Maintaining Company Records: Required Duration

Understanding the legal requirements for retaining company records is crucial for any limited company owner in the UK. Failure to comply can lead to significant penalties, including financial fines and potential disqualification as a director. The duration for which different types of records must be kept varies, and it’s essential to be aware of these differences to ensure full compliance with the law. This article aims to clarify which records need to be kept and for how long, helping you navigate the complexities of company record retention.

Maintaining Company Records: Required Duration

Understanding Company Records and Their Importance

Defining “Company Records”

The term “company records” encompasses a wide array of documents as defined by the Companies Act 2006. These include:

• Registers and indexes
• Accounting records
• Agreements and memorandums
• Meeting minutes
• Documents required by the Companies Acts
• Registers of debenture holders

Essential Records for Limited Companies

Limited companies must maintain:

• Registration and formation documents
• Statutory registers (directors, shareholders, PSCs, etc.)
• Shareholder vote results and resolutions
• Debentures and indemnities
• Share transactions and stock transfer forms
• Secured loans or mortgages
• Contracts and agreements
• Commercial leases
• Property deeds
• Business insurance policies

The Register of People with Significant Control (PSCs)

Companies must keep a register of PSCs, which includes individuals with:

• Over 25% shareholding or voting rights
• The right to appoint or remove a majority of directors
• Significant influence or control over the company

Accounting Records

Accounting records to be kept include:

• Company transactions
• Assets and debts
• Amounts owed to the company
• Year-end stock holdings
• Goods bought and sold, and parties involved
• Financial records for annual accounts and tax returns

Legal Requirements for Record Retention

VAT Records

For VAT, companies must retain:

• Records of goods and services transactions
• Invoices issued and received
• Self-billing agreements and supplier details
• Debit or credit notes
• Records of goods used privately

Some VAT records must be kept digitally, as per HMRC guidelines.

PAYE Records for Employers

Employers must keep PAYE records, including:

• Employee income calculations
• P46 / P45 forms
• Deductions (NICs, student loans, etc.)
• HMRC reports (P9d, P11d, etc.)
• Payments to employees and HMRC
• Leave and sickness records
• Tax code notices
• Taxable expenses or benefits
• Payroll Giving Scheme documents

National Minimum Wage and Living Wage Records

Employers must prove compliance with National Minimum Wage and Living Wage laws.

Pension Auto-Enrolment Records

Employers must keep:

• Records about jobholders and workers
• Records about the pension scheme

Duration of Record Retention

How Long to Keep Records

The retention period for company records varies:

• Company and statutory registers: For the life of the company
• Share transaction forms: For the life of the company
• Financial and accounting records: 6 years from the end of the financial year
• Meeting minutes and resolutions: 10 years from the date of the meeting
• Debentures, loans, and mortgages: 6 years from the settlement date
• Contracts, including indemnities and agreements: 6 years from the end of the contract
• VAT records: 6 years, or 10 years for VAT OSS/MOSS schemes
• PAYE records: 3 years from the end of the tax year
• National minimum wage records: 6 years from the end of the pay reference period
• Pension auto-enrolment records: 6 years, opt-out records for 4 years

Record Keeping Formats and Penalties

Formats for Record Retention

Most records can be stored digitally, with exceptions for certain original documents like CIS and dividend vouchers. If records are lost or destroyed, inform HMRC and recreate them as accurately as possible.

Consequences of Non-Compliance

Failing to keep records can result in fines up to £3,000 and director disqualification. It’s advisable to seek professional advice to ensure robust record-keeping systems are in place.

In conclusion, maintaining proper records is not just a legal requirement but also a cornerstone of sound business management. It ensures transparency, facilitates audits, and supports informed decision-making. By keeping abreast of your obligations and implementing effective record-keeping practices, you can safeguard your company’s compliance and financial health. For more detailed information, please visit our article: How Long Must I Keep My Company Records?