Did you know that as a limited company owner in the UK, you are legally required to store and retain certain documents and records for a minimum amount of time? Unfortunately, many directors and owners are not aware of the requirements, placing them at risk of financial penalty or even disqualification as a director. To complicate matters, the amount of time that records must be kept is not the same for all record types. In this article, we will explain which records you must keep and for how long in order to comply with the law.
What is meant by “company records”?
According to the Companies Act 2006, “company records” refers to any “register, index, accounting records, agreement, memorandum, minutes or other document required by the Companies Acts to be kept by a company” and “any register kept by a company of its debenture holders”. The following section outlines some of the records that your company may be required to keep.
What records do I need to keep for my limited company?
Keeping records about your limited company
You must keep records relating to your limited company, including:
- Documents relating to your limited company registration and formation, including the certificate of incorporation, memorandum of association, and articles of association
- Statutory registers of your limited company directors, directors’ residential addresses, shareholders, company secretaries, and people with significant control (PSCs) (see below for more information on PSCs)
- The results of any shareholder votes and resolutions
- Any promises for the company to repay loans at a specific date in the future (referred to as “debentures”) and to whom they must be paid back
- Any promises that your company makes for payments if something goes wrong and it’s the company’s fault (referred to as “indemnities”)
- Share purchase transactions – this may include any issued share certificates, returns of allotment of shares forms (form SH01) and stock transfer forms (form J30)
- Loans or mortgages which have been secured against the company’s assets
- Details of any guarantees, contracts, or agreements
- Commercial lease arrangements
- Deeds of title for land or property owned by the company, and
- Business insurance
Keeping a register of “people with significant control” (PSCs)
The rules state that you must also keep a register of ‘people with significant control’ (PSC), i.e. individuals with:
- Greater than 25% shares or voting rights in your limited company
- The right to appoint or remove a majority of directors or
- The ability to influence or control your company
It is important to bear in mind that you must still maintain a record even if you do not have any PSCs.
Keeping accounting records
It is also imperative to keep certain accounting records, including:
- Transactions showing money spent by the company
- Transactions showing money received by the company
- Assets owned by the company
- Any debts of the company
- Any money that the company is owed
- The stock holding of the company at the end of the financial year
- Any goods bought and sold by the company
- The details of those who the company bought and sold them to and from
- Any other financial records, information and calculations that you or your accountant need to prepare and file your annual accounts and Company Tax returns, i.e. receipts, petty cash books, orders, delivery notes, invoices, contracts, sales books and till rolls, and bank statements.
Keeping VAT records
HMRC requires that you keep all of the following records relating to your VAT:
- Goods and services purchased and sold (this includes any zero-rated, reduced and VAT-exempt items)
- Invoices issued by the company
- Invoices received by the company
- Self-billing agreements whereby the customer prepares the invoice
- The name, address and VAT number of any self-billing suppliers
- Debit or credit notes, and
- Any goods given away or taken from stock for private use
Certain VAT-related records must be kept digitally. For a full list of the records you must keep digitally, check the HMRC website.
Keeping PAYE records as an employer
If your limited company is an employer, it is necessary to retain certain Pay-As-You-Earn (PAYE) related documents and records, including:
- Employee income calculations
- P46 / P45s
- Any deductions made, such as national insurance contributions (NICs) and student loans,
- Reports made to HMRC (e.g. forms P9d and P11d).
- Payments made to employees, including wages, statutory payments, and expenses
- Payments made to HMRC
- Employee leave and sickness absences
- Tax code notices
- Taxable expenses or benefits and
- Payroll Giving Scheme documents (this includes any agency contracts and employee authorisation forms).
You must also be able to prove that your limited company has and is paying wages that are in line with its National Minimum Wage and Living Wage obligations. The current guidance states that “Employers are legally required to keep sufficient records to show that they are meeting their National Minimum Wage obligations and paying their workers at least National Minimum Wage”.
Another consideration is records relating to the auto-enrolment of staff into workplace pensions. There are two different types of records that an employer must keep by law, as follows:
- Records about jobholders and workers, including name, National Insurance number, opt-in notice and joining notice
- Records about the pension scheme, including employer pension scheme reference and scheme name and address
For detailed guidance on keeping records and documents relating to pension auto-enrolment for employers, visit the Pensions Regulator website.
How long do I need to keep records for my limited company?
As mentioned above, the length of time that you need to keep records depends on the type of records your limited company is required to store. Here is a summary of the required amount of time that you must retain documents relating to your limited company:
|Type of document
|Required amount of time to be retained
|For the life of the company
|Statutory company registers
|For the life of the company
|Share transaction forms
|For the life of the company
|Financial and accounting records (e.g. invoices, receipts, bank statements, stock statements, dividend vouchers)
|For 6 years from the end of the applicable financial year or accounting period
|Minutes of meetings and company resolutions
|For 10 years from the date of the meeting
|Debentures, loans, and mortgages
|For 6 years from the settlement date
|Contracts, including indemnities, guarantees, and agreements
|For 6 years from the end of the contract
|For 6 years, or 10 years if you are using the VAT One Stop Shop (OSS) scheme or used the VAT Mini One Stop Shop (MOSS) scheme.
|For 3 years from the end of the tax year they relate to.
|National minimum wage requirements
|National minimum wage records must be kept for at least 6 years as of 1st April 2021 from the end of the pay reference period to which it relates.
|Pension auto-enrolment requirements
|Pension auto-enrolment records must normally be retained for a minimum of 6 years. The exception to this rule being records relating to opt-outs, which must be kept for a minimum of 4 years.
In what format must records be kept?
It is important to review the guidance for each type of document provided on the government website or other official sources. In general, however, most limited company documents and records can be stored digitally. This may be in the form of an original digital form or document or a scanned version of paper documents. There are some small exceptions to this rule, however. Certain items must be retained in their original form, including Construction Industry Scheme (CIS) and dividend vouchers and bank interest certificates.
If some of your documents and records are lost, stolen, or destroyed, it is important to inform HMRC as soon as possible and provide this information in your Company Tax Return. You will need to recreate the record as best as possible to ensure that you remain compliant with the law.
What is the penalty for not keeping records?
If you do not keep the necessary records for the required amount of time, you risk receiving a fine of up to £3,000. In some cases, company directors may be disqualified for not adhering to their legal obligations to keep and store records in accordance with the law.
If you are concerned that you do not have the necessary records, are keeping records for the time required, are disposing of records incorrectly, or do not have a robust record-keeping system, it is advisable to engage a professional who can review your systems and advise you accordingly.
As with all aspects of running a company, by being prepared, understanding your obligations, and putting in place robust systems to manage your records and documents, you can relax in the knowledge that you are meeting your legal obligations. Sound record-keeping practices make business audits smoother, fosters greater levels of transparency and accountability, and build trust with investors and regulators. Keeping up-to-date and accurate documentation will also enable you to track your limited company’s financial health, monitor growth, and inform your decision-making.