’s records and information management processes. They make sure that HMRC is compliant with the law and best practices.
- The Data Protection Team: This team is responsible for ensuring that HMRC complies with the Data Protection Act. This includes ensuring that personal data is kept safe and secure and that people have the right to access their own data.
- The Appraisal and Disposal Team: This team is responsible for the appraisal and disposal of records, in accordance with HMRC’s retention policy. This team makes sure that records are destroyed when they are no longer needed.
What is HMRC’s Policy for Records and Information Management?
HMRC’s Records Management Policy sets out its commitment to the proper management of its records and information, in line with its statutory obligations. The policy covers all aspects of records and information management, from the creation and capture of the records to their retention and disposal. The policy is based on the principle that records should be kept for as long as they are needed, and no longer. This is because records have a value to HMRC and society, and they should only be kept for as long as that value lasts.
What is HMRC’s Retention Policy?
HMRC’s Retention Policy sets out how long it will keep records. The policy is based on the principle of ‘proportionality’, which means that records should only be kept for as long as they are needed. The policy is designed to strike a balance between the need to keep records for business purposes and the need to destroy them when they are no longer needed.
Records are ultimately disposed of when they have reached the end of their useful life. This means that they are no longer needed for business purposes or for historical research. Records may also be disposed of if they contain sensitive or personal information which needs to be protected.
What are the Personal Data Retention Requirements?
HMRC is required to comply with the Data Protection Act when it comes to the retention of personal data. This means that HMRC must take care to protect the personal data of individuals, ensure that it is accurate and up-to-date, and destroy it when it is no longer needed. This data can be very sensitive and can potentially be used for identity theft, so it is important that HMRC takes care to protect it.
What are Appraisal Reports?
Appraisal reports are documents which set out the results of the appraisal of records. Appraisal reports are used to determine the value of records and whether they should be kept or disposed of. This decision is based on a number of factors including the age of the records, the content of the records, the format of the records, and the legal requirements for retention. If it is decided that the records have value, then they will be kept. If it is decided that the records do not have value, then they will be destroyed.
What are Audits and Compliance?
Audits and compliance are an important part of HMRC’s work. They make sure that HMRC is complying with the law and best practices. This includes making sure that records are properly managed and that personal data is kept safe and secure. HMRC’s audits and compliance work helps to protect the public and ensure that HMRC is meeting its obligations.
HMRC’s work in this area is vital to the proper management of records and information. It ensures that records are kept for as long as they are needed and that personal data is kept safe and secure. This work helps to protect the public and ensure that HMRC is meeting its obligations.
Audits are conducted by independent bodies, such as the National Archives, and compliance is monitored by HMRC’s Internal Audit and Compliance Team. This independence is important because it provides transparency and ensures that HMRC is held to account for its record keeping.
Which Documents and Records Should Businesses Keep Themselves?
It is a legal requirement for businesses to keep certain records. This includes financial records, such as invoices and bank statements, and employment records, such as contracts of employment and PAYE records. HMRC has guidance on which records businesses need to keep and for how long they need to be kept.
HMRC also recommends that businesses keep other types of records, such as customer lists and records of sales and purchases. These records can be useful for businesses to keep track of their customers, understand their spending habits and make sure that they are complying with the law.
It is always good practice for businesses to have a system in place for managing their records. This system should be designed to meet the specific needs of the business and should be regularly reviewed to make sure that it is still fit for purpose. There are many different ways to store records, such as electronically or in paper form. HMRC has guidance on storing records electronically, including how to keep them secure and how to make sure that they can be easily accessed.
HMRC also has a policy for destroying records. This policy sets out when records can be destroyed and how they should be destroyed to make sure that they are not accidentally lost or stolen.
If you are not sure about which records to keep or how to organise them, it is always worth speaking to an accountant or a business advisor. To find out more about keeping records, you can also visit the HMRC website for advice.
Who can Request Business Records from HMRC?
In line with the Freedom of Information Act, business records can be requested by anyone who has a ‘legitimate interest’ in them. This includes businesses, individuals, solicitors, and other organisations. The request must be made in writing and must state the reason for the request. HMRC will then consider the request and decide whether to release the records.
There are various reasons why HMRC business records are publicly available.
- Business records help to ensure transparency and accountability. This means that the public can see how HMRC is working and hold it to account and can also check that HMRC is complying with the law.
- Business records can be used as evidence in legal proceedings. This includes cases where HMRC is being sued or where there is an investigation into HMRC’s activities. Likewise, if someone is in a legal dispute with a business, they can request records from HMRC to help them prove their case.
- Potential investors can access business records to help them make informed decisions about investing in a company. This information can also be used by businesses to help them understand the financial health of a potential customer or supplier.
- They can be used to help businesses and individuals understand the tax system and comply with their obligations. This helps to reduce the burden on HMRC and ensures that everyone pays the right amount of tax.
- They can be used for research purposes. Investigative journalists, concerned citizens and academics can all use HMRC records to check that businesses are paying the right amount of tax and to uncover instances of fraud and corruption. There have been many instances where HMRC records have been used to expose wrongdoing and bring about change.
The HMRC Record Keeping 6 years Period is an important part of HMRC’s records and information management. The period makes it easier for the public, HMRC and businesses themselves to access records and information. The period also helps to ensure compliance with statutory obligations, keep records and sensitive information safe and reduce the risk of audit or investigation.